Young, unmarried couples need to use their heads and not their hearts when buying a home together. Picture: Andres Ayrton/Pexels
No, you are not immune to the love bug death, so even though getting onto the property ladder is a great investment decision, and one many young, unmarried couples are making, you need to use your head and not just your heart.
Buying a property with the one you believe you will spend the rest of your life with can be an exciting and rewarding decision, but even if you feel your love is everlasting, you have to protect yourself in case the relationship fails.
There is no love lost when it comes to fighting for something with an ex-partner in a court of law.
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More often than not, couples decide to buy properties together without being married or even intending on getting married, says property investor Ben Malapile; after a few years, they break up and fight for the property.
“In some cases, the couple assisted each other with paying the monthly instalment and can't afford it individually.”
Before couples buy together they should have their affairs in order and, if they choose to buy as an unmarried couple, they should clearly stipulate what will happen to the property if they decide to part ways.
Does the property have to be in both our names?
If you are not married but you are both contributing to the property, the best way to protect yourself is to have it registered in both names, advises Eduan Milner of Eduan Milner Attorneys, Notaries and Conveyancers in Cape Town. After all, having ownership is the “ultimate decision”.
“Yes, there will have to be a division [in the event of you breaking up], such as one party buying the other out, or sale of the property to a third party, but neither of the parties can deal with the property without the co-operation of the other.”
If you and your partner wish to only have the property registered in one of your names, you must, at the very least, conclude an agreement that regulates what will happen to the property when you split up or when it gets sold. However, the drawback is that it still remains an agreement that must be enforced in a court of law, and this could take a long time, he says.
“By that time the owner could have sold the property and spent the money. Such an agreement will be a far second place to ownership itself and could give a false sense of security to the one party if he/she is not aware of the actual procedure and time that it will take to enforce his/her rights.”
Buying a property and obtaining a mortgage loan is a long-term commitment so this decision has to be made after considering all factors, says Leonard Kondowe, finance manager for the Rawson Property Group. And this may vary from one couple to the next.
“When you buy jointly it helps improve your affordability levels which will then enable you as buyers to qualify for bigger mortgage bond finance.”
What happens if I am not working but still have money to contribute?
Milner explains that the mortgage bond will always follow ownership, so if the property is registered in both names, the bond also has to be in both names. And the fact that one of you does not have an income will not prevent that person from becoming a mortgagor as the bank will look at the affordability of the application as a whole.
“If your contributions are going to be different, you can even register the property in a percentage that is not equal, such as 70/30, for example. However, both parties will be fully liable under the bond, irrespective of the percentage in which you hold shares in the property.
“Should you split up, the proceeds from the property will be divided according to each one’s share, unless a party can prove that it must be different, for example, if an agreement was concluded to that effect.
“Of course, the party feeling aggrieved by the split will have to bring an action in a court of law to enforce his/her rights. For example, if the parties initially decide on a 50/50 split, but during the course of the relationship the one party contributed more than they had initially foreseen, they can either conclude an agreement to reflect that the one party has contributed more or they can transfer a further percentage to that party to reflect an increased ownership.”
However, the last mentioned option will be a costly affair as it needs to be registered in the Deeds Office and transfer duty will come into play, he says.
If my partner is paying the bond but I am paying for other household costs, what rights do I have to the property?
In a case like this, Milner says both parties are effectively contributing to the property, one by paying the bond and the other by covering other expenses.
He adds: “If the property is registered in both your names, but the contributions are not equal, you should conclude a written agreement to that effect. If you split up and the one party has contributed more than his/her pro rata share, he/she will only be able to recover such additional contributions in a court of law. However, if they do not keep book of such additional contributions and have it in writing, it is going to be very difficult to prove.”
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So in a nutshell, how best can my partner and I protect ourselves if we buy a home together?
The best way to do this, Milner explains, is to have the ownership in the property reflect each of your respective investments in the property. If your investments are not an accurate reflection of your ownership percentage, you must reduce it to writing and even amend such document as the situation changes during the years.
“I know however that very few people do it as they seldom think of the bad times whilst it is going well. However, what you do not put in writing is going to be very difficult to prove a couple of years down the line.”
Echoing this, Carl Coetzee, chief executive of Better Bond says it is advisable to have a clear agreement which sets out each party’s contribution to costs including the deposit, transfer costs, monthly bond payments, home maintenance, and utility bills.
“Buying a property with someone else – whether a partner or a group of friends – involves a great deal of trust. You will need to do full property transfer if one of you decides to pull out of the partnership and exit the bond agreement. “
While there are many factors to bear in mind with joint ownership, if done properly, he says it can be an effective way of making home ownership more accessible to a couple who would otherwise be unable to afford a bond on their own.
While there’s no right or wrong answer when considering buying a home alone or with a partner, Coetzee says there are some considerations to bear in mind.
“You and your partner will both be jointly liable for the bond repayments, legal, and administrative fees associated with the buying and selling of the property and any other associated costs. Also, the credit scores of both partners will be affected if either of you default on your bond payments. Also, the others in the partnership will have to cover the defaulter’s share of the payment to avoid the risk of losing the property.”
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