Beware the pitfalls of cohabitation and property ownership

Cohabiting before marriage and even opting not to go the legal marriage route is commonplace these days and many cohabiting partners are looking to purchase property together, often as first time buyers, says Gerhard van der Linde, managing director for Seeff Pretoria East.

Purchasing property with your married spouse is fairly straightforward as there is a legal relationship with consequences attached to it. In the case of cohabitation, there is, however, no legal relationship and South African law confers no legal status.

It therefore follows that there is a distinct difference between purchasing and selling property with your legal spouse compared to a cohabiting partner. The latter can be particularly challenging, and upfront planning is vital to avoid disputes later on.

Purchasing and selling property jointly with a legal spouse
Van der Linde says that when purchasing property with your legal spouse, you would usually take out a joint mortgage loan, the property is then owned in equal parts and both parties are responsible for the mortgage loan jointly and severally.

The written approval of the other spouse is needed should one of the spouses wish to mortgage or sell the property.

In the event of divorce, the divorce agreement will set out how the property is to be dealt with. If it is to be sold, the spouses will share the proceeds in equal proportions. If one spouse retains the property, no formal transfer of ownership takes place, but the title deed will need to be endorsed by way of an application to the Registrar of Deeds.

In the case of marriage out of community of property, each party has its own estate and therefore co-own the property and share equally in the proceeds when it is sold. Should one party elect to retain the property in the event of divorce, the transfer of the share must be done by way of a formal deed of transfer and not merely an application to the Registrar of Deeds.

Purchasing and selling property jointly with a cohabiting partner
When you purchase property with someone other than your legal spouse, whether in a cohabiting relationship or otherwise, the property as a whole is co-owned and no particular part would be solely owned by any of the co-owners, says Tiaan Pretorius, manager for Seeff Centurion.

While the consent of the other owner/s is needed to sell, mortgage or lease the property, a joint owner can sell or let his/her own undivided share in the property without the consent of the other joint owners.

Pretorius therefore recommends that you seek legal advice and draw up an agreement at the outset to guide the ownership and disposal of the property. Do this as early as possible and before the property is even registered, he says.