Teaming Up For Your First Home

With the difficulties New Zealand first home buyers are having getting into their first home, many are looking to less traditional ways to get on the property ladder.  One such way is teaming up with friends, family or acquaintances.

If this is something you are thinking about here are some things to think about.

The two most common forms of residential property purchases are Joint Tenancy and Tenants In Common.  Understanding the differences between them is important to avoiding potential risks.

Joint Tenancy

This type of property purchase assumes an equal share of the property is owned by each person.  It is most commonly represented in the form of a couple purchasing a property together.

In the event of one of the owners death, their share is automatically transferred to the other owner.  A joint tenancy can be transferred to a tenants in common agreement in the following circumstances:

  • mutual agreement to transfer agreement.
  • bankruptcy (in some cases).
  • mutual agreement to terminate agreement.

Tenants In Common

This type of property purchase allows for joint ownership by people with either equal or unequal shares.

Features of tenants in common are:

  • the ability of an owner to leave their share in the property to a chosen person in their will.
  • allows the buyers to have their share of financial contribution recorded on the property title.
  • any owner can transfer or mortgage their share without knowledge of the other owner(s), subject to any mortgagee’s consent.
  • in the event of an owners death, their share will automatically be passed according to whomever the owner has assigned as recipient in their will.

This last feature mean it is important for all owners to have a will in place stating who their share should be transferred to upon death.  The Property (Relationships) Act and the Family Protection Act can have a bearing on how a joint tenancy or tenancy in common is dealt with upon death.  Take a look at our advice about writing a will,

Tenants in common is an appropriate form of purchase for family, friends or acquaintances wanting to buy a property together.

Things To Consider When Teaming Up To Buy Your First Home

1.   How will the parties structure ownership of the property.  If the parties have different financial contributions and responsibilities the title should reflect these and the parties should enter into a Property Sharing Agreement or Family Arrangement Agreement.

This Agreement is a very important part of a property purchase where multiple parties are agreeing to purchase, maintain, mortgage, rent, improve or sell a property.  There are many considerations such as death, separation, unforeseen future financial or personal circumstances that could affect the property and the quality of the parties joint collaboration.

2.   The parties may need independent legal advice to represent their individual needs and requirements.

3.   Insurance requirements need to be considered as the parties may need to increase or change their cover or take out additional insurances for the new property.

4.   The purpose or intention of the purchase. This can have tax implications on the different parties that may not have been considered originally.  Accountancy advice may also be necessary if the property is being used for investment purposes.

5.   Wills need to be put in place or changed/updated to reflect the new property being purchased by the parties.


*This article is intended to provide information only and should not be considered as legal advice.  

Should you require further advice in this area, get in touch with Jessie Foley at Foley Hughes Lawyers


Dustin Lindale May 1, 2016 Blog, Tips for First Home Buyers