Short notes on:
CO-OWNERSHIP OF IMMOVABLE PROPERTY
Introduction
These days co-ownership is financially appealing to many people, and has over the years become
increasingly popular. It is a good way to acquire property that you could possibly not have afforded
to purchase on your own.
Co-ownership is a share or a percentage of the total, which means that the co-owners also have coliability or joint liability and have obligations towards the entire the property, not just the section that
the individual owner occupies.
When two people own property together in undivided shares, it is advisable to enter into an
agreement which will regulate their rights and obligations and which states the terms and conditions
of their ownership should they ever decide to go their separate ways.
This rule applies equally if you’re an unmarried couple, married out of community of property or just
joint owners as partners in a property joint venture or even a holiday home.
What exactly is co-ownership?
The extent of the shares held by the co-owners do not have to be equal. If you own a 60% share in
the property, 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 costs of purchasing the property and at the end of the day you
would also benefit from 60% of any profit derived from the sale or lease of the property.
Risks associated with co-ownership
When a property is co-owned, no portion of the property can be improved or changed without the
permission of the other owner/s. Basically the owners have to agree on the day to day management
of the property, i.e. whether trees will be cut down, walls build, fences erected, buildings built, etc.
Similarly, all the co-owners will have to contribute to the expenses incurred in maintaining the
property in direct proportion to their ownership percentage. These costs include rates and taxes.
© Arinda Truter | SchoemanLaw Inc 2016
t +27 (0) 21 425 5604 f +27 (0) 21 421 8913 e [email protected] w www.schoemanlaw.co.za
If one of the co-owners does not pay his or her share of the debts, like for instance a mortgage loan
or the rates and taxes, then the remaining co-owners are all jointly and severally liable for the debt.
This means that the other co-owners may have to pay the debt even if they already contributed their
share.
Selling your share
A co-owner may sell his or her share of the property without reference to the other co-owner/s. You
can, however, only do so if no prior agreement was concluded between you and your co-owner/s in
which you agreed on how the disposal of your share in the property should be handled.
You can also not force your co-owner to sell his or her share of the property if he or she does not
want to, and neither can your co-owner force you to remain a co-owner against your will.
The best option here would be for the one co-owner to buy the share of the other co-owner at market
value. But this does not always work as the other person might not have the means available to do
so. The inexpensive and less time consuming option would be to settle the dispute amicably before
approaching a court.
Our law does however allow for a co-owner to apply for an order by a court for the partitioning of the
property. This essentially entails that the property itself will be divided physically amongst the coowners in accordance with the value of the property and each co-owner’s share in it.
If the partition of the property is impracticable, the court will have the option to make any order it
sees fit, for example that the property should be sold on a public auction and the proceeds thereof
shared between the co-owners according to their respective shares therein.
What should a co-ownership agreement contain?
•
If the contributions towards the purchase price or costs of transfer were unequal, this should
be mentioned and provision should be made for the inequality when sharing the proceeds
should the property be sold.
•
Payment of bond installments, rates, electricity, water, improvements and maintenance should
be regulated.
© Arinda Truter | SchoemanLaw Inc 2016
t +27 (0) 21 425 5604 f +27 (0) 21 421 8913 e [email protected] w www.schoemanlaw.co.za
•
The sale of the property or the sale of a share of one of the joint owners.
•
An agreement that if one of the owners wants to sell his or her share, the whole property must
be sold and the proceeds shared, or alternatively that the owner wishing to sell must give the
other owner a pre-emptive right to buy.
Conclusion
It is therefore of the utmost importance to firstly choose your co-owners very carefully, and secondly
enter into an agreement from the outset that sets out the above terms and conduct rules for all
involved. This will ensure that should a dispute arise, the co-owners have a right of recourse or can
settle the dispute. Speak to an attorney at SchoemanLaw Inc. today to ensure you safeguard
yourself from the risks of co-ownership.
© Arinda Truter | SchoemanLaw Inc 2016
t +27 (0) 21 425 5604 f +27 (0) 21 421 8913 e [email protected] w www.schoemanlaw.co.za