Property Co-ownership Agreements

by | Property & Leases

Where two or more people own property there needs to be complete understanding between the parties as to their respective rights and obligations.  This is particularly so where the co-owners are not married.  Very often the parties will assume they share the same views on how a property is to be maintained and whether or not it will be rented or sold. Where these views are not expressed misunderstanding and disagreement may arise.  Property co-ownership agreements are most important where the co-owners are unequal investors and / or where one of them intends to live in the property.

Joint tenancy v Tenants-in-common

Property owned by two or more people will be held either as “Joint Tenants” or “Tenants-in-Common”.

Married or de facto couples generally prefer property to be held as joint tenants. Both parties have an equal interest in the property and, on the death of one party, the property passes to the survivor automatically by operation of law.

Property held as tenants-in-common allows ownership in equal or unequal shares. On the death of an owner the deceased’s share is transferred in accordance with their Will. It is therefore critical for a person holding property as a tenant-in-common to have a valid and up to date Will.  It is also important for co-owners to understand that after the death of the other co-owner they will end up owning the property with the deceased’s beneficiary.

For a detailed discussion on these two forms of ownership refer to Anna Pantelios’ article “Joint Tenants or Tenants-in-Common?“.

Property Co-ownership Without an Agreement.

What happens when one co-owner wants to sell the property and the other one doesn’t?

If all avenues of negotiation have been exhausted a party may decide to settle the dispute through litigation. A party can commence an action in the Supreme Court of South Australia (in relation to South Australian property) requesting partition of the property into one or more parts (s 69 Law of Property Act, 1936 ).  This option is only available where the property is capable of being partitioned, for example a large block of vacant land, but there will be situations where this is not feasible.

If the property is not capable of being subdivided the Court can order the sale of the property (s70 Law of Property Act, 1936).

Litigation will be costly, time-consuming and stressful.  A Property Co-ownership Agreement is likely to help co-owners avoid the expense and uncertainty associated with legal proceedings.

Property Co-ownership Agreement Terms

A properly drafter Property Co-ownership Agreement will establish and formalise the agreed issues. The parties then have a framework for dealing with the property which should eliminate the need to resort to litigation.

Property Co-Ownership Agreements should contain terms which address the following:

  • the financial contribution of each party toward the purchase of the property;
  • the division of ongoing costs (which may include mortgage repayments, rates, and maintenance such as painting and lawn mowing) and income from rent;
  • whether the property will be leased and if the tenancy will be professionally managed;
  • whether the co-owners can live in the property and if so whether they can invite others to live with them;
  • the period of notice one party needs to give the other if he or she wants to sell;
  • the price to be obtained for the sale of the property (and to this end it would be advisable to obtain a valuation from a registered valuer);
  • dispute resolution procedure;  and
  • how the net proceeds of sale will be divided.

Family Law considerations

If the property is owned by a married or de facto couple and the relationship has irretrievably broken down a Property Co-ownership Agreement may be of assistance but it would not take the place of a certified financial agreement (also known as a co-habitation or de-facto agreement) under the Family Law Act.  Where the co-owners are married or in a de-facto relationship we recommend they seek advice from a family law practitioner about the benefits of a certified financial agreement.


Property Co-Ownership Agreements will  set out the key points for dealing with property owned by tenants-in-common and will reduce the likelihood of litigation between the parties.

It can be prepared before or after the purchase of property and would be useful where friends or business partners agree to purchase an investment property or where siblings inherit a property from a parent’s estate.

For further information please contact Danny Beger on 8362 6400 or email Danny BegerJoin our mailing list to receive updates and advice on current issues.

  • Danny Beger

    About the author: Danny Beger

    Danny advises on business transactions, trading structures, commercial documentation and estate planning issues. He has a wealth of business, commercial and property transactional experience.

    With interests in business and different types of property, Danny understands the issues that confront his clients, their businesses and investments.

    Call on 8362 6400 or .

    Full profile