Prince Charming has popped the question with champagne and flowers
and now you're expecting to live happily ever after. Before you walk
down the aisle there are a couple of property related issues you need
to think about.
The last article covered some of the difficulties of joint ownership.
Today's article covers some of the problems associated with property
and marriage. Are you going to get married In Community of Property
or with an Ante Nuptial Contract (ANC)? Both these bring with there
own set of issues to consider, which normally come into play on divorce.
If married in Community of Property (COP) property is jointly owned.
If married Out of Community of Property, that is with an Ante Nuptial
Contract (ANC), either partner can own property singly or jointly.
There are two aspects to take into account. The envisaged liability
of a spouse that might occur is an issue to consider. For example, one
might be in business or planning on going into business (which is always
a risky affair) and might want to make sure that the property as an
asset is protected in the event of insolvency of the business. A marriage
out of community of property affords an element of protection. There
are other legal structures to contemplate if this is the primary objective
though. Eg. Trusts.
In Community of Property both parties own the property. If in the event
of a divorce one of the parties keeps the property, it is a relatively
simple and cheap procedure to transfer the property into the name of
the new single owner. In terms of Section 45 of the Deeds Registries
Act this partner only needs to apply for an endorsement on the deed
declaring him/her the sole owner. If married in COP and no compromise
can be reached then the property can be sold and the money distributed.
Being married out of Community of Property entails having an Ante Nuptial
Contract (ANC) and can be done with or without accrual. Accrual is basically
the increase in value of assets within the time period of the marriage.
The accrual is an issue of what each party is entitled to and not how
the property can be disposed of or transferred later on.
In or Out
No accrual means that 'what's yours is yours and what's mine is mine'.
On divorce unless the property was registered in both names there is
no issue as to ownership.
With accrual each party is entitled to half of the property's increase
in value since the inception of the marriage. Since this is normally
difficult to settle, properties are often sold to resolve these conflicts.
This has nothing to do with whose name the property is registered in.
A property might be registered in one name or jointly. If in a sole
name and that is the person keeping the property there isn't a problem
except that the other party has to compensate the spouse for the value
If jointly owned, and one party is planning to keep the property, half
the property can be transferred to the remaining owner. Costs on half
the market value will have to be paid to do this.
This divorce can have implications on the way that the property is financed.
If jointly financed a new finance agreement will have to be entered
into to reflect the divorce and new liabilities and responsibilities.
Marriage is a weighty matter and the consequences of things not working
out, either financially for a spouse in business, or jointly in the
relationship and the ramifications and costs of the divorce are matters
to be considered before entering into this legal institution.