Buying your first home is an exciting yet complicated and daunting milestone for many young Australians. Whilst some save a deposit and finance their way to a successful purchase, other young and budding investors turn to family and friends to assist in making their home-owning dreams a reality.
There are a few things to consider when buying a first home, or indeed any property with another person or entity. Firstly, buyers need to be aware of ownership options, such as buying as “Joint Tenants” (whereby, on the death of one owner the property reverts automatically to the surviving co-owner or co-owners) or “Tenants in Common Shares” (whereby shares in the property can be held, ie. Margaret 20% and Harry 80%. The percentage share each person owns does not automatically transfer to the other and can be dealt with in that persons will). There are pros and cons for buying in each of these ways, and they should be considered carefully before a Contract is signed and especially before the submission of the documents that transfer title to the new buyer.
Consideration needs to be given to contingencies such as:
- where someone wants to dispose of their interest in the property;
- one party wishes to buy the other out;
- family disputes resulting in change of ownership;
- prospective sale of the property.
These are all matters that may cause unnecessary stress in a family/business relationship.
On a more positive note, consideration needs to be given to asset protection, planning for future purchases, land tax and stamp duty implications, structuring of assets and stamp duty implications when signing up a deal with a family member or friend.
Unfortunately, buying a property with another person is not as easy as simply signing a contract and conveying the property to the purchaser. We encourage our clients to put serious thought into the way that they structure their ownership and the pre-contractual preparation that needs to be considered to ensure future contingencies can be dealt with in a professional manner with minimal stress.
If you are looking at purchasing a home with your family, friends, business partners of otherwise, we encourage you to give a thought to getting some quality legal advice at the outset.
The team at Greenhalgh Pickard are experienced, professional, and happy to discuss your options with you regarding your property purchase, whether you have already signed a contract or are simply looking to buy. Please feel free to give me or any of our property law team a call to discuss your future in the property market!