| With house prices on the increase, more and more young people are buying
property jointly. However, couples are well advised to draw up a legal
contract. This contract should reinforce each partner's financial responsibilities
in a way that is as legally binding as their bond is to the bank. This
will prevent unnecessary complications should the relationship turn sour,
says Bruce Swain, Regional Director of RE/MAX Southern Africa.
One of the advantages of cohabiting with a partner is sharing the bond
repayments, which enables the couple to afford a higher priced property
than if they were shouldering the bond alone. However, few couples enter
into any form of formal contract when buying a property, leaving the
question of who pays for what unresolved.
"Most couples prefer not to think about the worst case scenario
or preparing for the possibility of a break up," says Grant Gunston,
attorney and Broker/Owner at RE/MAX Elite. "Only once the relationship
goes pear-shaped do partners start to think about the legalities involved,
but that's a little too late, heightening the potential for conflict."
Who pays for what?
Entering into a contract on the purchase of a property is not only about
preparing for negative eventualities. Instead, it serves to outline
specific responsibilities, forcing the couple to apply their minds to
important details, such as who will be responsible for paying the rates,
maintenance costs and other issues.
Many of these important issues are overshadowed at the time of purchase
by concerns about bond affordability and occupation dates etc.
Registering the property in both names gives both partners a stake
in the property and protects their interests in terms of the title deed.
If the property is registered in both names and the relationship turns
sour, one partner can buy the other out and take transfer of that share
of the property. In doing so, transfer and duty costs would be less
than if the entire property was transferred.
You are both liable
Property does not have to be shared equally. If there is a disparity
in the financial capability of one of the partners, the property can
be owned in 80:20 or 70:30 shares, for example. What many couples do
not realise, says Gunston, is that regardless of any arrangement they
might make between themselves regarding how the costs are split, the
bank will always make them jointly and severally liable for the bond.
This means that if one does not or cannot pay their way, the other will
be saddled with the full responsibility of the bond repayments.
"The importance of drawing up an agreement on purchase of a property
cannot be over-emphasised," concludes Gunston. "The cost of
having a legal contract prepared at the start is considerably less than
having to go to court later to fight it out. Litigation should really
be the last resort. If a couple has no contract and is trying to resolve
things without going to court, they would do well to consider mediation
as an alternative dispute resolution mechanism. Unfortunately, by the
time disagreeing couples get to the attorney stage, they're usually
beyond looking at co-operative ways of working out the situation"
|
Newsletter:
3 February 2012 to 10 February 2012 - Krugersdorp, Gauteng, South Africa
