I wrote this inspired by conversations with clients and friends that I’ve had lately.  

One had bought an investment property with his partner, the relationship ended and as is the case these days, the partner moved abroad. The partner has basically forgotten about their investment property and he needs to sign too to sell it. If there’s a shortfall, the other person isn’t contributing and it’s no longer a fair arrangement.  

If you buy property with someone who isn’t a spouse you may be liable for donations tax if it is not a 50/50 transaction, so please be aware of this going in. I’m not only talking about life partners, I’m also referring to investment properties purchased by friends, relatives or business partners. 

Buying a property with someone affects both of your credit so if one person misses their half of a payment, you can both be liable. If the other person is sequestrated and or enters Debt Review, your joint property is at risk.  

Have you discussed what happens in the event that one of you dies or becomes disabled? Do you suddenly have a new business partner?  When dealing with businesses, a buy and sell agreement is common to negotiate (an agreement that the partner will purchase the deceased partner’s share, funded by life cover). When buying an investment property with another person, it is essentially a business and I think you should treat it as such.  

What can I do? 

Set up a separate account for all income and expenses related to the property, the bond will be paid from here and the rent will be paid into here. That way both parties have access and transparency. What if you’re overseas and the tenant didn’t pay their rent on time? You might not be able to deal with it until you return. The other tip I have is to negotiate an agreement with a lawyer beforehand. Discuss what happens if one of you wants to sell, the relationship ends, death or disability. Also discuss if someone’s circumstances change and they no longer want to be invested. Don’t forget to break down the responsibilities, who will manage the property, who will handle maintenance etc. That way everyone’s interests are protected and the relationship is also protected. Finally ensure that you both have valid wills that mention what would happen to the jointly owned property. 

I’m not planning for anything bad to happen but I want you to be prepared in case it does. Having a simple contract and a separate bank account are relatively affordable ways to ensure peace of mind.