Property Co-Ownership: What is it?
Co-Ownership of real estate is the term used in situations where multiple people hold legal title to a property. These individuals could be friends, family or partners.
Essentially, co-ownership involves:
- Pooling your funds to contribute the initial equity in the property
- Combining your borrowing power to obtain finances at the best available rate
- Dividing the expenses and rental income generated from the property
There are several advantages to Co-Ownership. These include:
- Splitting the running costs of the property i.e. rates, repairs and renovations.
- All the costs involved with the purchase of the property are split between the parties i.e. the initial purchase price, stamp duty, legal fees, building reports etc. This means entering the property will cost you a fraction of what it would for someone entering on their own.
- With several parties involved you will be able to Repay the mortgage off at a faster rate thus increasing net returns
What is a Property Co-Ownership Agreement?
A Co-Ownership Agreement sets out the legal rights and obligations of each person with a share in the property. It also sets out all the likely foreseeable circumstances before they arise including:
- The Price and procedures of payment for the property
- The purpose of the property (eg investment, shared or sole use or a combination thereof)
- The 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
Are you planning on purchasing property with friends, siblings or a business partner? Download our Property Co-Ownership Agreement and save yourself time and money.