Housekeeping 102

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.

Business
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.

COP
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.

With ANC
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 retained.

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.

Financing
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.

Conclusion
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.

Article by: Dave Welmans - (www.thepropertygame.co.za)