Shared Equity Mortgage

A shared equity mortgage is a financing arrangement in which a third party — such as a government program or a First Nations housing authority — contributes a portion of the purchase price or down payment in exchange for a proportionate share of the property's future appreciation or depreciation when the home is eventually sold or refinanced. In British Columbia, the federal First-Time Home Buyer Incentive, which operated as a shared equity mortgage, was wound down and is no longer accepting new applicants as of 2024. Prospective buyers should consult current BC Government and program-specific guidance to identify any active shared equity programs available in their region.

Property Transfer Tax in BC is calculated on the fair market value of the property at the time of transfer, not on the amount of the buyer's personal contribution, under the BC Property Transfer Tax Act. The presence of a shared equity mortgage does not reduce the taxable fair market value of the property, so PTT is assessed on the full purchase price at the standard tiered rates of 1% on the first $200,000, 2% on the portion between $200,000 and $2,000,000, 3% on the portion between $2,000,000 and $3,000,000, and an additional 2% on any residential value exceeding $3,000,000. First-time buyers whose property qualifies may still access the First-Time Home Buyers' Program exemption, which provides a full PTT exemption for properties up to $835,000, subject to eligibility conditions set out in the Property Transfer Tax Act.

Yes. Under the Real Estate Services Act (RESA) and the rules administered by the British Columbia Financial Services Authority (BCFSA), licensees owe their clients a duty of full disclosure of all material information relevant to the transaction, including any financing structure that creates an ongoing financial obligation or encumbrance on the property such as a shared equity mortgage. A licensee must explain the material terms of such an arrangement — including the third party's equity share and repayment trigger events — so that the client can make a fully informed decision. Licensees should refer clients to qualified legal and mortgage professionals for advice on the specific program terms.

In British Columbia, a shared equity mortgage is typically registered as a mortgage or charge against the property's title in the Land Title Office under the Land Title Act, securing the third party's interest in the property and its future appreciation. This registration puts subsequent purchasers, lenders, and other parties on notice of the encumbrance. Buyers should instruct their notary or lawyer to conduct a thorough title search to identify and understand any such registered charges before completing a purchase.

When a homeowner with a shared equity mortgage dies in British Columbia, the property forms part of their estate and is administered in accordance with the Wills, Estates and Succession Act (WESA). The executor or administrator of the estate is responsible for addressing all encumbrances registered against the property, including satisfying or transferring the shared equity mortgage obligation, before distributing estate assets. The specific repayment or assumption terms of the shared equity program will govern what triggers the repayment obligation upon death, and the executor should seek legal advice to ensure the program's requirements are met during the estate administration process.

A shared equity mortgage can generally be placed on a strata lot in British Columbia, as strata lots are individual titled properties capable of being mortgaged under the Strata Property Act (SBC 1998, c. 43). However, buyers and program administrators should be aware that strata corporations may have bylaws affecting the use, rental, or resale of strata lots, and these bylaws could interact with the conditions of a shared equity program. A purchaser of a strata lot should review the Form B Information Certificate provided under the Strata Property Act to understand any financial obligations, bylaw restrictions, or pending strata levies that could affect the property's value — which is material to the equity-sharing calculation.

Real estate licensees in British Columbia who collect, use, or disclose a client's personal financial information — including details about a shared equity mortgage arrangement — must comply with BC's Personal Information Protection Act (PIPA). Under PIPA, licensees must collect only the personal information necessary for the transaction, obtain meaningful consent, and protect that information from unauthorized use or disclosure. Sharing a client's shared equity mortgage details with third parties, such as a seller's agent or lender, without the client's consent would generally constitute a breach of PIPA obligations.

Foreclosure in British Columbia is a judicial process governed by the BC Supreme Court Civil Rules and the Law and Equity Act — there is no power-of-sale process as exists in some other provinces. In foreclosure proceedings, the priority and treatment of all registered charges, including a shared equity mortgage, are determined by their registration date on title and applicable legal principles. A shared equity mortgagee registered on title would be a party to the foreclosure proceeding, and any equity sharing entitlement would be addressed through the court process and any resulting sale proceeds according to priority of claims.

The method of financing a property — including the use of a shared equity mortgage — does not in itself trigger restrictions under the Agricultural Land Commission Act (SBC 2002, c. 36) or the Agricultural Land Reserve rules administered by the Agricultural Land Commission (ALC). However, if the shared equity program's terms or the third party's involvement creates conditions that could constitute a subdivision of land or a change in use inconsistent with agricultural purposes, those aspects would need to be assessed for ALC compliance. Buyers considering a shared equity arrangement on ALR land should consult the ALC directly and seek legal advice to ensure compliance with all applicable restrictions.

A buyer should carefully review the specific program agreement governing the shared equity mortgage, paying close attention to repayment triggers — such as sale, refinancing, or a specified time period — and the method by which the third party's share of appreciation or depreciation is calculated. Because the repayment amount is tied to the property's future market value rather than a fixed sum, the ultimate cost of the arrangement can vary significantly depending on market conditions in British Columbia. Buyers are encouraged to consult a qualified mortgage broker, lawyer, or notary to model different scenarios and fully understand their obligations before signing any shared equity agreement.