She built a US$660K home with her in-laws on a verbal agreement — Dave Ramsey says sell it now that the deal has fallen apart

Both families each contributed US$100,000 (C$138,280) toward the US$660,000 (C$912,650) home. They moved in together in September 2024.

By June 2025, Ruth's father-in-law had died and her mother-in-law had moved out by August. She initially said she would keep paying her full share, but by January 2026, she cut her contribution to US$1,500 (C$2,075). Last month, she said she would stop paying altogether — but still expects her cut when the house is sold.

Ruth called in to The Ramsey Show for advice and Dave Ramsey didn't hesitate.

Ramsey's advice on what Ruth should do next

With only 18 months of payments on a US$660,000 (C$912,650) home, very little equity has been built. Sale proceeds may not fully cover what both families put in — meaning one or both sides could walk away with less than their original US$100,000 (C$138,280).

Ramsey had a clear formula for splitting the proceeds from the home's sale: "Deduct what she promised to pay, everything above $1,500 originally, and whatever she doesn't keep her promise on; deduct that from her half of the proceeds to make the deal fair (2).”

On the emotional cost of the arrangement, Ramsey was direct: "The way I would quantify that is, whatever money I lost, whatever tears I have shed over the stupidity of this deal was worth it for that precious six or eight months, and to be there when Pop passed. That was the cost of that.”

While this situation unfolded in the U.S. it is a story that will resonate with Canadians have grappled or will grapple with a similar predicament.

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Why Ruth's arrangement failed — and how to avoid the same trap

Ruth had no written co-ownership agreement with her in-laws. That single detail is what made her situation beyond repair the moment her mother-in-law decided to stop paying.

Under a joint mortgage in Canada, every co-borrower is equally responsible for the full payment — regardless of any private split they agreed to among themselves. If one party stops paying, the lender can pursue all co-borrowers for the outstanding balance. If you default on enough payments, every co-borrower's credit suffers (3).

A co-ownership agreement — drafted before closing and reviewed by a real estate lawyer — outlines where each borrower's responsibility lies when circumstances change. It specifies issues such as each party's monthly contribution, what triggers an exit, how buyouts are calculated and how proceeds are divided on sale. The Law Society of Ontario (LSO), which regulates the province's legal profession, recommends that anyone entering a joint property purchase have this agreement in place before signing any mortgage documents (4).

Multigenerational housing is growing in Canada — and so is the risk

Unfortunately, Ruth's experience isn't unique here in Canada. According to Statistics Canada's 2021 Census, around 2.4 million Canadians — or about 6.5% of the population — lived in multigenerational households, a 50% since 2001 (5, 6). Roughly 1 in 5 Canadians lived with adult family members such as a parent, grandparent, or adult sibling (7).

The appeal is understandable. Elevated house prices and steady mortgage rates have made solo homeownership difficult for many families. Combining incomes and down payments makes larger properties accessible — and for families with aging parents, it keeps everyone under one roof.

However, when the whole arrangement rests on a verbal agreement, the financial risk is real. And the more people involved, the more ways it can go wrong.

3 things Canadians should do before buying a home with family

If you're considering a multigenerational purchase here's what the experts recommend.

1. Get a co-ownership agreement before you close

Have a licensed real estate lawyer draft a co-ownership agreement that covers details such as: