Legal Articles

Have you and your partner been thinking about joining the real estate game by buying a property together?

That’s easily understandable.  It’s common for romantically involved partners, or even groups of friends to buy properties together. This is mostly because the salary of a young single person usually isn’t enough to cover the kind of bond they would like.

If you had a partner with whom you could pool your resources together; you could achieve an amount large enough to invest in a property, perhaps even in your dream home. 

It may seem like a spectacular, fool-proof idea, but it is vitally important to understand the definite risks that accompany a venture like this.

Will you be buying your first home or purchasing an investment property? And what would happen if things between you two don’t work out?

How do I prepare to buy my first home?

It’s never good to plan for failure; however, it is always wise to have a safety net, just in case your lives happen to take an unexpected turn or two. 

It is especially important to know about the laws and legal processes associated with buying a property. 

There are a few things that you should know about: Buying a house with your partner

The 50/50 Ownership Split

In cases where no prior co-ownership agreement exists; the automatic assumption is that all parties possess equal shares. Therefore, regardless of your individual contributions, unless stated otherwise, you and your partner will each own 50% of the property in a 50/50 ownership split.

• If you never have a problem in your relationship, this is no problem. However, if your relationship ever does end, you could end up in a situation where you receive 50% of the proceeds even though you could have paid 95% of the fees.
• A 50/50 split means that you and your partner have equal decision-making power regarding any matters relating to the property.

Therefore there would be no tie-breaking vote if there is ever a disagreement. 

Again, this may not be a concern of yours at all, but there have been cases where partners have separated, one partner wanting to sell and one partner wanting to stay. The result is always a stalemate with no easy resolution.

The only way to avoid a situation like this is to record a specific split share at the Deeds Office at the time of the purchase. It is recommended that you make sure that the respective ownership shares reflect your individual contributions.

Joint and several liabilities

Any bond acquired for the purchase of a property is required that you and your partner share joint and several liability. 

Simply put, this means that you and your partner are both responsible, together and individually, for the full amount of the loan. Therefore, no matter what you register the division of shares to be, you and your partner will still be equally responsible for your bond.

If one of you cannot or decides that they will not pay their assigned monthly instalment, the bank will retain the right to collect the outstanding amount from the other party (i.e. you). 

It’s easy to see how this could cause massive issues in the event of a disagreeable breakup. One party could, theoretically, cease all payments of instalments yet still retain ownership of the property.

Co-Ownership Contracts: Your Safety Net

There is no way to eliminate all risks that are associated with a joint property ownership deal. However, creating a solid co-ownership contract can help you minimize many potential issues you may face in the future.

If you are interested in this sort of venture it is worthwhile to find a legal professional who can advise you on your individual situation and to draw up a formal agreement. 

Van Deventer and Van Deventer Incorporated can provide you with experienced legal professionals in the Sandton, Johannesburg area who are eager to help protect your and your partner’s interests to the best of our capability.

Van Deventer and Van Deventer Incorporated – Attorneys, Notaries and Conveyancers in Johannesburg

Van Deventer and Van Deventer Incorporated will help you consider all the points of interest you need to when considering buying a home in Sandton, Johannesburg or anywhere else for that matter. 

Our attorneys and property conveyancers are well versed in all aspects of property law and will assist you to navigate topics such as: 

• share allocation; 
• occupation rights; 
• future costs and maintenance responsibilities; 
• in combination with providing information on the procedures to follow in the event of disability, death, or a breakdown in the relationship.

Buying a home or buying an investment property is a massive, long-term financial commitment. The decision you make concerning purchasing any property is one that you should love, but it also needs to be made with a clear mind and a logical plan.

As stated before, you never know what the future may bring, so it is always wise to have a plan to protect yourself and your interests. 

Van Deventer and Van Deventer Incorporated can assist you with any information you need to protect you and your partner in your new property ventures – contact us.