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Complexities of Co-Ownership

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Published Date: May 3, 2020

Many of us aspire to own our own property.  Whether it is to have a place to call home or simply for investment purposes. Raising the funds to buy property, especially for young individuals, can be challenging. It has become popular for individuals to purchase property in joint ownership with others – be it with a family member, a friend or even a co-worker. From an affordability perspective, individuals can combine their income, afford bigger deposits and even negotiate better loans with the banks.

Like a marriage, co-ownership is a long-term commitment and things can go wrong as individuals and their personal circumstances change. To avoid a messy ‘divorce’ it is advisable that parties carefully consider all possible eventualities and agree on the way that those situations will be dealt with upfront, and in as much detail as possible. Co-owners should bear in mind that they are jointly entitled to and responsible for the property and are usually mutually and severally liable for the obligations towards the bank.

The next time you consider buying a property with someone else, give thought to the following questions: –

  • Will each party own a 50% share in the property, or will you share in different proportions?
  • Who is entitled to live in the property, or will the property be rented out? If so, how will the rental income be allocated?
  • Who is responsible for the maintenance of the property and how will each party contribute to the costs? What about rates, taxes, levies and utility charges?
  • If a party should lose their job, go insolvent, simply stop paying or even die, what recourse is available to the remaining owner?
  • What if one of the parties wishes to ‘get out’ and sell their share in the property? How will the bond be dealt with in such an instance?

These are just a few of the numerous factors to consider when buying property in joint ownership with others. It is therefore crucial to have a proper co-owner’s agreement in place to cater for all aspects of the relationship.

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