.svg)
Property prices across Sydney and the Northern Beaches have made co-ownership increasingly common. Whether you're pooling resources with family, friends, or investment partners, shared property ownership can help you enter the market or expand your portfolio. The practical reality is that co-ownership works well when everyone understands what they've agreed to from the start.
Most co-ownership arrangements run smoothly until circumstances change. Someone wants to sell. A relationship shifts. Financial contributions become uneven. Without clear documentation of your arrangement, these transitions become complicated quickly. I work with co-owners to establish practical legal frameworks before purchase, so expectations stay aligned as situations evolve.
In this guide, we'll look at the ownership structures available in NSW, what makes a co-ownership agreement actually work in practice, and how to protect your interests when buying property with others. Let's work through the key considerations that help co-ownership arrangements succeed.
Understanding co-ownership structures and agreements before you buy helps avoid disputes later. Here's what matters most:
Invest time in choosing the right ownership structure and documenting your arrangement thoroughly before settlement. Work with a property lawyer who understands investment strategies to ensure your co-ownership agreement addresses financial contributions, ongoing costs, decision-making processes, and exit rights clearly. Consider how future scenarios like refinancing, capital improvements, or rental income will be handled. Ensure your agreement includes valuation processes and buyout provisions that work for investment properties. Regular reviews of your co-ownership arrangement help keep it aligned with your investment goals as circumstances change.
Co-ownership means multiple people hold legal title to the same property. In NSW, property law recognises two main ownership structures: joint tenancy and tenancy in common. Your choice between these structures affects your rights to sell, transfer, or leave your share of the property.
The ownership structure you choose influences what happens to your share when you die, whether you can sell independently, and how flexible your arrangement remains as circumstances change. Let's look at how each structure works in practice.
Under joint tenancy, all owners hold equal shares and own the entire property together. The defining characteristic is the right of survivorship: when one joint tenant dies, their interest automatically passes to the surviving joint tenant(s). This happens outside your Will and cannot be controlled by estate planning.
Joint tenancy works well when you want automatic transfer to your co-owner upon death. This structure is common for married couples or partners who want their share to pass directly to each other without going through probate.
The practical limitation is that you cannot leave your share to anyone else in your Will. Your interest automatically transfers to the surviving joint tenant regardless of your estate planning intentions. If you want control over who inherits your property share, joint tenancy may not suit your objectives.
Under tenancy in common, each owner holds a specific share of the property. These shares can be equal (50/50) or unequal (70/30, for example), depending on what you agree. Each owner can deal with their share independently: selling it, transferring it, or leaving it in their Will to whoever they choose.
This structure provides more flexibility for estate planning and reflects different financial contributions accurately. If you contribute 70% of the purchase price, you can hold a 70% ownership share. When you die, your share passes according to your Will, not automatically to your co-owner.
Tenancy in common suits investors, family members with different contributions, or anyone who wants control over their property interest. The trade-off is that your co-owner's share could potentially be sold to someone you don't know, unless you include appropriate protections in your co-ownership agreement.
Would you like to discuss which ownership structure suits your specific situation? Understanding these options helps you choose the arrangement that protects your interests effectively. Contact me to explore how your co-ownership can be structured properly.
Most co-ownership disputes I handle could have been prevented with a clear agreement from the start. Two reasonable people often have different understandings of what they've agreed to verbally. When circumstances change years later, these differences become problems.
A well-drafted co-ownership agreement documents what everyone has actually agreed to about money, decision-making, and exit processes. Let's work through the provisions that help these arrangements function smoothly.
Document who contributes what to the initial purchase: deposit, stamp duty, legal fees, and building inspections. These contributions often justify unequal ownership shares if you're structuring as tenants in common.
Ongoing costs need equal clarity. Who pays the mortgage instalments? How are rates, strata fees, insurance, and maintenance costs divided? What happens if one person cannot contribute their share temporarily?
Your agreement should address how you handle major repairs or improvements. If the property needs a new roof or significant renovation, how do you decide whether to proceed? How are these costs split, and what happens if one owner wants the work done and the other doesn't?
If someone will live in the property while others won't, document this arrangement clearly. Will the resident owner pay rent to the others? How is this amount calculated? What happens if the resident owner wants to stop living there?
For investment properties, document how rental income is divided and who manages the property. Who handles tenant selection, maintenance issues, and rent collection? Clear processes for these operational matters prevent friction as the arrangement continues.
Major decisions about the property need agreed processes. What requires unanimous agreement versus majority vote? Common major decisions include: selling the property, refinancing, making structural changes, or entering long-term leases.
Your agreement should specify how you make these decisions and what happens when you disagree. Clear processes help resolve disputes before they escalate.
How one owner exits the arrangement matters as much as how you enter it. Your agreement should document what happens when someone wants to sell their share. Common approaches include:
A right of first refusal gives existing owners the chance to buy the departing owner's share before it's offered to outsiders. This protects remaining owners from having to accept an unknown co-owner.
Valuation processes need documentation too. How will you determine the property's value for a buyout? Will you use independent valuations? Who pays for the valuation? These seemingly minor details become major disputes without clear documentation.
Timeframes for exercising buyout rights should be realistic. Thirty days rarely gives someone enough time to arrange finance for a property buyout. Ninety days is more practical for most situations.
Include practical dispute resolution procedures before anyone needs them. Start with negotiation between owners, then mediation with an independent third party if direct negotiation doesn't work. This approach resolves most disputes without litigation.
Document what happens if dispute resolution doesn't produce agreement. Sometimes one party buying out the other is the solution. Sometimes sale and division of proceeds is necessary. Knowing the process helps resolve disputes more efficiently.
Ready to work through your co-ownership arrangement together? I can help you document your agreement in a way that addresses these practical considerations clearly. Let's discuss how to structure your shared ownership properly.
Life circumstances change. A co-ownership agreement that works at purchase might not suit your situation five years later. Thinking through potential future scenarios helps you structure an arrangement that adapts as circumstances evolve.
Consider what happens if one owner gets married or enters a de facto relationship. Does the new partner have any interest in the property? How do you protect the co-ownership arrangement from claims by a partner's spouse?
Income changes affect co-ownership arrangements too. If one owner loses their job or faces financial difficulty, how do you handle their inability to contribute to mortgage payments or maintenance costs? Your agreement might include provisions for temporary contribution holidays or processes for one owner covering another's costs.
Relationship changes between co-owners matter significantly. Friends or family members who start as co-owners might have relationship changes that make continued co-ownership difficult. Clear exit processes become essential in these situations.
Property improvements create value questions. If one owner wants to renovate and the other doesn't, how do you handle the increased value those improvements create? If the improving owner funds the renovation, do they receive extra equity?
Rental situations change too. What if one owner initially lives in the property but later wants to rent it out? What if both owners initially rent it out but one later wants to move in? Your agreement should address how these transitions work.
Understanding the tax and duty implications of co-ownership helps you structure your arrangement effectively and plan for future changes.
When you initially purchase the property, stamp duty is calculated on the full purchase price, regardless of your ownership structure. Whether you're joint tenants or tenants in common doesn't change the duty payable at purchase.
First home buyer concessions may be available if all co-owners meet the eligibility requirements. This becomes important when choosing who should be on the title if some co-owners qualify for concessions and others don't.
Capital gains tax applies when you sell the property or your share of it. The main residence exemption can reduce or eliminate CGT if the property has been your main home, but this exemption has specific requirements under tax law.
For investment properties held as tenants in common, each owner reports their proportionate share of any capital gain when the property is sold. This makes ownership shares important for tax purposes.
Buying out a co-owner or adding someone to the title can trigger stamp duty. In NSW, duty is calculated on the value of the share being transferred. This can be a significant cost when restructuring co-ownership arrangements.
Some duty exemptions exist for transfers between spouses or in certain family situations. Understanding these exemptions helps you plan ownership changes cost-effectively.
Professional tax advice becomes essential when considering ownership changes. I work with co-owners to understand the legal aspects of these transactions, and I recommend consulting your accountant about the tax implications for your specific situation.
Consider two friends, Sarah and Michael, who decide to purchase an investment property together in Sydney's Northern Beaches. Sarah contributes 60% of the deposit, while Michael contributes 40%. They recognise their contributions are unequal and choose tenancy in common with Sarah holding a 60% share and Michael holding 40%.
Before settlement, they work with a property lawyer to document their co-ownership agreement. The agreement addresses several practical matters: mortgage payments are split 60/40 to match their ownership shares, with provisions for what happens if either person cannot pay temporarily. Rental income will be distributed 60/40, and both owners need to agree on tenant selection.
For exit strategy, they include a right of first refusal: if either owner wants to sell, they must first offer their share to the other owner at market value determined by independent valuation. The purchasing owner has 90 days to arrange finance and complete the buyout.
Three years later, Michael receives a job opportunity in Brisbane and wants to sell his share. Rather than becoming complicated, the process works smoothly because everyone knows what they agreed to. Sarah exercises her right of first refusal, they obtain an independent valuation, and Sarah arranges finance to buy Michael's 40% share within the agreed timeframe.
This scenario illustrates why documenting your co-ownership arrangement from the start matters. Sarah and Michael's clear agreement meant Michael could take his Brisbane opportunity without dispute, and Sarah could consolidate her ownership interest knowing the process and costs upfront. They maintained their friendship while ending their co-ownership arrangement—which doesn't always happen without proper documentation.
Co-ownership can be a practical way to enter the property market or expand your investment portfolio, but it requires clear legal documentation to work smoothly. Here's what to focus on:
Before you purchase:
Key considerations:
Red flags that need immediate attention:
Working with a property lawyer before settlement helps you structure your co-ownership properly and document your arrangement in a way that protects everyone's interests. I help co-owners establish clear frameworks that work in practice, not just in theory.
Ready to make confident decisions about co-owning property?
Co-ownership arrangements work best when everyone understands what they've agreed to from the start. I work with property investors, families, and partners to structure shared ownership properly and document agreements that protect everyone's interests.
Let's discuss how your specific co-ownership situation can be handled effectively. Contact LexAlia Law Studio to explore your options and ensure your arrangement is documented clearly before settlement.
Joint tenancy includes automatic survivorship, meaning your share passes to the surviving joint tenant when you die, regardless of your Will. Tenants in common allows you to leave your share to whoever you choose in your Will.
Yes, this process is called severance. Any joint tenant can sever the joint tenancy by giving written notice to the other joint tenant(s) or by transferring their interest. After severance, the property is held as tenancy in common.
Yes, particularly when buying with family. Family co-ownership arrangements often start with good intentions and verbal understandings, but circumstances change. Clear documentation protects everyone's interests and preserves relationships.
This depends on your ownership structure and co-ownership agreement. A well-drafted agreement includes processes for one owner buying out the other or forcing sale if buyout isn't feasible.
Most co-ownership agreements specify that market value will be determined by independent valuation. Some agreements require two valuations with the average used, while others allow one party to choose the valuer.
Under NSW property law, a co-owner can apply to court for an order for sale under section 66G of the Conveyancing Act 1919. Courts generally grant these orders unless there are compelling reasons not to.
.webp)
.webp)
