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December 2006

Owning Assets Together

Be clear as to the form of ownership or you may be disadvantaged later

People may own assets (such as a house, a car or a bank account) together. However, the nature of the ownership can be of great significance if the relationship between them hits a stormy patch or one of them dies. 
There are essentially two forms of ownership available:

(a) joint tenancy; and
(b) tenancy in common (in equal shares or specified shares as the case may be).

If you elect a joint tenancy then you own the asset together (not in shares). If one dies then, by survivorship, his/her share accrues to the other/s (irrespective of what may be in the deceased’s Will). Further, if there is dissension in the relationship, the strong assumption is that the asset must be divided between the co-owners equally.

If you elect a tenancy in common then you own the asset in proportionate shares (if the proportions are not specified then it will be in equal shares). If one dies then his/her share will be dealt with in accordance with the deceased’s Will. Further, if there is dissension in the relationship, the strong assumption is that the asset must be divided between the co-owners in their proportionate shares.

A recent High Court decision highlighted the difficulties that can arise:

  • A de-facto couple purchased a property as a joint tenancy;
  • Their relationship subsequently ended;
  • Proceedings were brought by the wife for the sale of the property with her claiming a one-half share;
  • The husband claimed a two-third share for himself;
  • He alleged that the wife was holding a proportion of the half interest “on trust” for him as:

1) Their respective contributions to the property justified an unequal sharing; and

2) The wife had an expectation of receiving less than 50% based on her position taken during negotiations at the end of the relationship.

The Court found:

1) To rebut the legal presumption that the parties joint ownership evidences their intention to equally share the proceeds, the husband had to prove that through his contributions, he reasonably expected to share in the wife’s half share and that a similar reasonable expectation existed or could be implied on the wife;

2) There was insufficient evidence to rebut the presumption and the Court was satisfied that the parties joint legal ownership evidenced their intention to share equally.


If the parties had owned the property as tenancy in common as to a two-thirds share for the husband and a one-third share for the wife, or there had been clear evidence during the relationship of an expectation by both the husband and the wife of an unequal division then the husband may have succeeded.

All manner of people can own property together (such as business partners, family members and friends). It is not solely restricted to married and de-facto couples. The above case occurred because the couple ceased living together before the Property (Relationships) Act came into force. Now, those circumstances would be dealt with under the terms of that Act, where the only way to effectively ensure an unequal division of proceeds would be for the parties to execute a Contracting Out Agreement. 
On every occasion when we act for more than one person on the purchase of real estate, we need to ascertain the form of ownership and whether a Contracting Out Agreement (for married and de-facto couples) or a Property Sharing Agreement (for all other purchasers) is required.

Be absolutely clear as to the intended form of ownership before the asset is purchased otherwise you may be significantly disadvantaged later on.