Let us Buy Property Together

By Kavita KooverjeeCategory: Property Law

A new popular way to buy property is to buy a property with friends. This new trend has emerged among young people, who have found it increasingly challenging to find the capital to purchase a property. And so buying porperty as co-owners has become financial sense.

With this, we also see a trend of people splitting up the ownership by percentage, i.e. Party A pays 30% of the bond, and Party B pays 70% of the bond. But that does not mean that each party holds a separate title deed to a physically demarcated part of the property.

But what are some legal implications to be aware of when purchasing property together as co-owners?

As the Law indicates, co-ownership is a type of partnership; Each co-owner has an undivided share in the whole property. This entails that each co-owner has to act jointly in all decision-making.

But you may encounter a situation where one co-owner no longer has the financial capacity to uphold their financial obligation. But, of course, any person can experience economic hardship.

From the outset, the critical thing is to have a contract. A contract will protect each party's rights, but more importantly, you will need an agreement that is clear on your specific rights as a co-owner.

With some relationships, no matter how great they are, can turn sour, and one or all parties may want to dissolve the agreement. In that case, one party may wish to immigrate, or a party may become insolvent. Whatever the reason, it is always essential to protect your rights and have a binding agreement that will cover you in such events and dictate how the parties will split up.  

Co-owner Agreements, Why It Is Important To Have A Contract  

A contract will set out the terms of the relationship, including the payment, what to do when the contract dissolves etc.  

You would almost certainly want a comprehensive co-ownership agreement, not just a copy-paste agreement but one tailored to the circumstances; an agreement that covers your rights, ownership, payment instructions, and potential breach of contract.

Furthermore, the contract should also include the following terms:

Regarding who is reposnible for the rates, taxes and levies;  Who is responsible for maintenance of the property,  Shares divisions of the property?  When are you compelled to sell?  What happens when the property is sold? Tax

By doing the above, you protect yourself and everyone else in the Co-ownership agreement.

Even if you are married and buying property together, it would still be advisable to have a co-ownership agreement in place. This would set out the outcome if the property is sold.

Conclusion 

It would be advisable to think through all the conditions of a co-ownership. To help prevent yourself from unnecessary litigation and expenses. 

Contact an attorney at SchoemanLaw Inc for your property law needs. 

Kavita Kooverjee | SchoemanLaw IncAttorneywww.schoemanlaw.co.za