Co-Ownership Property Disputes

A co-owner is a person who owns land with one or more other owners. Co-owners may hold land as joint tenants or tenants in common. The way land is held is important in property law as it impacts on the way it can be dealt with generally, and what happens after the death of a co-owner.

Joint tenants hold property together as a whole – in other words it cannot be divided into shares. Spouses and de facto partners usually hold property as joint tenants. Joint tenancy is subject to survivorship provisions – when a co-owner dies his or her interest in the property is extinguished and automatically passes to the remaining owner/s.

A tenancy in common can specify the individual shares of the property held by each owner. The shares need not be equal and co-owners are presumably free to transfer, sell or leave their share in the property by Will. Tenants in common is a popular arrangement between other family members, friends or business entities. Co-owners who are tenants in common each acquire a share proportionate to the contributions made. Any loan for the property is taken in all names and the parties are usually jointly and severally responsible for repayments and performance of all obligations.

What can go wrong?

Whilst there are benefits in co-owning property, disputes do arise causing financial and emotional anguish. Property disputes between co-owners are often triggered by changing circumstances – a relationship or business breakdown, financial stress or the death of a co-owner. Some disputes arise simply because the owners do not understand the implications arising from how the interests in the property are held.

Co-owners may claim that interests held are disproportionate to contributions made, or argue over loan repayments, maintenance and other expenses, the use and development of the property and the entitlement to profits. Significantly, the dispute will be over when or whether to sell the property.

You should always obtain legal advice prior to buying property. If buying with another person your Lawyer will assist you in deciding whether to hold the property as joint tenants or tenants in common.

If other purchasers (besides a spouse or de facto partner) are buying, you should consider having a property ownership agreement prepared. Ideally, this will set out the agreed interests held, options to purchase a co-owner’s share, distribution of proceeds on sale of the property, the agreed use, distribution of profits and responsibility for management.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances.