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Beware of buying property as joint owners

Beware of getting caught-up in the excitement of buying property together. Think first. Two or more unrelated people or a husband-and-wife team, who are married out of community of property, may jointly buy property.

The property as a whole is co-owned. No particular part of the property is solely owned by one of the co-owners.
The advantage of buying a property in half shares or any other shareholding is that the transfer costs are divided in accordance with the shareholding. The buyers can benefit on the reduced payment of transfer costs.

The extent of the shares held by the co-owners does not have to be equal, although this is not always practical. But if you for example have a 60% share, it does not mean that you own a larger part of the property. It means that you would pay 60% of the purchase price and transfer cost of purchasing the property. You would also benefit from 60% of any profit derived from the sale or lease of the property.

Problems can arise when one person wants to sell while the others do not. A portion or a share of the joint property can only be sold or leased with the consent of all the co-owners. A majority vote on this matter is insufficient.
This will also depend on the agreement between the owners.

So, be careful not to get caught up in the excitement of purchasing property together. Keep in mind that people and their circumstances change and that you should not put yourself in a tricky situation.

A co-ownership agreement must be drawn up to safeguard all the potential co-owners before you sign the offer to purchase. This agreement will have to state, for example, that should one owner want to sell his share of the property, the remaining co-owners have first option to purchase it, but if no market-related offers are made by them, the property must be sold (as a whole) and the proceeds divided according to the extent of each co-owner’s share.
The money that you spend on drawing up such an agreement will be money well spent.

Be warned: If one of the co-owners does not pay his share of the debts, like the mortgage loan, the remaining co-owners are all jointly and severally liable for the debt. This means that the co-owners will have to pay the debt. There is nothing you can do to safeguard yourself from this, as this will be one of the bank’s requirements!