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Property Co-ownership – Is It Right For You?

Posted by Dean Claughton on 20 Apr 2018

Assisted by Natasha Muscat

With reports of today's high residential prices dominating both the Australian media and property market, potential homeowners and investors can be easily deterred from beginning the ascent onto the property ladder.  In response to this growing need for affordable real estate, there has been a notable surge in digital platforms offering 'co-ownership' solutions.  

Co-ownership agreements offer buyers who otherwise may not be able to afford the purchase of a property the opportunity to divide the costs with others.  However, while enticing, co-ownership can carry a multitude of potential risks.

Co-Ownership and the digital world

The increase in demand for co-ownership has led to the development of digital platforms specifically designed for processing co-ownership matters.  

Digital platforms such as Kohab - labelled the 'Tinder' of the property marketplace, facilitate co-ownership agreements on a small and intimate scale, utilising 'tenancy in common' agreements.  The platform's process steers users through the key steps relating to co-ownership, such as allowing each party to have a defined share of the house.

Why Co-ownership might be for you

  • Co-ownership agreements can give potential buyers the means to overcome the obstacle of affordability, which is particularly inviting to those who otherwise wouldn't be able to afford a foot in the door of the property market.  Affordability comes as a result of divvying up between co-owners the costs associated with purchasing a property, such as the purchase price and legal fees.  
  • Co-ownership platforms such as Kohab assists buyers to purchase properties for co-living (occupation), co-investing and co-lifestyle (i.e. a shared holiday home), providing a wide range of sharing options.

Pitfalls of Co-Ownership

While the benefits of co-ownership may be attractive, there are a number of risks that must be considered before entering into an agreement, some of which include:

  • If one party wants to sell their share of the house, it can be particularly difficult to find a market of people willing to take over the resulting part ownership.  
  • On the flipside, the remaining co-owners may have no control over who the incoming partner may be, limiting their preferences on how the property should be managed. 
  • A sour relationship between co-owners can be the downfall to a successful co-ownership agreement.  Possible disputes which may arise include those related to mortgage repayments, whether one party is willing to be bought out and whether to refinance.  Without a co-ownership agreement, it can be very costly to litigate that which was initially intended to occur between the co-owners.  
  • There are financial risks associated with co-ownership.  This is due to the fact that as co-borrowers, parties are jointly liable for each other's debts.

    If you are considering becoming a co-owner of a property, Coleman Greig's expert professional advice can deliver significant value in minimising any potential risks associated with your investment.  To organise an initial discussion with a lawyer in our Commercial Property Law team, please contact: