Sealed with a kiss?
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"

Article by: Monique van Zyl -