Have you found the perfect home in Hunters Hill, Bondi, or maybe the Blue Mountains, and thought about buying it with your sister, partner, or a close friend? Pooling resources to enter the property market can be a smart move but before you sign the contract, it’s important to understand the legal implications of co-ownership in NSW.
Co-Ownership of Property in NSW:
In NSW, property can be held under two main forms of co-ownership:
- Joint Tenancy: Each co-owner holds the property jointly and equally. A key feature is the right of survivorship. If one owner passes away, their share gets automatically transferred to the surviving co-owner(s). This arrangement is common for married or de facto couples.
- Tenancy in Common: Each co-owner holds a distinct share (e.g., 50/50 or 70/30). Shares can be equal or unequal, depending on contributions and agreements between co-owners. Unlike joint tenancy, there is no right of survivorship, your share can be left to beneficiaries in your will.
The Conveyancing Act 1919 (NSW) governs these arrangements, and your choice will significantly affect ownership rights, estate planning, and succession.
Why You Need a Co-Ownership Agreement
While co-ownership can make property more affordable, it can also create disputes if expectations aren’t clearly set out in a co-ownership agreement. A co-ownership agreement is a legally binding document that sets out each party’s rights and responsibilities. It typically covers:
- Financial Contributions – How much each person pays towards the deposit, mortgage repayments, rates, insurance, and maintenance.
- Ownership Shares – Whether the property is owned equally or in proportion to contributions.
- Decision-Making – How major decisions (such as selling, leasing, or renovations) will be made.
- Exit Strategy – What happens if one party wants to sell their share or can no longer afford repayments.
- Dispute Resolution – Steps to resolve disagreements without resorting to litigation.
Without a written agreement, disputes may end up in court, where one co-owner can apply for an order of sale under the Conveyancing Act 1919 (NSW). This process can be stressful, costly, and damaging to personal relationships between co-owners.
Estate Planning and Co-Ownership
Co-ownership also has implications for estate planning:
- If you are joint tenants, your share automatically passes to the surviving co-owner, regardless of your will.
- If you are tenants in common, your share can be left to your chosen beneficiaries under your will.
For this reason, it’s essential to update your will and consider other estate planning measures when entering a co-ownership arrangement.
Risks of Informal Arrangements
Buying with friends or family without a clear agreement may lead to:
- Disputes over unequal contributions.
- Problems if one co-owner wants to sell but the other doesn’t.
- Financial stress if one party defaults on mortgage repayments.
Get Legal Advice on Co-Ownership in NSW:
Buying property with family or friends can be a great way to get into the market but without the right legal protections, it can create significant risks. At Shore Lawyers, our property lawyers can draft co-ownership agreements, advise on ownership structures, and help you make informed decisions under NSW property law.
Contact us today for tailored advice on co-ownership agreements in NSW.
