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I recently bought a 3 unit, 3 storey house with my husband and sister. The basement we will renting out to a tenant, my sister will occupy the ground floor and my husband I will occupy the top two floors. My sister is putting in 30% of the down payment and we are putting in 70%. We thought to divide all house expenses by this ratio of 30/70, however, her living area is more than this ratio, we share a space more like 40/60 as the third floor is smaller than the floors below. Is it fair to ask her to pay 40/60 of the monthly mortgage payments?

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Communications is key here, and get everything in writing, which clearly states what you have agreed, and avoids faulty memory. Decide in advance what portion of the house each owns. You might want to consider the problems that can arise should your or her not be able to pay. Who is getting the mortgage? You, your sister, or combined (bad idea)? –  ChuckCottrill Jan 30 at 16:35
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I suggest that you first decide on what %'s of the home value you each have a legal claim to. Then split the mortgage using the same %'s. Then, if someone feels their % is slightly higher, they are compensated because they 'own' a correspondingly higher share of the house. Use the same %'s for downpayments (which may mean that an 'adjustment' payment might be required to bring your initial cash outlay from 70/30 into the %'s that you agree to).

Tenant income gets split the same way.

Utilities are a bit more difficult - as heating depends more on square feet, but water and hydro depend more on how many people are there. You can try to be really precise about working out the %'s, or just keep it simple by using the same %'s as the mortgage.

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I agree water is proportionate to people, but if hydro means electricity, not so much. There's a lot of stuff running that doesn't change if my wife and daughter weren't home for a month. I'd divide that bit by area as well. –  JoeTaxpayer Jan 30 at 3:15
Even though you may have different space, one area might be more (or less) desireable, and thus be worth more. –  ChuckCottrill Jan 30 at 16:38
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In my opinion, since she will live in one apartment, as will you and your husband, the simplest method is to divide the ratio exactly the same as the area for your living space. If it's 40/60, she puts 40% down, you put 60%. And you split expenses the same. The tenant income can be applied to the house expenses, as it's no different than giving her 40% and you keep 60%.

No matter how well you get along, it's easy for someone to feel a split of expenses isn't fair unless it's discussed and agreed up front.

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