What is a Disadvantage of Joint Ownership?

Thinking about buying a house with a friend, sibling or partner? The idea of sharing the price tag can sound great, but it also comes with a hidden downside many first‑time buyers overlook. Below we unpack the biggest drawback of joint ownership and give you practical ways to protect yourself.

Understanding Joint Ownership

When two or more people hold title to the same property, they are in a joint ownership a legal arrangement where each co‑owner holds an undivided share of the whole property. In everyday language it’s often called “co‑ownership”. The most common forms are joint tenancy where owners have equal shares and a right of survivorship - if one dies, the other automatically inherits the whole and tenancy in common where each owner can hold a different percentage and can bequeath their share to anyone in a will.

The Core Disadvantage: Loss of Control

The single most painful downside of joint ownership is the loss of unilateral control over the property. Every major decision - refinancing, major repairs, renting out rooms, or selling the house - usually requires the consent of all owners. If even one co‑owner objects, the whole process can stall, cost you money, or force a legal battle.

Why Decision‑Making Gets Tricky

• Different financial goals: One person may want to upgrade the kitchen, while the other prefers to keep cash for a child’s education.
• Varied risk tolerance: A risk‑averse partner might reject a lucrative rental plan that the other sees as a smart cash‑flow move.
• Life‑event changes: A divorce, job loss, or health issue can shift an owner’s priorities overnight.

Because the title is shared, you can’t unilaterally sign a new mortgage or refinance without the other(s) signing as well. Lenders treat a jointly‑owned property as a single borrower - mortgage lender the financial institution that provides the loan to fund the purchase may require all owners to meet credit and income standards. If one co‑owner’s credit drops, the whole loan can be at risk.

Other Significant Drawbacks

1. Difficulty Selling the Property - To sell, every owner must sign the sale agreement. If one refuses, you’re stuck with a property you can’t move on from.
2. Shared Liability for Debt - If a co‑owner defaults on a personal loan or tax bill, the creditor can sometimes place a lien on the shared house, endangering everyone’s equity.
3. Inheritance Complications - In a joint tenancy ownership with right of survivorship, the surviving owner automatically inherits the deceased’s share, which can bypass the deceased’s will. In a tenancy in common ownership where shares can be bequeathed, the estate may need to go through probate, adding time and cost.
4. Tax and Insurance Hurdles - Property tax bills are sent to the name on the title deed the legal document that proves ownership of the property. If one owner fails to pay, the whole property can face a tax lien. Insurance premiums can also rise if one co‑owner has a high‑risk profession or a history of claims.

Real‑World Example

Emma and Liam, both 28, bought a two‑bedroom townhouse in Auckland as tenancy in common each holding a 50% share that can be passed on separately. Two years later, Liam lost his job and fell behind on his personal credit cards. The bank placed a lien on the property to recoup the debt. Emma, who was still making mortgage payments, suddenly faced a reduced equity value and a possible forced sale. Their situation illustrates how a single co‑owner’s financial trouble can jeopardize the other’s home.

Mitigating the Risks

Before you sign the co‑ownership agreement a legal document outlining each party’s rights, responsibilities, and exit strategy, consider these steps:

• Hire a solicitor who specializes in property law the legal area that governs ownership, transfers, and disputes over real estate.
• Agree on a clear exit plan: buy‑out formula, right of first refusal, or a timetable for selling.
• Separate finances where possible - keep joint mortgage payments in a dedicated account to avoid disputes.
• Include a clause that requires each owner to keep a reasonable credit rating, protecting the loan.
• Consider life‑insurance policies that cover each other's share in case of death.

Checklist for Prospective Co‑Owners

• Identify the type of ownership (joint tenancy vs tenancy in common).
• Draft a detailed co‑ownership agreement with a lawyer.
• Verify each party’s credit score and debt obligations.
• Plan for future life events - marriage, children, retirement.
• Set up a joint bank account for mortgage and maintenance expenses.
• Review property tax obligations and insurance coverage.
• Discuss how any improvements will be funded and valued.

Comparison: Joint Tenancy vs Tenancy in Common

Final Thoughts

The biggest joint ownership disadvantage isn’t the cost or the paperwork - it’s the fact that you give up the ability to act alone on your biggest asset. By understanding the legal structure, drafting a solid co‑ownership agreement, and planning for the unexpected, you can keep the benefits of sharing a purchase while protecting yourself from the pitfalls.