THESE days, more and more unmarried couples buy property together as it is a great way to get into property investment at an earlier age.
But, of course, there are definitely risks involved that need to be fully understood. For instance, in cases where no prior co-ownership agreement exists, there is an assumption that all parties are equal shareholders. “Unless you specify otherwise, your property will be registered at the Deeds Office as a 50/50 ownership split between you and your partner,” said Bill Rawson.
“This means that regardless of your individual financial contributions, should couples part ways, one could end up getting only 50 per cent of the proceeds even when they have paid 90 per cent of the bills,” explains Rawson.
Being equal shareholders also means you both have equal decision-making power on matters relating to the property, which means there’s no tie-breaking vote during a disagreement. With that said, during a break up, one party might want to sell while the other wants to stay, resulting in an stalemate with no easy resolution.
“The best way to avoid this,” said Rawson, “Is to have a specific share split recorded in the Deeds Office at the time of purchase. If one person is going to pay 70 per cent of the costs, and the other only 30 per cent, make sure the respective ownership shares equal those contributions.”
Keep in mind, however, that no matter what division of shares is registered, partners are still be equally responsible for their bond loan amount. Which means if one of partner stops paying the assigned portion of the monthly installments, the bank has the right to collect the outstanding amount from the other partner – and this can lead to serious trouble in the event of a break up, since one person could theoretically cease all payments without losing ownership.
Rawson recommends getting an experienced legal professional to draw up a formal agreement in order to protect yourself (and your partner) as fully as possible.
For more information, contact the Rawson Property Group on 021 658 7100 or visit www.rawson.co.za
