Buying Property With Someone Else? What Should Be Decided Before You Sign

Crownmark Lawyers | Property & Conveyancing

Buying with somebody else has become ordinary. Couples do it, but so do siblings pooling an inheritance, friends who would rather own than rent, parents helping an adult child in, and business partners buying a premises. What has not become ordinary is having the conversation that goes with it.

In our experience, co-owners agree on the property and almost nothing else. Who pays what, what happens if one of you wants out, what happens if somebody dies: these questions are rarely discussed, because at the point of buying everyone is optimistic. The law will answer them for you if you do not, and it will not necessarily answer them the way you would have. This article sets out what needs to be decided before signing.

How You Hold the Title Is a Legal Decision, Not a Formality

There are two ways to hold property with someone else in Australia, and the difference matters enormously.

Joint tenants

Joint tenants hold the whole property together, in equal shares, regardless of what each contributed. The defining feature is the right of survivorship: if one joint tenant dies, their interest passes automatically to the survivor. It does not form part of their estate and cannot be left to anybody by will. This suits most married and de facto couples.

Tenants in common

Tenants in common each hold a distinct share, equal or unequal, which can be sold, transferred or left by will. If one co-owner dies, their share goes to their estate rather than to the other co-owner. This is the right structure for siblings, friends, investors, and couples where one person has contributed substantially more.

⚠️  Get this wrong and it is difficult to undo. If two friends buy as joint tenants and one dies, the survivor takes the whole property and the deceased's family receives nothing from it, whatever the will says. Severing a joint tenancy later is possible, but it requires action that people rarely think to take.

Unequal Deposits Need to Be Recorded Now, Not Remembered Later

A common scenario: one person puts in $200,000 and the other puts in $50,000, and both go on the title. Unless you record it, the title will not show that difference. If you are joint tenants, the law treats you as equal owners. If you are tenants in common in equal shares, the same result follows.

There are two ways to reflect the difference, and they produce different outcomes:

• Adjust the shares. Hold as tenants in common in proportions that reflect the contributions, for example 80/20. Each person then owns that proportion of the property, and of any growth in its value.

• Record it as a loan or a fixed entitlement. Hold in equal shares but agree in writing that the larger contributor is repaid their extra contribution off the top on sale, before the balance is divided. This returns the dollars but not a share of the growth.

  
  

Neither is automatically better: if the property doubles in value, the first approach rewards the larger contributor considerably more. What matters is choosing deliberately and recording it, rather than discovering the difference at sale.

Contributions After Settlement Are Where Most Disputes Start

The deposit is the part everyone remembers. The years afterwards are the part that generates the argument. Before you sign, agree in writing on who pays what, and what happens when someone cannot:

• Mortgage repayments, and what happens if one co-owner's circumstances change.

• Rates, insurance, owners corporation fees and land tax.

• Repairs and maintenance, and the threshold above which both must agree before money is spent.

• Capital improvements, such as a renovation, and whether the person paying gets a larger share, a repayment on sale, or nothing.

• Rent, if the property is an investment or one co-owner lives there and the other does not.

  
  

⚠️  One point that surprises almost everyone: if you borrow together, each of you is liable to the lender for the whole debt, not for your share of it. If one co-owner stops paying, the bank will look to the other for the full repayment, and a default affects both credit files. Your agreement with each other does not bind the lender.

The Exit: What Happens When One of You Wants Out

This is the question co-owners least like to discuss and most need to answer. Lives change: a job interstate, a new relationship, a business that needs capital. Without an agreed exit, the person who wants out has limited options, and the person who wants to stay may be forced to sell.

A well-drafted co-ownership agreement usually deals with the exit in this order:

• A right of first refusal. The departing co-owner must first offer their share to the others before it can be sold to anyone else.

• An agreed valuation method. For example, a valuer agreed between you, or one appointed by the relevant institute of valuers if you cannot agree. This prevents the price itself becoming the dispute.

• A time frame. How long the remaining co-owner has to arrange finance and complete the buy-out.

• A default position. What happens if nobody can or will buy: usually sale on the open market, with an agreed process for choosing the agent and setting the reserve.

• A minimum holding period, where appropriate, so one co-owner cannot force a sale within the first year or two.

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What happens if you have no agreement

In Victoria, a co-owner can apply to VCAT under Part IV of the Property Law Act 1958. The starting position matters: under section 229, VCAT must order sale and division of the proceeds unless physical division would be more just and fair. The underlying view is that co-owners should not be locked in together against their will, so a sale can be ordered even where it is harsh on the other co-owner and nobody has done anything wrong. VCAT can also order compensation between co-owners for what each has put in.

In New South Wales, the equivalent is an application to the Supreme Court under section 66G of the Conveyancing Act 1919, for the appointment of trustees for sale. The practical effect is similar, and orders are made as a matter of course in most cases.

Both routes work, and both are slower, costlier and more stressful than a clause you could have written before settlement. Neither applies to married or de facto couples in dispute, whose property matters are dealt with under family law instead.

Death, Wills and the Part People Forget

If you hold as tenants in common, your share passes under your will. That makes two things essential. First, you need a current will that actually deals with the share. Second, you need to think about who inherits it, because your co-owner will be in business with that person. A sibling who inherits a half share of a house they have never lived in, alongside your friend who lives there, is a dispute waiting to happen.

Well-drafted agreements address this directly, usually by giving surviving co-owners an option to buy the deceased's share at valuation within a set period. Some co-owners take out life insurance to fund that buy-out.

A Co-ownership Agreement Is the Cheapest Part of the Purchase

A co-ownership agreement is a written contract between the people buying together, recording the shares, the contributions, the ongoing costs, the decision-making, the exit mechanism and what happens on death or default. It can be prepared before settlement and, relative to the price of the property, costs very little.

People resist it for an understandable reason: raising it feels like distrust, particularly between family or close friends. In practice the opposite is true. The agreement protects the relationship precisely because it removes the need to negotiate under pressure, when someone's circumstances have already changed.

If you are buying with someone, the questions worth answering before you sign are simple to state: how are we holding it, who is putting in what, who pays what from here, how does someone get out, and what happens if one of us dies. If you can answer all five in writing, you are in good shape. If you cannot answer any of them, that is the conversation to have before the contract, not after.

Crownmark Lawyers advises co-purchasers across Victoria and New South Wales on ownership structure, co-ownership agreements, contract and Section 32 review, and co-ownership disputes. Under Crownmark Assured Pricing, the fee is fixed and agreed before the work begins. If you are buying with someone else, we are happy to talk it through before you sign.

Harjit Mahindroo

Managing Partner

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This article is general information about co-ownership of property in Victoria and New South Wales and is current as at September 2026. It is not legal advice and does not take account of your particular circumstances, including any tax or duty consequences of the structure you choose. Property matters between married and de facto couples are dealt with under family law and different considerations apply. For advice on your situation, please contact us or another qualified practitioner.