Legal Comment by Mark Illidge of Hinterland Lawyers

November 2007

The trend towards co-ownership of property is gaining momentum as housing affordability affects more homebuyers. Co-ownership of property can be advantageous in that it spreads the costs of stamp duty, conveyancing fees and most significantly, mortgage repayments. It can also allow for faster repayment of the mortgage and the ability to purchase a better quality property than you might otherwise be able to afford. However, there are pitfalls with co-ownership of property as the law is vague, uncertain and some would say unfair when it comes to regulating rights between co-owners. All co-owners should consider entering into an agreement between themselves, which sets out how they wish to deal with their mutual rights and obligations with respect to each other.

The types of matters with which a Co-ownership Agreement should deal include:

• Who contributes what share or portion of the price and/or deposit;
• How much the parties will borrow and who is responsible for the repayment;
• Which of the co-owners will live in the property or part of the property and on what basis;
• Whether to own as tenants in common or joint tenants;
• What events will trigger a sale;
• A procedure should one party wish to sell to allow the other co-owners to purchase the selling share;
• How proceeds of a sale will be distributed;
• How obligations to pay rates, maintain the property, carry out repairs and/or effect improvements will apply;
• Regulation of the right to lease or mortgage the property; and
• A method to resolve disputes.

It is far better to have an agreed way of dealing with such matters before you enter into the co-ownership, rather than waiting until an issue arises and potentially not being able to reach an amicable agreement.

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