Buying property — sign a contract

2011-02-12 00:00

WITH February being the month of love, we look at one of the most long-lasting commitments a couple can make: buying a property together.

Evidence from Korbitec points to more unmarried couples buying a property together. This is hardly surprising because you are going to increase your spending power vastly by joining forces with your partner when applying for a bond.

But experts agree that it is foolish to enter into such an arrangement without a written agreement protecting both your interests. Experts agree that the best time to put this type of contract in place is when relations are good, because you are more likely to reach a fair outcome than if things are acrimonious. So what better time to get your mutual property affairs in order? Setting up a formal contract does not sound very romantic though, so why is it so important?

Firstly, South African law does not recognise common-law relationships. This does not mean that you will not be able to defend your case legally, but a formal contract will save time, money and heartache.

Secondly, if both your names are on the mortgage and deed, you will both be held responsible for keeping the mortgage payments up to date.

The contract should consider some basic points.

• Your contributions to and share of the property, and what happens if you contribute different proportions of the costs at different times.

• Your roles and responsibilities when it comes to the property.

• Your exit strategy. If the relationship should end, what happens?

• What happens if one of you wants to sell the property, and the other does not?

• What happens if one of you is unable to pay your agreed share of the mortgage for a given period?

• What about the other costs, from insurance, to repairs and renovations, to levies and daily expenses?

• What happens if one of you were to die? This is an important consideration for you and your next of kin.

• What are the various tax implications of your joint ownership?

 

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