Buying With a Partner Family Member or Friend. Co-Ownership in Australia

Co-ownership is common in Australian property. Spouses and partners buy together as a matter of course. Siblings pool savings to enter the market. Friends combine borrowing capacity to afford a first property. Parents buy alongside adult children. Investors team up to acquire a property neither could fund alone.

The legal mechanics of co-ownership are straightforward. The decisions that need to be made early are less obvious and more consequential. This guide describes the structures available and the practical decisions co-owners should resolve before contract.

It is a process guide. Choices about which structure is right for a particular situation are legal and tax decisions that should be made with a solicitor and an accountant. Where this guide flags a decision point, that is a signal to take professional advice, not a recommendation.

Two Forms of Co-Ownership

Australian property law recognises two principal forms of co-ownership: joint tenants and tenants in common. Both names appear on the certificate of title. The legal differences between them are material.

Joint Tenants

Joint tenants hold an undivided interest in the whole property. Each joint tenant owns 100% of the property in a legal sense, with the right of survivorship. When one joint tenant dies, their interest passes automatically to the surviving joint tenants. This passing happens outside the deceased's will. It is not part of their estate.

Joint tenancy is the default structure for spouses and long-term partners buying a principal place of residence together. The survivorship feature means that when one spouse dies, the other becomes the sole owner without needing to deal with the estate.

Joint tenants must hold equal shares. Two joint tenants each hold 50%. Three joint tenants each hold one-third.

Tenants in Common

Tenants in common each hold a distinct, divisible share in the property. Shares can be equal (50/50, 33/33/33) or unequal (70/30, 60/25/15). Each tenant in common's share is their own property and can be sold, mortgaged or bequeathed independently of the others.

When a tenant in common dies, their share passes under their will (or under the intestacy rules if there is no will). It does not automatically pass to the surviving co-owners.

Tenants in common is the standard structure for non-spousal co-ownership. Friends, siblings, business partners and parent-child arrangements typically use tenants in common with shares that reflect each party's contribution.

The Practical Difference

Three scenarios illustrate why the choice matters.

A married couple buys a home as joint tenants. One spouse dies. The other becomes sole owner automatically. Probate is not needed for the property.

Two friends buy an investment property as tenants in common, 50/50. One dies. Their share passes under their will (potentially to a child, sibling or partner not on the title). The surviving friend now co-owns the property with whoever inherits the share.

A parent contributes 80% of the purchase price for a property bought with an adult child. They register as tenants in common 80/20. The contribution structure is recorded on the title. If the property is later sold, the proceeds split 80/20.

The right structure depends on the parties, the contribution, the intent and the estate planning context. These are legal and tax questions that should be put to a solicitor.

Co-Ownership Agreements

A co-ownership agreement (sometimes called a property co-ownership deed) is a written contract between the co-owners setting out how the relationship will work. It is a separate document from the title and is private to the co-owners.

A co-ownership agreement is not legally required. In practice it is strongly recommended for any non-spousal co-ownership. The cost of preparing one (typically $1,500 to $4,000 from a solicitor) is a small fraction of the cost of resolving a dispute without one.

A typical co-ownership agreement addresses:

• Each party's contribution (deposit, stamp duty, settlement costs)
• Ownership shares (whether joint tenants or tenants in common, and if tenants in common, the percentages)
• How the mortgage is serviced (who pays what, in what proportions)
• How operating costs are shared (rates, water, insurance, body corporate, maintenance)
• How major capital expenditure is decided
• Whether the property will be occupied, rented or used as a holiday property
• Pre-emption rights if one party wants to sell their share (does the other party have first right to buy)
• Valuation methodology if a party exits
• Exit triggers (death, separation, mortgage default, dispute, voluntary sale)
• Dispute resolution before litigation (mediation, expert determination)
• Tax treatment of expenses and income (recorded for the accountants, not decided by the agreement)

A solicitor familiar with co-ownership agreements can produce a draft tailored to the parties' circumstances. Off-the-shelf templates are available but are rarely suitable for non-standard arrangements.

Lending in a Co-Ownership Arrangement

Most co-ownership arrangements involve a mortgage. Lenders treat all co-owners as jointly and severally liable for the loan. This is critical to understand.

Joint and several liability means each co-owner is liable for the entire loan, not just their share of it. If one party defaults, the lender can recover the full debt from any one of the other parties. A 25% co-owner is on the hook for 100% of the mortgage if the other co-owners stop paying.

The implications:

• Each co-owner's credit file is affected by the loan and by any defaults.
• Each co-owner's borrowing capacity for future loans is reduced by the full amount of the joint loan, not their share.
• Default by one co-owner exposes all others to recovery action by the lender.

Some lenders offer "tenants in common" loans where each party borrows a separate amount secured against the same property. These are uncommon and more complex but limit each party's liability to their own loan. Discuss the options with a finance broker before contract.

Tax Treatment

Tax treatment depends on the property's use and is property-specific. This article does not give tax advice. Co-owners should engage an accountant before contract and on each major change.

Topics that need accounting input include:

• Capital gains tax on disposal (main residence exemption, six-year rule, partial exemptions)
• Income tax on rental income and deductions
• Land tax thresholds (in some states the threshold applies per owner, in others per ownership)
• GST in development scenarios
• Stamp duty on transfers between co-owners (transfers of shares can trigger duty)

The structure that minimises one tax may increase another. An accountant familiar with property and the parties' broader tax position is essential.

What Happens When One Party Wants Out

The exit scenarios are the most common source of dispute in co-ownership arrangements.

The clean exit is a voluntary sale to the other co-owner or to an outside buyer. If the co-ownership agreement includes pre-emption rights, the exiting party offers their share to the remaining co-owners first at an agreed valuation. If declined, the share can be sold to a third party (which may be impractical for partial shares, in which case the whole property goes to market).

The contested exit is when the parties cannot agree. An exiting party who cannot find a buyer for their share can apply to the relevant state Supreme Court for an order under the Property Law Act (or state equivalent) for sale of the property and division of proceeds. This is a litigation outcome and is expensive and slow.

Death of a co-owner. For joint tenants, the share passes to the surviving joint tenants. For tenants in common, the share passes under the will (or by intestacy).

Separation of co-owning partners. Family law applies to spouses and de facto partners. The Family Court has broad powers to order division of property regardless of how title is held. This is an area where early family law advice is essential.

Bankruptcy or insolvency. A bankrupt co-owner's share vests in the trustee in bankruptcy. The trustee can compel sale of the property to realise the share.

Each scenario is more manageable when the co-ownership agreement was drafted with that scenario in mind. Retrofitting an agreement during a dispute is far more expensive than commissioning one at the start.

Practical Checklist Before Signing

Before signing a property contract as co-owners, the parties should have answered:

• What structure are we using. Joint tenants or tenants in common.
• If tenants in common, what are the percentages. Do they reflect contributions.
• Do we have a co-ownership agreement drafted.
• Who is on the loan and what is each party's borrowing exposure.
• How are operating costs split. What is the mechanism for paying them (joint account, monthly transfer, accountant management).
• What happens if one party wants to sell. Does the other have a pre-emption right.
• What happens if one party dies.
• What happens if the parties (in a non-spousal arrangement) fall out.
• Have we taken independent legal advice. Have we used the same solicitor or separate solicitors for the structure question.

Independent legal advice is particularly important for parent-child and inter-family arrangements where the imbalance of contribution is significant. A solicitor representing all parties cannot give each party fully independent advice.

Frequently Asked Questions

Should I buy as joint tenants or tenants in common

Joint tenants is the standard structure for spouses and long-term partners buying a principal place of residence together. Tenants in common is the standard structure for non-spousal co-ownership where contributions are unequal or where each party wants their share to pass under their own will. The right choice for a specific situation is a legal decision and should be made with a solicitor.

Can I change from joint tenants to tenants in common later

Yes, by "severing" the joint tenancy. The process is a unilateral application to the relevant titles office. Severance changes the title to tenants in common (typically in equal shares unless documented otherwise). Severance does not require the other co-owner's consent in most jurisdictions but they should be notified.

What is the stamp duty position if one co-owner buys out the other

Stamp duty (transfer duty) usually applies to the share being transferred at the date of transfer, calculated on the share's value. Some concessions exist for spousal transfers as part of family law settlements. Confirm the position with a conveyancer or solicitor before contract.

Can I co-own with my self-managed superannuation fund

This is a specialist area covered by SMSF rules and is outside this article's scope. SMSF property acquisition has specific structural and borrowing requirements. Engage a specialist SMSF adviser and accountant before any co-ownership involving an SMSF.

Does the bank require a co-ownership agreement

Banks typically do not require a co-ownership agreement and most will not see or review one. The agreement is a private arrangement between the co-owners. The bank's interest is limited to the mortgage security.

Related Resources

• A Step-by-Step Guide to Buying Your First Home in Australia
• Conveyancing in Australia. What Happens Between Contract and Settlement

About AgentBridge

AgentBridge is a property distribution business that connects sellers and developers with a national network of more than 80 buyers agents across every Australian state and territory. Buyers agents on the panel work with co-owners frequently and can suggest solicitors and accountants experienced in co-ownership structuring.

This article is a process guide. It does not give legal, tax or financial advice. Co-ownership decisions should be made with the assistance of a qualified solicitor and accountant familiar with the parties' specific circumstances.

Last reviewed: 22 May 2026.