Are you buying a property with friends or family members? What you need to know about co-ownership.

Rising house prices across Sydney have made it difficult for people trying to enter the property market. In response to this we are seeing more and more people buying property with friends or family members rather than trying to go it alone.

This can be a great solution because sharing the costs of buying and holding property puts owning property within reach for many who otherwise wouldn’t be able to afford the current property market.

But what happens if these friends have a falling out?  What do you do when one of you wants to sell but the other doesn’t?  Trying to resolve these kinds of situations can end up costly and time consuming for all parties.

So how do you avoid this and best protect yourself should things not work not the way you had hoped?

Put in in writing!

We cannot say this enough when it comes to entering into any kind of financial relationship with someone else.  Having a written agreement in place from the outset will save plenty of headaches later.  Whilst everyone may have every intention of harmoniously sharing property with others, things can happen and circumstances can change – which is when having a written agreement in place, addressing what happens in these instances, is invaluable.


Some of the main things to consider when purchasing property with other people are:

What proportion of the property will each person own?

If each person is contributing to the purchase costs equally then it’s common for the parties to own the property as tenants-in-common in equal shares (that is, 50/50).  If one party contributes a larger amount than another though, then the parties’ shares in the property can reflect this difference.  For example rather than owning the property equally, the parties may decide that an ownership of 60:40 is more appropriate given the parties’ contributions in purchasing the property.

How will the property be used or occupied?

If all parties will be living in the property then this is relatively straightforward.  It becomes more complex however, if not all of the parties will be living in the property and things such as who will be responsible for the maintenance and upkeep of the property and the apportionment of rates will need to be considered.

What if one party can’t pay their share of the expenses?

Life can throw curveballs and it may be that at some point one of you may not be able to cover their share of the rates or the cost of unexpected repairs or maintenance. So what happens then? If another party pays it for them when and how will this be paid back? Will they be compensated? Will it be treated as a loan with interest be payable?

What if a party wants to sell their share?

The sale of an interest in a jointly owned property is usually not something that can be readily sold on the open market.  Particularly if the joint owners live together, then the remaining owner would no doubt wish to have a significant say in who is able to purchase the outgoing owner’s interest – ideally, with a right of first refusal (that is, the right to purchase the outgoing owner’s interest) and then if the remaining owner does not wish to purchase the share, then the outgoing owner should have the right to force the sale of the entire property.


Whilst the above list is not exhaustive, it certainly is indicative of the types of issues that need to be discussed between the joint owners, and the agreement recorded in writing – ideally before the property is purchased.

If you have any questions about joint ownership, please contact the team at Shire Legal on 95263444 or


Do I need to disclose pre-existing termite damage to my home?

Unfortunately it’s a fact of life that many houses in bushy areas, such as the Sutherland Shire, are subject to termite invasions. It is actually more common than not for homes in the Shire to already have pre-existing termite damage.

But what if the pre-existing damage is so substantial, that it threatens the structural integrity of the home?  And what if the vendors selling the home already know about the damage?

The District Court of New South Wales (and subsequently the Court of Appeal) dealt with this type of situation in the case of Wood & Anor v Balfour & Anor [2010] NSWDC 139. This case centred on the purchase of a property located in Kareela. The property had been owned by the Balfours from the time it was constructed in 1980 until it was purchased by the Woods in 2004.

During their ownership of the property, the Balfours discovered termite activity in the timbers of the home, and had the home treated by a pest control company. They later discovered three further areas of termite damage, and then took steps to repair and cover the damage in each of these areas. The repairs included cosmetic building work to cover the damaged areas. The last of these repairs were completed in 2000.

Four years later, the Balfours placed their property on the market and sold the property to the Woods. After purchasing the property, the Woods discovered the extent of the termite damage was greater than expected.

The Woods sued the Balfours in the tort of deceit, alleging that the concealment and non-disclosure of the termite damage constituted a fraudulent misrepresentation that there was no serious termite damage to the property. The Woods also alleged the Balfours knew this representation was false and intended to deceive the Woods.


At the trial in the District Court of NSW, the judge rejected the Woods’ claim, holding the alleged representation was not made, and, even if it had been made, it had not been false, and the Woods had not relied on it. The decision upheld the principle of ‘caveat emptor’ meaning let the buyer beware. Further, the Contract included a Special Condition which specifically acknowledged that the purchaser was not relying on any representations made to them by the vendor.

The trial Judge found that the work carried out to conceal the past termite activity was done for aesthetic purposes and not with the intent of deceiving prospective purchasers.

The Woods appealed the District Court decision and the matter was heard in the NSW  Court of Appeal.

The Court of Appeal found that by making the property available for inspection and being silent as to the existence of any latent defects, the Balfours created the implication that the vendor had not knowingly concealed any defects that would otherwise be visible to the eye or otherwise discoverable by the exercise of reasonable care when inspecting the property.

The Court found that the conduct of the Balfours was not fraudulent. It was not enough for the Woods to prove that the Balfours were aware of the damage. In order to be successful in bringing a claim in the tort of deceit, the Woods needed to prove that the Balfours were aware that the property had substantial termite damage which compromised the structural integrity of the property. The Court of Appeal therefore dismissed the appeal and the trial judge’s decision that the Balfours were not liable to the Woods was upheld.

Whilst the appeal was unsuccessful, it is clear that if you as a vendor are aware of the existence of substantial termite damage which compromises the structural integrity of the property and you takes steps to conceal such damage from prospective purchasers, you  can be held liable for losses suffered by the purchasers.

For assistance with the sale or purchase of property, contact Shire Legal’s property team on 9526 3444.


When is stamp duty payable? How much do I need to pay?

OSRTransfer of land

Stamp duty is generally payable on transfers of ownership of land or business within New South Wales (unless you are entitled to a stamp duty exemption or concession).  Stamp duty is paid to the New South Wales Office of State Revenue.

A stamp duty calculator is available on the Office of State Revenue’s website.

First Home Owners

First Home Owners who purchase or build a new home (with a total value less than $650,000) may be eligible for a $15,000 grant (aka “FHOG”) (the grant will reduce to $10,000 in January 2016).

There are also exemptions/concessions on stamp duty for first home owners under the First Home New Home Scheme:

  • for new homes valued up to $550,000 – exemption
  • for new homes valued between $550,000 and $650,000 – concession
  • for blocks of land valued up to $350,000 – exemption
  • for blocks of land valued between $350,000 and $450,000 – concession

Transfer to your Self-Managed Superannuation Fund (SMSF)

There is a reduced duty of $50 payable on transfers of title from your name to your SMSF (section 62A Duties Act 1997 (NSW)) (subject to certain rules set out in the section).

Transfer pursuant to a family law property settlement

If the ownership of a property is transferred as a result of a family law property settlement (e.g. from both spouse names to just one name), then the transfer is exempt from stamp duty.

Transfer of a deceased estate property

A transfer of a deceased’s property to the legal representative (executor) or a beneficiary, pursuant to the Will, is exempt from stamp duty.

Establishment of a trust

The establishment of a trust, such as a family discretionary trust, is subject to $500 stamp duty.

When is stamp duty payable?

Stamp duty is payable within 3 months after the duty to pay liability arises, otherwise interest will be charged.

However, if the property is being purchased “off the plan”, then stamp duty is payable:

(a) at settlement/completion; or

(b) after 12 months from the date of exchange,

whichever occurs first.

Be careful when buying off-the-plan

Whilst buying an off-the-plan unit or apartment is an exciting prospect for any wanna-be property owner or investor, there are inherent risks with doing so, particularly because the property is not yet built so you do not really know exactly what you are purchasing until just before settlement – typically a year or so down the track after you first entered into the contract.  You are instead relying on the developer’s plans and any specifications set out in the Contract.


Be mindful of the following:

1. Off-the-plan contracts are drafted by the developer’s solicitor, therefore they tend to have the developer’s best interests in mind.  In particular, they will typically contain a clause allowing the developer to make changes to the property if required, such as the floor plan, the location of the garage and/or storage space, the colour of the finishes etc – if such changes will not significantly affect the property being purchased.  Sometimes, the developer can even amend the square meterage of the property by a stated percentage.  Be sure you read through and understand each of the special conditions in the contract, and understand what modifications the builder can make to your property.

2. Sometimes developers will only be able to secure finance to commence building the project once they have sold a certain number or percentage of the units by a particular date.  In these cases, the developer will ensure there is a special condition in the contract allowing them to pull out of the contract if they do not reach their target by a particular date.

3. Almost all off-the-plan contracts will contain a “sunset clause” which means that if the development is significantly delayed for whatever reason (such as problems with the actual build, or delays in registering the title document) then the purchaser has the right to pull out of the contract and receive their deposit back.

4. Depending on its location, the newly built unit may be able to offer water views, and often the agent marketing the property will make promises of water views.  But what if those water views don’t eventuate, either because of a change to the floor plan of the unit (in line with point 1 above) or the view being built out by a neighbouring property?  The recent NSW Court of Appeal case of Higgins v Statewide Developments dealt with such an issue.  Whilst the yet-to-be-built property was marketed as having 180 degree views, a newly constructed wall obstructed those promised views.  The purchaser argued that there was a difference between the property as per the contract and the property that was built, which substantially detrimentally affected the property.  Whilst the Court noted that the contract did not refer to the marketing model or the promise of water views, and that there was nothing wrong with the unit per se (apart from the absent water views), it nevertheless used its discretion and found that the developer dishonoured representations made by it that the property had water views, and this was an important consideration for the purchaser when deciding to purchase the property.  It therefore ordered the developer to return the purchaser’s deposit.