Co-Ownership of Land In Victoria
Over the last decade as land and house prices have increased, and more recently interest rate rises and affordability issues have jumped significantly, people looking to enter the residential property market have considered many and varied ways to get their first home.
One of these has been for individuals to join with a third party, usually a family member or close friend, to combine their purchasing power. Any parcel of land in Victoria can be owned by more than one person as joint tenants or tenants in common. The distinction is very important. Whilst the immediate goal of property ownership may become achievable, great care is needed and a full consideration of all associated day to day issues and potential future issues needs to occur before any contract is signed for the purchase of property.
The issues involved include some or all of the following of what is not an exhaustive list:
- How much is each party contributing up front and will contribute during the period of ownership;
- How much each is borrowing;
- How will the parties be recorded on the title, what if one party has financial hardship and cannot contribute as intended, or default on their loan obligations.
- What if one or all parties want to sell;
- How are the proceeds to be divided and will the acquisition impact on the parties' entitlement to government supports e.g. first home buyer grants and stamp duty benefits.
All of these are complex and need to be considered on the individual circumstances in each case and then carefully documented in a Co-Owners Agreement to ensure clarity for all parties for their agreement on how to address the various issues involved. Disputes are otherwise likely to end up in VCAT or the Courts and be protracted and expensive to resolve for all parties.
RNG Lawyers can assist you in advising regarding the relevant issues and prepare an Agreement for all parties to agree to before purchase, or with all parties' consent after purchase if required.
If you have any questions please contact Deborah McCloskey in our Property Team on (03) 9739 7377
Written by RNG Lawyers Property team, Barry Northfield