How to Protect Yourself When Buying Property With Someone Else: 7 Lessons I Learned the Hard Way
Buying property with a family member, friend, or partner can seem like a smart way to get on the property ladder—splitting the deposit, mortgage, and responsibilities makes homeownership feel more achievable. But what happens if the relationship breaks down?
I learned this the hard way. At 24 years old, I bought a property with a family member. At first, things were fine, but by the time I was 30, we had fallen out. I ended up walking away with almost nothing and had to start over from scratch. Thankfully, I had a solid financial safety net, which allowed me to rebuild my life. But I also learned that financial security alone isn’t enough —without proper legal protections, even well-planned co-ownership agreements can go wrong.
Before buying, we sought legal advice and followed the standard legal process for purchasing property together. However, we did not have a separate co-ownership agreement beyond the property deeds. This was a crucial mistake. A co-ownership agreement is an extra step beyond the standard legal documents, providing clear guidance on what happens if things don’t go as planned.
Like many people, we didn’t discuss what would happen if things went wrong in any great detail. I recall a very short conversation with our lawyer about it and at the time I remember thinking we should talk about this more but we never. Everyone wants to be optimistic when buying property together—similar to how couples avoid talking about prenuptial agreements before marriage. But just like a prenup, a co-ownership agreement is about protection, not expecting failure.
If you’re thinking about buying property with someone else, here are 7 lessons I learned from my own experience —and what you need to know to protect yourself.
1. Have a Legal Agreement in Place From Day One
A co-ownership agreement is essential, even if you trust the other person completely. This document should cover:
✅ How ownership is structured (50/50, 60/40, etc.).
✅ What happens if one person wants to sell or move out.
✅ Who covers which costs (mortgage, repairs, strata fees, council rates).
✅ How decisions are made (e.g., renting out a room, renovations, refinancing).
💡 Lesson: This agreement, although difficult to discuss and may seem like an over kill or downer, can help clarify and make what can be a complex and emotional situation a little easier to navigate, if things don’t go to plan.
2. Use the Right Ownership Structure: Joint Tenants vs. Tenants in Common
When you buy property with someone else, you can structure ownership in two ways:
✔ Joint Tenants
- Both owners own 100% of the property together (rather than separate shares).
- If one person dies, their share automatically transfers to the other owner.
- Not ideal if you’re buying with a friend or non-spouse family member.
✔ Tenants in Common
- Each person owns a specific percentage (e.g., 60/40, 50/50).
- If one person dies, their share goes to their estate (not the other owner).
- This structure is best for co-ownership with non-partners as it allows for more flexibility.
💡 Lesson: Always choose tenants in common unless you're buying with a spouse and/ or want automatic inheritance rights.
3. Have an Exit Strategy Before You Buy
Most people don’t think about what happens if one person wants to sell or move out. But life changes—people get married, relocate for jobs, or have personal disputes.
Your agreement should clearly state:
✅ How a buyout works (can one person buy the other out? How is the price calculated?).
✅ What happens if neither person can afford a buyout (sell the property? Rent it out?).
✅ A dispute resolution process (mediation, legal steps).
💡 Lesson: Assume at some point, one of you will want out—plan for it upfront.
4. Know What You’re Liable For (Mortgage, Debts, and Defaults)
If your co-owner stops paying their share of the mortgage, the bank doesn’t care who was responsible for what—you’re both legally responsible for the full loan.
Protect yourself by:
✅ Having separate bank accounts and a clear payment system to track who pays what.
✅ Making sure both names are on the mortgage statements (so you can both see if payments are missed).
✅ Checking credit scores and financial stability before buying together.
💡 Lesson: If your co-owner struggles financially, you could be left carrying their debt.
5. Even With Financial Security, Legal Protections Matter
Having my own financial safety net allowed me to start over, but it didn’t protect me from the legal and emotional fallout of the co-ownership dispute.
✅ A financial safety net helps you recover, but it doesn’t prevent **disputes, legal costs, or financial losses**.
✅ Even if you have savings, legal agreements ensure fairness and clarity if the partnership dissolves.
✅ Financial independence is important, but legal protection is what keeps you secure in co-ownership.
💡 Lesson: Money helps, but a legal safety net is just as important as a financial one.
6. Watch for Power Imbalances & Red Flags
One person often takes the lead in managing finances, decisions, or contracts. But if one person controls everything, it can lead to manipulation, financial abuse, or unfair situations.
✅ Make sure both names are on all documents (mortgage, property title, bills).
✅ Have regular financial check-ins to review expenses and future plans.
✅ If you feel pressured into decisions, pause and seek legal advice.
💡 Lesson: If someone is resistant to transparency, that’s a red flag.
7. Understand How Selling or Refinancing Works
If you decide to sell, will you split profits evenly? What if the property lost value?
✅ Make sure the agreement states how profits (or losses) are divided.
✅ Understand what happens if one person can’t afford to buy the other out.
✅ Have a timeline for when the property should be reassessed or reviewed.
💡 Lesson: Don’t assume you’ll always agree on selling—have a plan in place.
Final Thoughts: Property Should Be Freedom, Not a Trap
Homeownership is one of the biggest financial decisions you'll ever make, and it should give you security, not take it away. If you’re buying with someone else, go in prepared—because getting out can be much harder than getting in.
Have you ever faced a property dispute or know someone who has? I’d love to hear your thoughts—let’s start the conversation.
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Books & Resource Recommendations
For general financial knowledge:
For property & co-ownership guidance:
An Introduction to Property Law in Australia (Robert Chambers) (Amazon)
Australian Property Law: Cases and Materials (Bradbrook, MacCallum, Moore) (Amazon)
Below are a list of Australian firms that can provide guidance and assistance in drafting co-ownership agreements tailored to your specific needs. It's advisable to consult with a legal professional to ensure that all aspects of the co-ownership are properly addressed. The links below are links to each firms articles / webpage with further information co-owership agreements.
1. Nest Legal
Nest Legal offers services to help clients establish co-ownership agreements, ensuring that all details are considered and potential issues are addressed upfront. They emphasize the importance of having clear agreements to protect all parties involved.
2. E&A Lawyers
E&A Lawyers provide insights into the necessity of co-ownership agreements, especially given the increasing trend of jointly owned properties. They discuss various scenarios where having such agreements can be beneficial.
3. CM Lawyers
CM Lawyers highlight the significance of co-ownership agreements in New South Wales, discussing legal considerations, benefits, and potential challenges associated with shared property ownership.
4. ADLV Law
ADLV Law provides co-ownership agreements that cover a broad range of provisions, from financial contributions to future sale terms, tailored to the specific circumstances of the co-owners.
5. Stratus Legal
Stratus Legal assists clients with all co-ownership-related needs, whether they co-own property as tenants in common or as joint proprietors, emphasizing the importance of having a written agreement to cover the arrangement and understanding between the parties.
📢 Affiliate Disclaimer: Some of the links in this post are affiliate links, which means I may earn a small commission at no extra cost to you if you purchase through them. I only recommend products I trust and believe will add value to my readers.
📢 Disclaimer: I have legal qualifications and experience working in civil litigation and the property sector, which has given me a strong foundation and passion for property law and co-ownership agreements. However, I am not a practicing lawyer or financial advisor. The information shared here is for educational purposes only, and I recommend seeking independent legal and financial advice before making any decisions.
