Property Sharing Agreements

Protection when friendly property arrangements go sour

The recent High Court decision in the Murphy case has highlighted the need for Property Sharing Agreements when family or friends own property together.

The Murphy Case

In the Murphy case a mother and son purchased a property some 17 years ago when the son was still a minor. It appears that the son entered into the arrangement simply to support his mother’s finance application. However as a result of his involvement he was entered onto the title to the property, with them owning it as “tenants-in-common in equal shares”. Many years later, both parties having occupied the property at various times, the son decided that he wanted his “half” of the equity in the property. And so the Court battle began. In the end the Court decided that regardless of the son having his name on the title he was not entitled to any claim in the equity. The Court awarded him compensation for some payments he had made over the years but nothing close to half the equity value. The property itself was transferred to his mother.

The simple fact is that all of the costs and aggravation of that Court case could have very easily been avoided had the mother and son had a Property Sharing Agreement.

Property Ownership – Rights and Obligations

It is important at the very outset for all parties involved to understand what their rights and obligations are in respect of the property. For example: Who will be on the title to the property? Who will pay the rates and other outgoings? Who will pay the mortgage? Who will receive the benefit of any capital gain? What happens if one party wants out of the arrangement? The answers to those questions may be different in every case and may differ from the traditional understanding reflected by the title ownership.

The Property Sharing Agreement can record all of these matters up front. That way everyone knows exactly where they stand and there is no trying to second guess what a persons intentions were in relation to the property years, or even decades, down the track. Unnecessary litigation can be avoided if relationships sour because the procedure for winding up any arrangement is clearly set out at the beginning.


Its important to note that its not too late to enter into a Property Sharing Agreement now. If you have a property arrangement and want to record your understanding about it now we can still do that for you. If you are considering a new property arrangement with friends or family contact us to discuss how a Property Sharing Agreement can help you avoid issues in the future.