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In most cases, when you buy or build a home there is one definitive owner or perhaps a couple owning the property jointly. Your title is either Torrens or Strata based on whether or not you chose a house or an apartment. However, when it comes to duplexes things can get a little bit complicated. When you buy or build a duplex, you’re dealing with two individual private homes that share a lot and central wall. While the standard way to handle duplex ownership is to rent out the other half or both halves while living elsewhere, you have a surprising number of legal and financial alternatives as well. The duplex could easily be a permanent home for you and another family, splitting the land, the costs, and even the title between the two parties.
Buying a Duplex – Alone or Partnered
A duplex is a unique living situation in which two families can live separately and comfortably on the same lot for the price of a single large property. Many people invest in duplexes as rental properties while others live in one side and rent the other. This process involves a normal single owner title, but what about pooling resources with another family to acquire two high quality conveniently located homes for the cost of one property transaction? While this would save both families a great deal of money, it would also require a more complicated title transfer process. After all, both families will want legal ownership of the property. The good news is that titles can be managed in many ways and there are already a few established procedures that would make buying or building a duplex with another family logistically viable.
Tenants in Common Title
The most practical title solution to splitting the cost and acquisition of a duplex with a second family – whether they’re family, a close friend, or a friendly stranger who wants to live in the same neighbourhood – is a Tenants in Common title. For this arrangement, each party or named owner has a claim to a certain percentage of the property, in this case probably 50% to each family. This way, both parties that buy the duplex together have equal legal control over the property and can reasonably split responsibility down the centre. Naturally, joint concerns like roof or foundation will result in shared responsibility and here the families can act more like a body corporate. You can even draw up a private contract with the other family that determines who is responsible for what and how big decisions will be made together.
Joint Tenant Title
If you’re going in with family like a sibling who would also like their first home or your parents who may be helping you financially, a joint tenant title might be more to your liking. Usually, joint tenancy is used for married couples who want to own a home equally as practically the same person. This type of title sharing means that everyone on the title owns the entire home and can make important legal, financial, or maintenance decisions about it. The special thing about a joint tenant title is that if one of the owners dies, the other owner(s) retain complete ownership without the house ever becoming part of an estate. This kind of title is suggested only for close families but is a great way to share a property with your parents (without directly living together) and then inherit the entire property naturally when the time comes.
Buying a Shared Duplex
The process of buying a home in Australia has always been complex, requiring skilled professionals who understand the unique ins and outs of property law. For this reason, anyone either buying or selling a home needs their own real estate agent, property inspector, and conveyancer to represent their needs and enable the purchase process. When you buy a duplex with another family, the two parties have the opportunity to share these costs along with the stamp duty. The only additional worry is ensuring your conveyancer who handles the title transfer understand how you want to share ownership. Make sure to talk to them before the deal is finalized about whose name is going on the title and how much percentage each participant should own.
Building a Shared Duplex
The process of building a new home requires you first to find a good location (with a local council who will approve your duplex building plans), buying the land, choosing a house design, and hiring a contractor to build. It’s very important that you buy the land together first so that everyone who is going to be on the title already is before the house is built. Otherwise, there may be some extra taxes when you ‘gift’ half your land to the other family when they finally are added to the title, especially if the house has ‘added value’ to the property since then. Partner and plan early in the process and when you go through the process of buying the land, tell your conveyancer what your plans are to share the property and eventually the house built on it. Now is the time to explain who will be owning the house, if it’s joint or tenants in common, and so on. When the home is finished, you will need to make one final change to your title: listing it as having a dual-residence on it rather than being an empty lot.
Duplex ownership is an incredibly versatile financial and residential opportunity. They make great investment properties but they are also being used to open up the bottle-necked housing market by making double-use of a single lot without creating the crowding of an actual apartment building. Some duplexes even have strata titles in which each half is owned separately and the families work as a literal body corporate for shared areas. Whether you’re buying to rent both two units, going in with another family, or buying half a strata-split, duplexes are a great way to get into the housing market and stay in town at the same time.
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