While a co-ownership agreement can cover a wide range of issues, it will always include provisions on what is to happen if and when the co-ownership is terminated: how the joint ownership is to be dissolved, how the asset is to be sold, whether the parties have pre-emption rights in respect of one another’s shares, etc.
A co-ownership agreement is particularly useful where the parties contribute different amounts (which need not necessarily affect the ownership shares), or where they hold differing rights and obligations in relation to the jointly owned asset.
It may also regulate matters such as rights of use, property maintenance, allocation of expenses, and the rights of the co-owners in the event of the death of one of them, among other issues.
It is, of course, usually easier to agree on the terms of joint ownership when the parties are on good terms. However, even in the absence of any disputes, there is a risk that a co-owner may unexpectedly pass away, leaving the surviving owner in joint ownership with the deceased’s spouse, heirs, or even a bankruptcy estate.
The terms of a co-ownership agreement should therefore be considered carefully. Reliance on a standard-form contract, or on the assumption that the other party will “act reasonably,” is not advisable. Co-ownership agreements should be tailored by professionals to the specific circumstances. They are rarely costly, but a registered (tinglyst) co-ownership agreement can prove extremely valuable, and it is nearly impossible to predict when the need for it may arise.
