Steps to success when buying shared real estate

Buying a share in property is perhaps a smart investment if you aren't able to afford the whole piece of real estate yourself.

It's becoming increasingly common for people to buy in conjunction with a person who is not a spouse or a de facto partner.

A typical purchase of real estate by that scenario is known as a joint tenant agreement. This is where if one of the owners dies, the ownership immediately goes to the partner or spouse.

People who are interested in buying with friends or extended family would be doing so under the banner of shared property ownership - there must be strict ground rules and a proper contract in place to ensure that this type of arrangement works and all parties are aware of their rights and obligations.

Shared property ownership is also different because if one of the owners dies, the share doesn't immediately go into the hands of the other parties, but is left in a will to whomever the dead partner wishes.

The most common issues surrounding shared property, whether it be between two or five people - is when one party cannot meet the repayment for whatever reason, and what happens if a partner wants to sell their stake.

If one party wants to sell, they usually offer the piece to the existing parties as a courtesy before going outside that group to find a willing buyer.

The agreement that you sign upon ownership should also cover the division of bills, housework and any other time costly or monetarily costly activities that affect the owners.

All parties should consider all likely scenarios in the agreement before they sign, such as if one of the parties loses their job and is unable to meet their share of repayments. If one partner dies, think about whether the beneficiary will be interested in keeping the share or selling - if they do want to sell, lay out in the agreement that the existing partners can have the first bid.

Be sure to think of all these eventualities because if you are all delving into the property market for the first time, there are bound to be conflicts. Your friendship with your co-owners will have a better chance at standing the test of time if you lay out all the ground rules before starting.

Talk to your local Ray White real estate office about the best way to proceed in a shared property. Their expert advice will ensure that your experience in real estate is a successful one.