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Property Sharing Agreements are for people who are buying property together and they are not in a de facto relationship.
Contracting Out Agreements are used by couples who are in a de facto relationship and want to contract out of the of Property (Relationships) Act 1976. This means they can make their own rules. We have previously written a newsletter on this here.
This newsletter does not cover Contracting Out Agreements. We have previously covered these in this blog.
With rising property costs, many people are turning to co-ownership-sharing ownership of property with family, friends, or business partners.
Co-ownership brings risks, especially if responsibilities, costs, and usage aren't clearly defined. Disputes over finances, property usage, or the desire to sell can put strain on relationships and finances. Without an agreement, you risk ending up in lengthy, costly legal disputes, and could be liable for your co-owner's unpaid expenses. Setting everything out in a written agreement protects your investment and promotes a smooth, harmonious co-ownership arrangement.
Many co-owners assume they'll "work things out as they go," but this can backfire when different perspectives arise. Here are common areas of friction:
a. Decide how ownership will appear on the title as tenants-in-common (each owning a specific share).
a. Clarify each party's contribution to the purchase. Co-ownership doesn't always mean equal funding-some may provide more, while others contribute by co-signing a loan for approval.
a. Outline how ongoing costs like mortgage payments, taxes, and maintenance will be covered. Address what happens if someone can't pay or if major repairs are needed, and keep in mind that the lender can hold each co-owner equally liable, regardless of individual agreements.
a. Specify if the property is for personal use only or if renting to third parties is allowed. Agree on how any rental income or capital gains will be shared among co-owners.
a. Establish what happens if an owner wants out. Options can include letting remaining owners buy their share or requiring them to sell their interest if necessary. These provisions protect both the owner who wants to sell and those who wish to retain ownership.
a. If relationship property claims are a concern, co-owners may require everyone to enter a relationship property agreement with their partner or spouse. This limits potential claims from non-owners and protects the co-ownership structure.
a. Plan how to handle disputes. You might agree to start with mediation before escalating to legal action, preserving relationships and minimizing costs.
