Co-owning a home without a contract can be risky

Many people nowadays choose not to get married but will live with their partners and buy their home jointly.

In these cases it is essential that partners buying a home together sign a valid contract to protect the asset for all involved, says Lanice Steward, managing director of Knight Frank Residential SA.

“In some cases one of the partners might have stopped working to look after children and not contributed to repaying the bond, but has contributed to the household in other ways. Because of this intangible input, in the case of a split, who would get a fair share of the proceeds of the sale of the property?

“It is important to establish and stipulate whether the buyers of the property are co-owners or partners, as this determines when each party becomes responsible for any debts incurred. If buying the property as partners, the debt responsibility only starts once the partnership is dissolved, whereas when buying as joint owners, the prescription period starts when the debt was incurred.”

In a court case covered in a Smith Tabata Buchanan Boyes newsletter, Claassen v Quenstedt, the partners bought a home together but neither signed a contract nor stipulated the conditions of the agreement.

This is a typical example of how important it is, not only to have a contract between the partners, but to stipulate whether they are joint owners in the property, says Steward.

In this case, a mortgage was registered over the property, Quenstedt paid the deposit and the property was registered in the names of both parties. After several years the relationship came to an end and Claassen claimed that each party should be fully accountable to the other with regard to all expenses incurred as well as any profit. This would be extended to the settlement of the outstanding bond, the estate agent’s commission, payment of all the municipal accounts still due, any other direct expenses and the reconciliation of the amounts paid to either party.

Quenstedt argued that the parties would share the profit and share the expenses to maintain the property, as well as the bond repayments and rates and taxes.

Claassen was claiming monies due before November 2011, which was three years before the issue of the summons, claiming that the joint ownership amounts were due. The response from Quenstedt was that there was an extension in cases of partnership, which they had entered into when they bought the property together.

The court ruled that Quenstedt was responsible for the maintenance of the property as he was living in it and he did not owe Claassen any rent for the time he has lived there in addition to paying the bond repayments. Claassen, as co-owner of the property was responsible for the outstanding share of rates and taxes and the bond repayments which have not yet prescribed.

The property was ordered to be sold and the payments of the outstanding bond made, as well as commission to the estate agent and all municipal amounts due. The profit that remained was to be split between the two parties.

“Had this couple entered into a contract before buying the property,” said Steward, “they could have avoided the expense of taking this matter to court as well as the unnecessary time delays in coming to an agreement. Parties buying property together need to break down all the expenses and profit and be sure that they have an agreed percentage share in their contract as well as who is responsible for what aspects of the ongoing ownership.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 18 Jun 2018
      Many home sellers are motivated to appoint estate agents because they know that the agency will carry the costs of advertising and marketing their property.
    • 18 Jun 2018
      When a property is sold when it has a tenant in occupation, the questions often raised are: “What happens to the tenant if the landlord sells the property?”, and what rights the tenant will have with regards to cancelling the lease or enforcing it, says Sunell Afrika, rentals manager for
    • 18 Jun 2018
      Sellers are often caught off-guard by the expenses incurred in the selling of a property. Just like there is no such thing as a free lunch, there is also no such thing as selling your property without incurring at least some costs.
    • 15 Jun 2018
      The second quarter of 2018 has proven to be the turning point for Midrand’s real estate market, especially the upper end which started to waver towards the end of a tumultuous 2017 with a notable drop in both sales and average selling prices.
    • 15 Jun 2018
      According to data recently released by FNB, the average age of a South African home buyer has increased from 38 to 44 this year. In an attempt to help first-time buyers enter the market sooner, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, walks us through the steps of saving for your first home.
    • 15 Jun 2018
      Putting your house on the market can be a stressful process. There are so many decisions to make that will impact how quickly your house is sold and for how much you can sell it for. It’s a serious money game where you can’t afford to make the wrong decision.
    • 14 Jun 2018
      The word tourist describes someone who is visiting South Africa for a limited time and is probably not going to buy a property here – so why is the tourism industry so important to the real estate sector?
    • 14 Jun 2018
      Serengeti Estates has entrenched its status as one of Johannesburg’s most desirable addresses for a spectrum of homeowners with its launch of The Signature Residences, a new cluster village.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us