“Mother, let’s buy a house. You pay half, I pay half.”

When you can’t afford to buy a property on your own, sharing with someone else could be a good idea but do you know the risks involved in joint ownership? Indeed, joint ownerships could lead to nightmares in the unforeseen future, especially when relationships turn sour.

Founder and managing partner of Chur Associates Chris Tan explains that if there is no legal evidence suggesting otherwise, all co-owners are deemed to have the exact same equal share of the property. If there is bank financing for the property, it is very likely that the joint owners shall be jointly liable for the entire loan sum procured and not for each co-owner’s respective share only.

Decision making in a joint ownership of a property is a situation where it is “all or nothing”, where everyone agrees or it’s a no-go. “It’s certainly not a matter of majority rules,” says Tan.

One way to prevent unpleasant scenarios among joint owners of a property is to have the parties sign a joint-ownership agreement (JOA).

A JOA is signed between co-buyers who enter into the Sale and Purchase Agreement together. Although there is no guarantee that a JOA could solve all problems, an agreement is better than no agreement, says Tan.

Law firm Marcus Hwang & Co partner Normaliza Sulaiman concurs. “The JOA will assist the co-proprietors to resolve any disputes, differences or disagreements,” she says.

Before meeting a lawyer, the potential joint owners should discuss and agree on major issues such as whether the spread of co-ownership interest should be 20:80 or 40:60 or 50:50 and so on; distribution of utility fees and various expenses; as well as a consensus on maintenance, repair and improvement of the property.

More importantly, the owners need to specify conditions to guide their decision-making regarding the property and the process for selling the property, such as how to determine a minimum selling price and duration for holding the property.

Possible eventualities and solutions also need to be considered. The owners are encouraged to agree on and spell out clear exit strategies if relationships between parties become strained or when one dies or becomes ill.

Clauses on pre-emptive rights (right of first refusal) should also be included to grant a co-owner the first right to buy out the property if the property is to be disposed.