Important aspects around purchasing and selling property jointly

Immovable property is a particularly attractive investment especially in view of the current historically low interest rate. Aside from offering a roof over your head and security, unlike other investment classes, property generally retains its inherent capital value and will continue to grow in value depending on the state of the economy.

While it is not uncommon for married spouses to purchase property jointly, it is becoming increasingly popular for people to purchase property with other persons such as a partner or friend, especially investment property.

There is a distinct difference between buying property jointly with your spouse compared to buying with another person or persons. The latter can be particularly challenging, and it is best to plan upfront to avoid disputes later on.

Purchasing and selling property jointly with a spouse

Joint ownership where a husband and wife purchase a property together and take out a joint mortgage loan is fairly straightforward. The property is owned in equal parts and both parties will be responsible for the mortgage loan jointly and severally. Written approval from the other spouse is needed if one of the spouses wishes to mortgage or dispose of the property.

In the event of divorce, the divorce agreement will stipulate whether the property is to be retained by one of the spouses or sold. In the case of a marriage in community of property, the spouses will share the proceeds of the sale in equal proportions. If one spouse retains the property, no formal transfer of ownership will take place, but the title deed will need to be endorsed by way of an application to the Registrar of Deeds.

If married out of community of property, then by virtue of their separate estates, the parties will already be co-owners of the property and share equally in the proceeds upon disposal. If one party decides to retain the property, then transfer of the share would need to be done by way of a formal deed of transfer and not merely an application to the Registrar of Deeds.

How co-ownership with someone other than your spouse differ

When you co-own a property with someone other than your spouse, the property as a whole is co-owned and no particular part would be solely owned by any of the co-owners. A distinctive feature of co-ownership is that, without an agreement to the contrary, a co-owner can sell his/her share without the other's consent.

It is therefore advisable that the parties seek legal advice and draw up an agreement at the outset to guide shareholding, payment of costs and ongoing property costs including utilities and maintenance, handling of disputes, voting, how the profits and losses on the property are to be divided, and what happens when one of the owners wants out of the arrangement, or in the event of the death of a co-owner.

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