Sharing the ownership of property between two or more people or entities is called co-ownership. The co-owners can be friends, family members, business partners or strangers!
As highlighted by Pod Property ‘Over the last 15 years, house prices across Australia have risen by enough to leave a generation of Australians feeling like they are never going to be able to afford a home of their own.’
Because of how expensive property is to buy, new and innovative methods of ownership are being developed to assist people in to the property market.
Domain released a piece recently that demonstrates just how unaffordable property is in Australia:
‘A stunning rise in house prices has reignited worries about housing affordability, with experts warning workers on moderate incomes will find it harder to reach home ownership than ever.
Despite rock-bottom interest rates that made mortgage repayments cheaper, and a raft of government assistance, record high prices make it near impossible for some to save the required deposit.
It raises the prospect that Australia could miss the opportunity offered by the social shifts of the pandemic to make housing more affordable.
And the affordability problem affects all tiers of the market, from entry level buyers to current owners trying to upgrade.
New figures yesterday revealed house prices are at a record high in every capital city except Perth and Darwin, reaching an eye-watering $1.21 million in Sydney and $936,000 in Melbourne, according to the latest Domain House Price Report.
A 20 per cent deposit on the median house would be $242,000 in the harbour city and $187,000 in the Victorian capital.‘
As many of you who have followed our journey know, we created Mortgage Mates to help match two or more users to own a home together because this is one way we can make housing more affordable.
Once we have matched two Mates we assist people to link into relevant third parties for additional support including real estate, finance and legal support.
To ensure you do things safely, you can create an agreement to assist in the safe and secure ownership of a property or item. This is called a co-ownership agreement. As defined by Muffetts law firm…
- The advantages of an agreement include:
- Pooling your funds to contribute the initial equity in the property
- Combining your borrowing powers to obtain finance on the best available terms
- Sharing the initial cost of purchasing the property
- Dividing the expenses and net rental income from the property in various ways
- Accessing a greater range of potential investments
- Repaying a mortgage off quicker and increasing net return
A CO-OWNERSHIP AGREEMENT
‘If you are considering co-ownership, it is important to obtain legal advice to make sure that the process proceeds smoothly at all times. There are many reasons people join forces to co-own property and the circumstances in each case differ, it is essential to record the parties’ rights and intentions in writing.’
‘The Co-Ownership Agreement sets out the parties’ legal rights and obligations and deals with all the likely foreseeable circumstances before they occur, including important issues such as:
- Price and payment for the property
- The purpose of the property (eg investment, shared or sole use or a combination thereof)
- Management and contributions to payment of expenses
- Maintenance and repair
- How long the co-ownership is to last
- How a co-owner may exit the arrangement and/or sell their share in the property
- Various exit strategies
- Various important legal terms to make sure the Co-Ownership Agreement is legally binding
- Dispute resolution
The agreement can also determine other discussion pieces such as:
- How you deal with your house or flat
- Separate ownership of assets
- Banking and cash arrangements
- Living expenses
- Finance and borrowing
- What happens if / when you separate as co-owners
- Division of capital assets
- What one of you might pay to own the whole property
NOTE: Co-ownership differs from the way a husband and wife might hold a property as joint tenants (where a spouse’s share automatically passes to the other spouse on death), instead being held as tenants-in-common, which means the share will not automatically pass on death.
By using our third party agreements or support from a lawyer you already know, you can benefit from expert advice using existing legal documents to save you time and money.
Netlawman even let you complete an existing document with your own information by paying a one off fee. Some examples of questions that may be included are:
1. We are entering in to this agreement so as to record and regulate financial and other matters which will affect us as we live together,■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ ■-■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ .
2. This agreement is intended to be a binding legal document. We each acknowledge that we have entered into this agreement voluntarily without any unfair or improper ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ .
3.We now [live together / intend shortly to live together] at [address], but this agreement shall ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ .
4.We have honestly and frankly told each other about our individual assets and financial positions and have set ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ .
5. We both acknowledge and agree that this agreement has been jointly drawn by us and accordingly ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ ■ ■ ■ ■
We know co-owning may seem scary when you first consider it, but by taking the steps above to draft an agreement, owning with a person you have Matched with online may actually be safer than buying with some one you know. Statistics show that when buying with a partner we don’t take legal steps to protect our assets or responsibilities meaning we are more at risk, if or when something goes wrong.
So whether you are buying with a best friend, partner, family member or stranger… Consider a co-ownership agreement to ensure both of you are protected and supported through your housing journey.