Buying with Friends or Family? Here’s How to Protect Yourself Legally - May 2025

By Malisa Howard, Principal Solicitor, Jaide Law

Pooling your resources with a friend or family member to buy property might seem like a brilliant way to get into the market - especially as property prices stretch further out of reach. But while co-ownership can be financially savvy, it’s also a potential legal minefield if not structured properly.

Here’s what you need to know to protect your finances, your rights, and your relationships when buying property together.

1. Co-ownership Structures – Choose the Right One

When purchasing with another party, the first major legal decision is how to structure ownership. In Australia, you generally have two options:

a) Joint Tenancy

This means each party owns the whole property together. If one person dies, their share automatically passes to the other (known as the ‘right of survivorship’), regardless of what their will says. This setup is typically used by married or de facto couples.

b) Tenants in Common

Here, each owner holds a specific percentage of the property (e.g. 60/40 or 50/50). Shares can be sold or passed on via a will. This is the better option for friends, siblings, or investment partners, as it keeps your share more flexible and protected.

Tip: If one party is contributing more to the deposit or repayments, consider having unequal ownership shares documented on title and in a co-ownership deed.

2. The Co-Ownership Deed – Your Best Friend

The single best way to avoid disputes is by getting a co-ownership deed drawn up before settlement.

This legally binding document can cover:

• Ownership proportions
• Contributions to deposit, mortgage, rates, maintenance
• Living arrangements (if someone’s planning to live there)
• What happens if one party wants out or can’t pay their share
• A dispute resolution process

Without a clear and properly written deed, the law may assume equal contributions and ownership—leading to issues if one party contributed more.

3. Finance and the Mortgage – Joint and Severally Liable

When you take out a loan together, banks usually make you both jointly and severally liable. That means:

• You’re each responsible for the entire loan, not just your share.
• If your co-owner defaults, you must make up the shortfall.
• This can be risky, especially if your co-owner’s financial situation isn’t stable. You should:
• Sanity check each other’s financial capacity
• Agree on how repayments will be managed (direct debit from each account, joint offset account, etc.)
• Consider structuring with separate loans if using certain lender products or family trusts (ask your broker or lawyer for advice)

Pro tip: A well-structured co-ownership deed, written by an experienced property lawyer, can include clauses for managing defaults, including forced sale rights.

4. Exit Plans – The Safety Net

No one likes planning for a fallout—but if things go pear-shaped, it’s essential to have an agreed exit plan, which should be reflected in your co-ownership deed.

This can cover when and how the property can be sold, how it will be valued and what happens upon the sale.

Case Study: Three siblings co-own a property in NSW. One wants to buy the others out and to build a granny flat. The deed stipulates they must get two independent valuations and average the amounts to value the property for the buy out—saving weeks of arguing over price.

Wrap-Up: Put Legal Protection Before Property Emotion

Buying with a loved one can be exciting and rewarding—but it also brings risks if things aren’t done properly. The golden rule? Plan for the worst, hope for the best. A clear legal structure, documented deed, and ongoing transparency are your best defence against legal and emotional turmoil.

If you’re even thinking about co-buying, talk to a property lawyer early. Sorting out the right structure now can save you a world of pain (and cost) later.

If you’ve got questions about a property matter, we’d love to help. Feel free to reach out to us at contact@jaidelaw.com.au – we’d love to help you make your next transaction a smart and stress-free one.

Disclaimer – We know most of you get this, but just to be clear, the information above is general and doesn't consider your unique situation. Please don't rely on it as a substitute for professional advice. We strongly encourage you to seek appropriate guidance for your specific needs.

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