Co-Ownership
Category Property Advice
CO-OWNERSHIP OF PROPERTY AND A LOT MORE
Getting into property and buying your first property is a big and important decision with lots of potential outcomes. Some might wish to share this responsibility with someone else including the financial responsibility that goes with owning a property.
So, you decide to purchase a property with a friend:
Firstly, it is important to understand that the property will be registered in both, you and your friends` name.
This means both, you and your friend need to apply for a home loan together. You will both need to qualify for the bond together. Your combined affordability will be considered. Both will have to meet the required credit score and the bond will be registered in both, your names.
There are benefits to co-owning a property:
You share the expenses and responsibilities like the monthly bond repayments, rates, taxes, maintenance and repairs.
On the other side of this, should you and your friend no longer be friends, difficult issues might arise. You might want to sell and your friend not. You want to place new tenants in the property and your friend not. You don't want to spend money on renovations, but your friend wants to.
It is thus important that before you get into this "In community" ownership of property that you have a properly drafted co-ownership agreement in place to deal with issues that might arise during your co-ownership. This agreement needs to clearly indicate the share that each party owns. Also the responsibilities and financial contributions of each party, the arrangements with regards to renting or selling of the property. And importantly what will happen should one of the owners pass away, who will inherit or have the option to buy the co-owner's share.
Seek guidance from an expert before you tie the property knot!
Author: Jaco Smit
