Co-ownership Agreements for Property — Protecting Yourself in Australia (2026)

Updated

Co-ownership Agreements for Property — Protecting Yourself in Australia (2026)

Buying property with someone else — whether a friend, sibling, business partner, or colleague — is increasingly common in Australia’s high-price markets. A co-ownership agreement (also called a co-ownership deed or property sharing agreement) is the document that governs what happens when circumstances change.

Why You Need a Co-ownership Agreement

When co-buyers purchase together, they typically have:

  • Clear intentions at the time of purchase
  • A verbal understanding of who pays what and what happens if someone wants out
  • No documentation of any of it

The problems arise later — when one person wants to sell, when someone can’t meet their share of repayments, when a relationship breaks down, or when one co-owner dies. Without a written agreement, resolution can involve lengthy and costly legal disputes.

A co-ownership agreement does not eliminate all disputes — but it provides a framework and reduces the likelihood of costly litigation.

Who Should Have a Co-ownership Agreement?

A co-ownership agreement is strongly advisable for:

  • Friends buying together (most important — no family law protections)
  • Siblings buying together
  • Colleagues or business partners
  • Non-cohabiting co-investors
  • Any situation where the parties are not in a married or de facto relationship

Couples in a marriage or de facto relationship have family law protections that cover property division on separation — though even couples may benefit from documenting specific financial arrangements.

What a Co-ownership Agreement Should Cover

A well-drafted agreement typically addresses:

1. Ownership shares

  • Each party’s percentage of ownership (consistent with the tenants in common title)
  • How contributions are documented (deposit, stamp duty, renovation costs)

2. Financial obligations

  • Who pays what portion of mortgage repayments, rates, insurance, body corporate fees
  • What happens if one party cannot meet their share
  • How an offset account or extra repayments are handled

3. Decision-making

  • How decisions about the property are made (unanimous, majority, specific allocation)
  • Who manages the property if it is rented
  • Renovation decisions — who approves, how costs are shared

4. Exit provisions (the most important section)

  • What happens if one co-owner wants to sell and the other doesn’t
  • Right of first refusal (the departing owner must offer their share to the remaining owner first)
  • Valuation process (independent valuer, agreed methodology)
  • Buyout timeframe (how long does the remaining owner have to decide/finance?)
  • Forced sale provisions (if buyout not agreed within a timeframe)

5. Default provisions

  • What happens if one owner stops paying their share of the mortgage
  • Can the paying owner seek recovery of the other’s share from the property?
  • Notice requirements before escalating

6. Death provisions

  • Does the deceased’s share pass to the estate or to the surviving co-owner?
  • (Note: this is determined by the tenants in common structure — the agreement should be consistent with and reference the will)

7. Refinancing and further encumbrance

  • Can one co-owner refinance or mortgage their share independently?
  • (This may not be possible in practice — lenders typically require all owners’ consent)

Tenants in Common vs Joint Tenants — Connection to Co-ownership Agreements

Co-ownership agreements are most relevant where co-buyers hold as tenants in common — each with a separately defined share. Joint tenants (where ownership automatically passes to the survivor on death) may not need the same level of documentation, as the legal structure resolves many scenarios automatically.

If buying with a non-partner (friend, sibling), hold as tenants in common with a co-ownership deed.

Cost and How to Get One

A co-ownership agreement should be drafted by a solicitor — not downloaded from the internet and self-completed. The risk of getting it wrong is significant.

Typical cost: $500–$2,000 depending on complexity and the solicitor. This is modest relative to the value of the property being purchased.

Consider the agreement as part of the purchase costs — not an optional extra.

Frequently Asked Questions

What if we don’t have a co-ownership agreement and something goes wrong?

Without an agreement, you fall back on general property law, which may require a court application for partition (forced sale) to resolve a dispute. This is expensive, slow, and stressful.

Does a co-ownership agreement override the mortgage?

No — the lender’s rights are not affected by a co-ownership agreement. If one co-owner stops paying their share, the lender can still pursue all borrowers for the full debt. A co-ownership agreement creates rights between the co-owners to recover costs — it does not affect the lender.

Should we update the agreement if circumstances change?

Yes — if ownership shares change, if one party’s financial contribution changes significantly, or if the property is refinanced, review and update the agreement.

This article provides general information about co-ownership agreements for property in Australia. Every co-ownership situation is different — have a solicitor draft an agreement tailored to your specific circumstances. For mortgage advice, find a licensed broker through MoneySmart.