Key Facts

  • Due to the rising cost of houses in New Zealand, many Kiwis are considering co-owning a property with friends.
  • According to Duncan Lang, a solicitor at Smith and Partners Lawyers, this approach is common among younger people trying to afford their first deposit and older clients interested in downsizing or acquiring a second property.
  • Transparency between co-owners about finances and the potential for missed payments, which could impact all owners, is crucial.
  • To mitigate risks, potential co-owners are advised to enter a property-sharing agreement that outlines terms such as payment of outgoings, property maintenance and exit strategies.
  • Co-owners can opt to become joint tenants, meaning ownership automatically transfers to the survivor upon one’s death, or tenants in common, where ownership percentages are specified and the deceased’s share becomes part of their estate.

Article Summary

The climbing price of houses in New Zealand has provoked a rising trend in which friends pool their resources to co-own properties. Duncan Lang, a solicitor with Smith and Partners Lawyers, highlighted that this practice is particularly noted among young people attempting to amass their first deposit and older clients who are keen on downsizing or purchasing a second property. However, for this financial partnership to work effectively, transparency and understanding about each party’s financial contributions and punctual mortgage payments are critical.

Lang also advised that a property-sharing agreement should be established to lay down terms on how expenses such as outgoings are managed, how the property is maintained, and the implementation of various exit strategies. This agreement serves as a safety net by providing clarity and avoiding potential disputes or financial confusion in the future.

Furthermore, co-owners have the choice of becoming either joint tenants or tenants in common. The joint tenancy arrangement transfers ownership automatically to the surviving owner(s) if one passes away. Meanwhile, a tenants in common arrangement outlines a specific percentage of ownership for each party. In the event of death, this specified share is distributed according to the owner’s will.

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