Co-ownership Agreements

Introduction

A Co-ownership Agreement regulates the relationship between co-owners of a property. They are commonly used where:

• You are purchasing property with family or friends
• You are purchasing property as an investment with other people
• You are purchasing property with your spouse, but you have different interests in the property; or
• You have a mortgage over the property, and you want to record who is responsible for repaying the mortgage and in what proportions.

What is included in a Co-ownership Agreement?

Co-ownership Agreements come in many varieties and should be tailored to your specific needs. Typical matters that will be covered in Co-ownership Agreements include:

• Who is entitled to reside at the property
• In the case of a property used as a holiday house, who can use the property and at what times of the year
• If the property is an investment property, how rent is to be distributed between the co-owners
• Who is responsible for making repayments on the mortgage
• Who is responsible for the maintenance of the property
• How the property is to be sold should one of the co-owners decide they want to sell their share of the property
• What happens if one of the co-owners dies or becomes bankrupt, and
• Co-ownership Agreements will include a dispute resolution mechanism, if there is a disagreement between the parties. This should avoid the need for the parties to make an application to VCAT, should there be a disagreement amongst the parties.

You can enter into a Co-ownership Agreement at any time but they will typically be set up at the same time as purchase of the property. This way, everyone knows what is expected of them from the outset.

Co-ownership Agreements and relationship breakdown

A Co-ownership Agreement will not be binding in the case of the breakdown of a marriage or de-facto relationship. If you want an agreement with your spouse or partner to deal with the unfortunate situation where you might separate, then you should obtain legal advice as to whether entering into a Financial Agreement is right for you.

A Financial Agreement is a document which can be drafted at the commencement of your relationship or during it, to detail what you are both intending to have happen to your assets in the event of separation.

The family law courts will likely not be constrained by a Co-ownership Agreement in determining a division of property upon separation, but they would have regard to a Financial Agreement. In most cases, having a Financial Agreement will circumvent the need for any court action.

In some situations, it may be appropriate to have both a Co-ownership Agreement and a Financial Agreement. The Co-ownership Agreement would deal with your co-ownership of the property while your relationship is on-going, whereas a Financial Agreement would address what is intended to happen to the property should the relationship come to an end.

Co-ownership Agreements and your Will

A Co-ownership Agreement operates alongside your Will and is not a substitute for it. It is important that your Co-ownership Agreement and your Will are consistent. If you are preparing a Co-ownership Agreement, it is worthwhile reviewing your Will at the same time to ensure everything is in order.

How can we help?

At Sharrock Pitman Legal, we have drafted many Co-ownership Agreements for our customers. If you need a Co-ownership Agreement, please give us a call on 1300 205 506 and we can assist you with establishing a Co-ownership Agreement tailored to your particular needs.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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