Strategies

How to Co-Purchase a Property With a Partner

July 30, 2020
Invex
Invex Team

As we look towards a period of recovery after severe economic uncertainty, we can see that property prices are remaining stable across the country, with a positive outlook moving forward. This is where co-purchasing can make all the difference. But how exactly do we go about buying property with a partner in Australia?

The first step is to find a co-purchase partner and to get to know exactly what resources they have available and what their objectives are. Let's take a look at what comes next.

Get to know your partner

It is the dream of most couples to own a property to live in, as well as perhaps an investment property. However, co-purchasing is not limited to this kind of set-up. Instead, partners can be almost anyone — from friends and family members to business associates or employers.

This is why you need to get to know your partner and their background. Before you begin the co-purchase process, you need to get together and discuss the following:

  • What is the financial history of each and every person involved in the investment? What outstanding loans or tax liabilities exist within the partnership? What are the incomings and outgoings for each partner? Does anyone have a history of bankruptcy?
  • What are the objectives for the purchase? Does either partner want to live there full-time, or do they have other plans for the property? Assess these objectives ahead of time and make sure that everyone agrees.
  • Who will take care of which duties? Make sure that everyone is aware of what they are responsible for so that there is complete transparency.

Lay the legal foundations

When navigating Australian property law, it is advisable to seek the assistance of a legal advisor. This advisor will help you set out the following:

  • The legal agreement of responsibility and ownership so there is no ambiguity when it comes to deciding who deals with what
  • Setting up the correct legal structure, such as tenants in common, joint tenants or a property trust. The right legal approach can  also make the handling of money much more straightforward, as each partner is bound by certain legally enforceable guidelines.
  • The filing of all necessary documentation related to the purchase

You will also need to agree on:

  • Which mortgage provider to work with so that you achieve the best property loan
  • Which conveyancer or solicitor (or settlement agent in Western Australia) to work with to make the process as efficient as possible. The conveyancer will also help you to navigate specific property laws in different Australian states.
  • Whether or not to work with an accountant to help you and your partner stay legally compliant without paying excessive tax

It may also be useful to work with a buyer's agent, particularly if you or your co-purchaser is not able to travel to the property for viewing or negotiations.

Consider the long term

You now have the insight and the team required to approach sellers, make offers, gain pre-approval for loans and other financial products, and finalise the property purchase.

However, you still need to consider the long-term future of your co-ownership. Whether you are co-purchasing with a romantic partner or simply engaging in a professional relationship to make the purchase, you still need to outline some key contingencies:

  • What happens if one partner wishes to leave the partnership? In most cases, the remaining partner has the right to buy the other partner's stake if they choose to do so, but this needs to be outlined beforehand.
  • What happens if one partner should tragically die? Make sure that the life insurance of all partners is enough to reasonably cover the ongoing responsibility of the investment.
  • Who will arbitrate in the event of disagreement between partners? It can be very difficult to reach a consensus from within the partnership, and so it is important to plan how these disagreements will be handled.

Co-purchasing is a great way to get on the property ladder and access returns from the Australian property market, but you need to make sure that everything is agreed upon beforehand. Follow these steps and set yourself up for a safe, successful, and lucrative property co-purchase.

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