select
|

Co-ownership contracts need to stipulate conditions of the partnership

Although buying a property is often an emotional decision, it should be approached with a business-like attitude, with all the pros and cons being considered and a contract drawn up between shareholders in the property, says Anne Porter, head of Knight Frank Residential SA.

“Often two people choosing to buy a house together will decide they want to invest together, find a charming home and go through the process of buying it, but they don’t consider beforehand all the implications of doing so,” she says.

“What would happen for instance if the one were transferred to another province or country and needed the funds from the property, and the remaining person was not able to buy the other out? Or who would have to leave the property if there was an argument or fallout and the relationship soured? Then, too, if improvements are made to the home, will there be a 50/50 split on costs as well as profit made as a result of the improvements? What if the improvements are wanted by one party and the other is not happy to pay towards them?”

The division of co-owned property can be challenging if there are no previously determined terms and conditions written down. This is where the actio communi dividendo principle would be used, says Porter. This affords co-owners a way of receiving their share in the property or being compensated properly should they not come to an amicable decision on a split. This allows for courts to decide whether to order that the property be  subdivided, sold or transferred to one of the co-owners against payment from the other.

It is worth noting, says Porter, that even if there is a pending claim for subdivision of a property that is jointly owned, the co-owners may still sell their shares. The only time that a co-owner may not insist on the partition of a property is where there has been an agreement entered into that states they may not do so within a specific period.

The courts can also rule that property be sold by means of public auction, with the condition that the reserve price is met, and the proceeds are then split and paid to the co-owners.

“The aim is to avoid legal battles as these are extremely costly and time consuming. If all potential problems are discussed beforehand, and then factored into a contract between the co-owners, each party knows upfront what their commitments and outcomes from the partnership will be. This provides a clear decision of what would need to be done in the case of the partnership being dissolved and leaves no “grey” areas for personal interpretation,” says Porter.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 May 2018
      Buyers feel that they are getting value for money in the Northcliff area without having to compromise on aesthetics and amenities
    • 21 May 2018
      Secure living is one of the growing property trends in South Africa and Nooitgedacht Estate in Stellenbosch certainly ticks the right boxes for buyers who want a secure, exclusive lifestyle in one of the Boland’s most sought-after estates, says Pam Golding Properties.
    • 21 May 2018
      As the impact of technology on the real estate industry becomes more significant, it is clear that there is a need for an objective look at not only traditional real estate models but also online and other alternative low-commission real estate agencies, to examine what they offer and what their impact might be.
    • 21 May 2018
      With sectional titles growing in popularity, an increasing amount of homeowners simply do not have the garden space to install a tool shed in their backyard.
    • 18 May 2018
      Home improvements are a great way to add value to your property, but not all of us have bottomless pockets for a full-on renovation. Lucky for us, there are plenty of affordable DIYs that can spruce things up over a free weekend.
    • 18 May 2018
      The need for large office spaces is slowly eroding as more and more employers choose to allow their staff to work remotely. As a result, the home business model has grown in popularity, with many new entrepreneurs choosing to start their business from home rather than in a business district. But, what are the legal implications of operating a business in a residential area?
    • 18 May 2018
      Proxi Smart Services Pty Ltd, a company that deals with the day to day administration of property transfers while the conveyancer attorneys perform the legal side of transfers, lost its bid for the court to allow them to do business in this regard.
    • 17 May 2018
      If you’re a first time buyer, then you are probably only just beginning to realize how expensive furniture can be. That three-piece lounge suite you’ve had on your “Dream Home” inspiration board probably seems like nothing but an unrealistic fantasy to you now. But, a little bit of financial discipline mixed with a dash of smart shopping can go a long way towards helping you furnish your fantasy.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK