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Property Co-Ownership and Divorce


Divorce is never an easy experience for anyone, particularly when unexpected realities come to light. In an ideal world, we would cover all of the basics and make good choices, before we make any big decisions like those with property. However, in the rush of love, as our heart battles it out with our head for supremacy, sometimes we slip up.

It’s virtually impossible to think about divorce when you’re engaging in an exciting and uniting activity like getting married, or buying a house together. But whatever stage of life you are in, you should definitely think about how you would go about dividing assets, should that unhappy reality arrive.

The most important time to think about this is at the start – when you’re buying the property and signing up for the mortgage together, particularly if you’re not getting married or that’s just not an option yet under Australian law. It is important to make good choices about property co-ownership, for financial and tax purposes, but also as consideration for family members in the event of either, or both of your deaths.  

Divorce is another matter, however, and pre-nuptial agreements are not just for celebrities. When it comes to getting a divorce, the Family Law Act may override co-ownership agreements. If both parties have a binding agreement under the Family Law Act, then the outcome during the divorce will be based on that. Whatever was detailed in that agreement will be enforced. Specifically, how both parties intend to deal with the property belonging to either one of them, or both in common, in the event of the marriage breaking down.    

Understanding the current status, your options, and the implications for both of you with the next steps is crucial to ensure a harmonious transition through the property settlement process (if at all possible).


Co-ownership Structure

When you buy a property with another person, you are choosing to co-own, however this term can be interpreted in a couple of different ways, depending on the co-ownership structure you choose. Each has their own risks and benefits and it’s really up to each individual to make the best decision for themselves – hopefully with independent legal advice.


Tenancy in Common  

This is just as the name implies – you have the property in common but as separate individuals. Tenancy in common means that each co-owner has a specific share of the property and in the event of their death can bequeath the property to a beneficiary of their choice. It may be the other co-owner, if they choose, or family members such as children or grandchildren or even friends. The point is that it offers a much more flexible arrangement for both co-owners, giving them pre-established shares in the property. One of the unfortunate implications of this arrangement is that the property may need to be sold in the event of the death of one co-owner.


Joint Tenancy

This means that neither of you have a proportion of the property, but that the two of you as owners exist as one entity (where the property is concerned) and own the property as such – as one entity. If one of the joint tenants dies, ownership of the property is automatically transitioned to the surviving owner. 


Co-ownership Agreement

Once you have chosen the most suitable co-ownership structure for you both, you should get a co-ownership agreement drawn up by a professional. This will cost a few hundred dollars but is well worth it for the clarity and reassurance it will provide in the future. The agreement should clearly state the ownership structure and in many cases can also outline all the other points agreed upon, such as division of expenses (like cleaning and maintenance of the property, rates, utilities etc.), agreement on direct debits for regular payments such as the mortgage, and division of management tasks like who co-ordinates tradesmen for example.


Remember there are professionals out there with expertise to advise you on things such as this. Getting advice from a financial advisor and a family lawyer when you are putting things in place, can make everything so much easier to undo, in the unhappy event of a divorce or untimely death.

For more on how to make good decisions around some of life’s challenges, or to find more answers to questions you might have about divorce, see our ‘Life’s Challenges Q&A’. 


Still got questions? Check out more Q & A’s

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The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.

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