Frequently Asked Questions
Please note: below questions and answers relate to Australia.
General Questions
- Do I have to share my mortgage?
- Yes. Banks provide specialist mortgages called a 'split' or 'shared' mortgage.
- How many partners can be involved?
- As many as you like. Obviously, the fewer partners, the less complicated it is to maintain the arrangement.
Legal Matters
- How much does a Co-ownership Agreement cost?
- PodProperty.com.au, co-ownership legal experts, charge $350 per person (incl. GST). See their full price list here.
- How safe is Co-ownership?
- The single most important consideration is to ensure that you have a water-tight Co-ownership Agreement in place. Contact a property lawyer to draw up an agreement. Ideally, consider engaging the services of a law firm specialising in co-ownership deals such as PodProperty.com.au.
- What happens if a co-borrower defaults on their share of the mortgage?
It is critical that you engage a property lawyer to draw up a Co-ownership Agreement which protects your rights should a co-borrower stop meeting their share of the mortgage repayments. PodProperty.com.au, legal experts in co-ownership of properties in Australia, advise as follows:
© PodProperty.com.au:
Under the PodProperty Co-Ownership Agreement, each co-owner has a power of attorney in their favour so that a co-owner can take over a defaulting party’s share in order to either refinance or sell out. All costs associated with such default come out of the defaulting party’s share.
Remember that if you are co-borrowers, you are jointly and severally liable for each other’s debts.
Under standard mortgage documents, borrowers are typically in default 14 days after missing a single payment, even if only one co-borrower is in default. In addition, a bank may impose a penalty interest of at least 5% on top of the existing rate from that point. If it doesn’t look like you are in a position to pay then the bank may serve an order for possession and sale of your property.
- What if I want to sell my share of the property?
Below is an example of how a Co-ownership Agreement falls into place if you decide you want to sell your share of the property. This information is provided by PodProperty.com.au, legal experts in co-ownership of properties in Australia.
© PodProperty.com.au:
PodProperty’s co-ownership agreement deals with what happens if one of you wants to sell their share in the property. The following options are available to you:
- an indemnity in respect of each co-owner against liability caused by any failure of a co-owner to fulfil his or her obligations under their mortgage;
- a way of dividing up any profits or losses realised in respect of the property;
- an approval mechanism for allowing people other than the owners to live at the property;
- obligations on each co-owner to pay their proportion of the mortgage repayments on time;
- rules on splitting the operating expenses of the property;
- the establishment of a committee for making decisions in connection with the property;
- a regime to protect a co-owner against the default of another co-owner;
- ways of selling out, either collectively or individually;
- a provision relating to determining fair market value in the event that a co-owner is looking to sell out; and
- a dispute resolution clause to quickly resolve disagreements between the parties.
- What is a Co-ownership Agreement?
- A co-ownership agreement is the legal contract drawn up to protect the legal position of each party involved in buying property together. A property lawyer specialising in co-ownership prepares the agreement including terms and conditions covering the rights and responsibilities of each co-owner.
- What is in the Co-ownership Agreement?
Below outlines an example of a Co-ownership Agreement drawn up by PodProperty.com.au, legal experts in co-ownership of properties in Australia.
© PodProperty.com.au:
The PodProperty Co-ownership Agreement regulates the relationship between the co-owners by including the following provisions:
- an indemnity in respect of each co-owner against liability caused by any failure of a co-owner to fulfil his or her obligations under their mortgage;
- a way of dividing up any profits or losses realised in respect of the property;
- an approval mechanism for allowing people other than the owners to live at the property;
- obligations on each co-owner to pay their proportion of the mortgage repayments on time;
- rules on splitting the operating expenses of the property;
- the establishment of a committee for making decisions in connection with the property;
- a regime to protect a co-owner against the default of another co-owner;
- ways of selling out, either collectively or individually;
- a provision relating to determining fair market value in the event that a co-owner is looking to sell out; and
- a dispute resolution clause to quickly resolve disagreements between the parties.
- Where can I get a Co-ownership Agreement?
- PodProperty.com.au in Sydney specialise in Co-ownership Agreements and conveying all over Australia.
Living in the Property
- Can I live in the property?
- Yes, if you and your co-ownership partner(s) can agree to the rent. Be aware that each co-owner has a legal right to access the property.
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