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Co-ownership Agreement for Property in NSW

When two or more people buy property together in NSW, a co-ownership agreement sets out how costs, decisions, and exits are managed. It is not legally required, but without one, a dispute over selling or maintaining the property can only be resolved by negotiation or court proceedings. This guide explains what a co-ownership agreement covers and when you should have one.

What is a co-ownership agreement?

A co-ownership agreement (also called a property sharing agreement or co-ownership deed) is a private written contract between two or more people who own property together. It sets out their rights and obligations while they own the property together, and what happens when the arrangement ends.

NSW law does not require co-owners to have a written agreement, but without one, each co-owner's position in a dispute is governed by the general law of co-ownership and, ultimately, section 66G of the Conveyancing Act 1919 (NSW), which allows either party to apply to the Supreme Court for an order to sell or partition the property. Court proceedings are expensive and slow. A well-drafted agreement provides a cheaper, faster resolution mechanism.

When is a co-ownership agreement most important?

A co-ownership agreement is most important when co-owners are:

• Friends or siblings buying together rather than a married or de facto couple (couples have additional protections under family law)
• Contributing unequal amounts to the deposit, mortgage, or renovations
• Holding as tenants in common with unequal shares (where each owner's share passes through their estate, not automatically to the survivor)
• In a business partnership buying investment property together
• One party is guaranteeing the other's mortgage rather than both being on the loan

For couples in a relationship, the Family Law Act 1975 (Cth) provides separate protections for property adjustment if the relationship breaks down. A co-ownership agreement can still be useful, but the need is less acute than for unrelated buyers.

What a co-ownership agreement should cover

Ownership shares

For tenants in common, the agreement should state each co-owner's percentage share. This is especially important where contributions are unequal. Note that the share proportions on the title register must also reflect this split: if you contribute 60% and your co-owner 40%, the title should be registered as tenants in common in those proportions, not as joint tenants (who hold in equal shares by operation of law).

Ongoing costs

The agreement should set out who pays:

• Mortgage repayments (and in what proportion)
• Council rates, water rates, and strata levies (if applicable)
• Building insurance and contents insurance
• Maintenance, repairs, and renovations
• Property management fees (if rented)

In practice, many co-owners contribute in proportion to their ownership share, but this is not automatic without an agreement.

Decision-making

Property decisions -- such as whether to renovate, rent out, or sell -- require agreement between all co-owners. The agreement can set out whether unanimous consent is required, or whether a majority can act in certain situations. It can also set out notice requirements before any co-owner can list the property for sale.

What happens if one co-owner wants to sell

This is the most common source of dispute. Options typically included in co-ownership agreements:

What happens if a co-owner dies

This depends on how you hold title:

• Joint tenants: The right of survivorship applies automatically. The surviving co-owner inherits the deceased's share, regardless of what the deceased's will says. The agreement should address what happens if both co-owners die simultaneously, and whether either co-owner can sever the joint tenancy unilaterally.
• Tenants in common: The deceased's share passes through their estate under their will (or intestacy rules if there is no will). The agreement should clarify whether the surviving co-owner has a right to buy out the estate's share, or whether the estate can sell to a third party.

What happens if a co-owner cannot meet their obligations

If one co-owner stops making mortgage repayments, both owners remain liable to the lender (if both are on the loan). The agreement should set out what happens in this scenario: can the other co-owner cover the repayments and reclaim the amount later? Is there a trigger point after which the non-defaulting party can require a sale?

Co-ownership agreements and joint tenants vs tenants in common

The form of co-ownership you choose affects what the agreement needs to cover. See our guide to joint tenants vs tenants in common in NSW for a full explanation of the differences. In summary:

• Joint tenants hold equal shares and have a right of survivorship. A co-ownership agreement cannot override the right of survivorship unless the joint tenancy is formally severed.
• Tenants in common can hold unequal shares. Inheritance follows each owner's will (or intestacy). A co-ownership agreement is particularly important for tenants in common because there is no survivorship mechanism.

If joint tenants want to change their arrangement, they can sever the joint tenancy by registering a Deed of Severance with NSW Land Registry Services. This converts the joint tenancy to a tenancy in common in equal shares. The co-ownership agreement can be updated at the same time to reflect the new arrangement.

How to get a co-ownership agreement in NSW

A co-ownership agreement should be prepared by a NSW solicitor. There is no prescribed form, and the content must reflect the specific circumstances of the co-owners. Key practical points:

• Ideally, the agreement should be signed before or at the time of exchange of contracts, not after the purchase is settled. Negotiating the terms becomes harder once the property is already owned jointly.
• Each co-owner should have the opportunity to receive independent legal advice before signing, particularly where the agreement restricts their rights or where contributions are unequal.
• The agreement should be reviewed if circumstances change significantly, such as a change in relationship between the co-owners, a major change in financial contribution, or a refinancing of the mortgage.
• If one co-owner is contributing more to the deposit and wants to protect that contribution, the title should reflect unequal shares as tenants in common, AND the co-ownership agreement should set out how any gain or loss is split on sale.

Common questions

Related guides

• Joint tenants vs tenants in common in NSW: the key differences
• Transfer of title in NSW: process, duty rates, and family exemptions
• Exchange of contracts in NSW: what happens at exchange
• Buying a house in NSW: the complete step-by-step guide
• How much does conveyancing cost in NSW?