Joint tenants or tenants in common?
This is one of the most important decisions co-owners make.
Two common ways of owning NSW property are joint tenants and tenants in common.
They can have very different consequences, particularly when an owner dies.
The right structure depends on your relationship, estate plan, financial arrangements and what you want to happen to your interest in the property.
Don't simply tick a box because someone tells you that's what everyone normally does.
What if one person wants to sell?
This is where things can get uncomfortable.
You might be best friends today.
You might be in a long-term relationship.
You might never imagine disagreeing.
But circumstances change.
Relationships end.
People move.
Someone loses their job.
Someone wants their money back.
Someone meets a new partner.
One owner wants to renovate and the other doesn't.
A co-ownership agreement can record what you've agreed will happen if circumstances change.
It can deal with matters such as:
each person's financial contribution;
mortgage repayments;
rates, insurance and other expenses;
repairs and improvements;
use of the property;
what happens if someone wants to leave;
how a buy-out will be valued;
what happens if someone stops paying; and
how the property can ultimately be sold.
Buying a property together is exciting.
Whether you're buying with your partner, sibling, parents or friends, it's easy to focus on the fun decisions:
Which house?
How much can we borrow?
Who gets the bigger bedroom?
But there's another conversation that should happen before anyone signs a contract:
What happens if things don't go according to plan?
We're putting in different amounts. Does that matter?
Absolutely.
Imagine two people buy an $800,000 property.
One contributes $150,000 towards the deposit.
The other contributes $30,000.
They might still decide to own the property equally.
But is that actually what they intend?
What happens if the property is sold two years later?
Does the person who contributed $150,000 get their contribution back first?
Are mortgage repayments equal?
What about renovations?
Rates?
Insurance?
Repairs?
These are much easier questions to answer before you buy than after a disagreement.
Have the conversation while everyone is getting along
A co-ownership agreement isn't about expecting the relationship to fail.
It's about agreeing on the rules while everyone agrees.
At Neilson + Co Legal, we help clients buying property together understand both the conveyancing transaction and the bigger legal picture.
Buying property with someone else?
Before you sign the contract, talk to us about the proposed ownership structure and whether a co-ownership agreement is appropriate.
Contact Neilson + Co Legal to arrange a pre-purchase contract review and discuss your ownership arrangements before you commit.