Co-ownership agreements are becoming increasingly important. With the rising costs of housing and land, it’s common to see multiple persons (other than spouses) owning property. Whether it’s a first home with siblings to get into the property market, an investment property or farmland for the family’s business, a co-ownership agreement can save you costly disputes.
A co-ownership agreement is essentially a written agreement that sets out the rights and obligations of the owners of a property. Owners of a property may own it as joint tenants or tenants in common.
Property owned as joint tenants means that the property is owned by two or more parties and if one owner dies, their interest passes automatically to the surviving owner/s. This is typical of how spouses would hold property.
If property is owned as tenants in common, then property owned by two or more parties will be owned in equal or unequal shares. Each owner may dispose of their share in the property independently and the shares do not automatically pass to the other owner in the event of death but form part of the deceased person’s estate.
Having a co-ownership agreement is of particular importance when you own the property as tenants in common.
What does a co-ownership agreement cover?
A properly drafted co-ownership agreement will set out the parties’ legal rights and obligations and how the co-owners will deal with foreseeable issues, such as:
- the financial contribution of each party toward the purchase of the property
- the purpose of the property
- the division of ongoing costs and expenses and income
- maintenance and repair obligations
- how a co-owner may exit the arrangement and/or sell their share in the property
- disputes resolution
- disability or incapacity of a co-owner
- separation from a spouse or de facto partner
- general change in circumstances, for example, retiring or lifestyle change.
Draft the agreement in the good times, not the bad
Co-owners should set the ground rules and document the terms and conditions of the co-ownership as soon as possible while the parties are getting along. If things go wrong down the track and emotions are running high, refereeing to an existing agreement will be much easier than resolving the dispute or agreeing to new terms.
How we can help
At Cohen Legal, we will work with you to structure the co-ownership arrangement and protect your interests by preparing and completing of a properly considered and tailored co-ownership agreement to suit your needs. Get in touch with our experienced property lawyers for advice or to learn more.