Pooling Resources, Protecting Your Future: The Essential Legal Steps for Buying a Home with Siblings or Friends

The Modern Approach to Home Ownership

Saving a deposit for your first home has become one of the greatest financial hurdles for Australians. It's a challenge that has made co-buying—teaming up with a sibling, family member, or friend—an increasingly popular and effective solution.

By pooling resources, co-buyers can enter the market sooner, access properties in better locations, and share the financial burdens of ongoing maintenance and rates. Government initiatives, such as the First Home Guarantee, further sweeten the deal by allowing eligible pairs to purchase with a smaller deposit and without paying Lenders Mortgage Insurance (LMI).

However, while schemes like the FHG may be the catalyst for the purchase, the true foundation of a successful co-buying journey is the legal structure you choose. A good relationship is not a legal contract; therefore, establishing clear ownership rules and an exit strategy before you sign the contract is the single most important step you will take.

The Two Key Ownership Structures (and Why They Matter)

When you purchase property with someone who is not your spouse or de facto partner, you must decide how your names will appear on the title. Your choice of ownership determines everything from your share of the property to what happens to that share if one of you passes away.

The two main structures in Australia are Joint Tenants and Tenants in Common.

Joint Tenants (The "Equal Share and Shared Fate" Option)

This structure is typically used by married couples, but co-buyers can choose it.

Share of Property

Owners hold a joint and equal interest (e.g., 50/50). No one party can hold a greater proportion than the other.

The Crucial Rule

Right of Survivorship applies. If one owner dies, their share automatically passes to the surviving owner(s), regardless of what their Will says. The share does not form part of the deceased owner’s estate.

Selling a Share

An owner cannot sell or transfer their share without the consent of the other owner(s).

Best Suited For

Co-buyers (often siblings) who intend to treat the property as a single, shared asset and want the other co-owner to automatically inherit their share upon death. (Generally, not recommended for friends).

Tenants in Common (The "Defined Share and Independent Control" Option)

This structure provides the most flexibility and is often the recommended choice for friends, siblings, or partners who contribute unequal amounts.

Share of Property

Owners hold defined, separate shares, which can be equal or unequal (e.g., 60/40, 70/30). This is ideal for reflecting unequal deposit contributions.

The Crucial Rule

No right of Survivorship applies. If one owner dies, their share is distributed according to their Will and forms part of their estate. It does not automatically pass to the co-owner.

Selling a Share

An owner can sell or transfer their share independently (though a co-ownership agreement often includes a right of first refusal for the other owner).

Best Suited For

Friends, investors, or co-buyers with different financial contributions who want the ability to bequeath their share to their own family/estate, not automatically to the co-owner.

Important Disclaimer: Seek Professional Advice

The information provided in this article, including details regarding ownership structures (Joint Tenants and Tenants in Common) and co-buying strategies, is general in nature only. It is intended for informational and educational purposes and does not constitute legal, financial, or specific professional advice.

Property purchases and co-ownership arrangements are complex legal transactions with significant financial implications. Before proceeding with any purchase or making decisions about your ownership structure:

• You must seek independent legal advice from a qualified solicitor or conveyancer specializing in property law. It is highly recommended that each co-buyer obtains separate legal advice to protect individual interests.

• Consult with your financial advisor or mortgage broker to understand the full financial impact, including borrowing capacity, tax implications, and shared liability.

Never rely solely on general information. Your specific circumstances, financial contributions, and long-term intentions require personalized professional assessment to ensure your agreement is structured correctly and your interests are fully protected.