Why a handshake isn't enough
Property co-ownership between family members fails most often not because of bad intentions but because of unspoken assumptions. One party assumes contributions will be treated as equity-building; the other treats them as rent. One party assumes they can sell their share when they want; the other assumes the family will stay together indefinitely.
A co-ownership agreement makes the assumptions explicit. If you can't agree on what goes in the document, you can't agree on the arrangement. Finding that out before you've spent $80,000 on a conversion is vastly preferable to finding it out afterward.
The eight things it must cover
1. Ownership percentages
Who owns what percentage at the start, and how do those percentages change over time? If one party is building equity through monthly contributions, the formula for calculating that change needs to be here — not left as an understanding.
2. Monthly contributions and what they cover
How much does Party B pay each month, and what does it buy? Is it rent (builds no equity), a contribution toward the mortgage (equity-building), a loan repayment, or some split? Every dollar should be accounted for.
3. Running costs
How are utilities, insurance, maintenance, and repairs split? Equal split, proportional to space occupied, proportional to income? And who has authority to approve unplanned expenditures, and at what threshold does something require joint approval?
4. Decision-making
Who decides what about the property? Routine maintenance: either party can authorise up to $X. Significant repairs: joint approval required. Structural changes or renovations: unanimous agreement. This section prevents a significant source of family conflict.
5. Exit provisions
What happens when someone wants out? This is the section most families most want to skip, and the one that matters most. It should cover: the notice period required, how the property is valued, whether the remaining party has a right of first refusal, how a buyout is funded, and what happens if neither party can buy the other out.
6. Death and inheritance
If Party A dies, what happens to their share? Does it pass to Party B, or to their estate? This section needs to align with each party's will. A Declaration of Trust can override what a will says in some jurisdictions — get legal advice on this specifically.
7. Relationship breakdown
A parent-child relationship can deteriorate. And a parent may remarry, bringing a new partner whose interests are different from the child's. Specify what happens to the arrangement in the event of significant relationship breakdown, and whether either party's new partner acquires any rights in the property.
8. Dispute resolution
Before going to court, disputes should go through mediation. Specify that mediation is the first step and name a process for selecting a mediator. Court proceedings over property between family members are slow, expensive, and usually destructive.
Getting it drafted
A conveyancing solicitor or property lawyer can draft or review a co-ownership agreement. Expect to pay $500–$1,500 for a document prepared specifically for your situation.
There are template agreements available online, but they carry real risks: they're generic, they may not reflect your jurisdiction's laws, and they often miss the specific terms that matter for family arrangements.
If cost is a concern, come to the solicitor with a written summary of everything you've already agreed — the percentages, the monthly amounts, the exit terms. The more work you've done in advance, the lower the bill.
This article provides general information only and does not constitute legal advice. Property law varies significantly by jurisdiction. Always consult a qualified solicitor or attorney before entering into any co-ownership arrangement.