I know its Era like that a hous owner cannot be declared as a co-owner. But if you are already a Co-Owner you can place a house. I just tested to place a house with a char that is already Co-Owner of another house so this behavior is sure. I dont think there is any logical reason for this behavor. You could easily be Co-Owner of many other houses if you just didnt place a house before. If you want to be Co-Owner but are a house owner you would have to temporary break down your house, become Co-Owner and place your house again. A house owner should be able to be declared as a co-owner.
I agree as well. This feature quite possibly made a lot more sense back in 2001, especially with the 1 account limit and many people only owning one home. As UO and all of its players/account limitations have evolved, so should the co-owner rules