Co-ownership 101: How to Achieve a Happy Ending

Every co-ownership arrangement eventually ends through sale, transfer, or death. Failure to plan is silly. Here's how to avoid sticky situations.

Published on
July 2, 2023
Updated on
July 24, 2023
Co-ownership 101: How to Achieve a Happy Ending
Written by:
Pam Hughes
Pam Hughes
Forty years of experience across finance, real estate, insurance, and construction. Committed to personal empowerment through financial education. Best friends with a small dog known as Francis.

Why you need an exit plan

Co-investing in a home is one of the largest investments you may ever make. As a co-owner, you can lose more than just your original investment: your home, relationships, creditworthiness, and peace of mind are also at risk. But this is the bet that 50 million US co-owners take.

For all the unknowns, here's what we do know:

  • All of us will die one day
  • 100% of co-ownership arrangements will end through sale, transfer, or death
  • Property and tax laws don't afford co-owners the same protections as married couple homeowners

Most co-owners have never considered an exit strategy, let alone created one. Perhaps this is because humans aren't great at accurately assessing personal risk. We consistently underestimate risks like death (Andersson et al., 2007) and financial loss (Remo Stössel et al., 2015). It doesn't matter if we miscalculate or ignore risks: they exist whether we take steps to address them or not.


The day before you die, you're alive.

The day before your lover leaves you, they haven't.

The day before financial catastrophe strikes, it hasn't.

Co-owners who avoid mapping out how to unwind co-ownership when the day comes are walking a tightrope. Co-ownership always ends. The real question is, what can you do about it?

When sh*t gets real: 5 ways co-ownership ends

Below we explore some real-life scenarios and share preventative steps you can take to avoid disaster.

1. Co-owners break up

If almost 50% of marriages in the US end in divorceimagine the break up among partners who are not married. 

According to attorney David Matthews, a Weinberg Wheeler Hudgins Gunn & Dial partner in Georgia, "...with unmarried couples, you could never force the other side to buy you out. If one party wants to be really obstinate and not sell, the other party has a problem."

Attorney Lynn Strober, co-chair of the Matrimonial and Family Law practice at Mandelbaum Salsburg adds, "Unlike married couples, if there is a buyout between unmarried partners, tax issues may arise, as the transfer may be a taxable event."

💡 A transfer between the parties may trigger a due on sale clause if a mortgage is involved. Your mortgage lender could come looking for full loan repayment.

Prevention: Don't wait until a split happens. Discuss, agree, and codify how you'd deal with this sort of situation. Then record it in your Co-ownership Agreement and update it as necessary. 

2. Co-owners face an unexpected sale

Imagine that one co-owner suddenly decides they want out, intending to sell their share without discussing it with the rest. This could cause a lot of tension, and potentially a legal dispute, as the remaining co-owners scramble to buy out the exiting party or face a stranger owning part of their home.

Prevention: Define boundaries and stipulate an order of operations for handling different life events that could lead to an unexpected sale. Be sure to outline each party's rights in each scenario.

3. Dispute between co-owners

Even strong relationships crumble under the weight of money and ownership. A disagreement over home improvements or maintenance costs can escalate quickly into a full-blown conflict. A conflict that can't be resolved amicably may lead to litigation and even a forced sale of the property.

Prevention: Strong communication and clear guidelines on decision-making processes can help mitigate this risk. Invest the time to understand differences of opinion, then address issues before they become problems.

4. Death of a co-owner

A co-owner's sudden death can throw the entire co-ownership arrangement into chaos. Without a clear plan, the deceased's share of the property may pass to a relative (or friend) with no interest in co-owning, or worse, create legal and financial headaches for the surviving co-owners.

Prevention: A well-planned exit strategy—including a Co-ownership Agreement, Wills, and estate planning documentation—can provide structure and help avoid probate, unnecessary taxes, and added stress during a tough time.

5. Bankruptcy of a co-owner

If one of the co-owners falls into financial difficulty and files for bankruptcy, their creditors could come after all of their assets—and your co-owned home. That could lead to a forced sale of the entire property, leaving you and any other co-owners without a home and financially distressed.

Prevention: A strong co-ownership agreement can include mechanisms to protect the property and all co-owners in such situations.

Choose prevention over cure

Where the exit plan is concerned, co-owners often:

  • Wing it and hope for the best
  • Use a templated legal document from the internet and believe they are "covered"
  • Look for a remedy instead of taking precautions

The earlier in your co-ownership you can plan for your exit, the better. The BEST thing you can do is to get a plan together for how you'll unwind co-ownership before sh** hits the fan! Ask and answer the right questions, build consensus with your co-owners, and ensure everyone involved is heard. Record your decisions. If it is not in writing, it doesn't exist. Memories fade. Don't forget to revisit your exit plans over time. It is a best practice to set a rhythm for reviewing and updating your agreements as life changes. At a bare minimum, an annual review makes sense.

We built Shared Homeowner OS™ to provide an all-in-one tool to sanitize decision-making and collaboration. It removes guesswork and mutes the drama. Co-owners can choose the possible exits you'd like to address and how you'd handle them. 

Co-create your exit plan as part of your Co-ownership Agreement. Revisit and update your plan as often as you and your co-owners like. Provisioning for your exit will reduce the likelihood of many, if not most, of the risks associated with an ending—planned or otherwise. Boom.

Need help? Meet Shared Homeowner OS™

We've spent 31,680 hours cracking co-ownership–so you don't have to. With Shared Homeowner OS™, it’s easy to plan, structure, and manage co-ownership.

🤝 Streamline decisions
📝 Co-create agreements
✍️ Digitally sign from anywhere
🔐 Manage documentation
🚪 Plan an exit strategy
⚡️ Update anytime

One app to put you and your co-owners in control. Eliminate guesswork, avoid conflict, save $1,000s on legal fees, and cut 120 hours of admin a year.

Learn more or apply to the private beta.

Check out our other posts:

Co-ownership Agreements

How to split ownership of a home

The 3 stages of shared homeownership

Documentation in co-ownership

Ultimate guide to shared homeownership