Is co-owning a property really a good idea?

2018-07-25 06:00
Natalie Steenkamp

Natalie Steenkamp

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Question:

A friend and I are considering buying a house together as an investment property.

I am quite keen to move forward with the plan, but she is a bit worried about how it will work and whether or not it is a good idea.

Can you give some guidance on what the possible pros and cons of jointly owning the property might be?

Answer:

Buying property, whether for personal use or investment or business purposes, remains a stressful exercise.

Often, as probably in your case, a person feels they wish to share some of the responsibility and financial exposure with another person and then partner up to jointly buy a property, essentially co-owning the property in question.

In such a case, you and your friend will have to apply for a home loan together and must jointly meet the necessary credit application requirements.

The property will be registered in both your names, and you can own the property either in equal undivided shares or accor­ding to a determined percentage.

There are pros to co-owning a property.

You can share expenses, deal jointly with the upkeep and maintenance issues, help manage tenants and rental issues and divide the responsibility for mortgage repayments.

On the downside, it must be understood that you are a co-owner.

That means that issues may arise if you and your friend are no longer friends; you may want to sell, but your partner may not; you might not want to spend money to renovate, but your partner does; you might want to kick out your tenant, but your partner wants to keep him.

Most of these issues can be dealt with in a properly drafted co­ownership agreement, but it must be appreciated that you do not have the same freedom over your property as with sole ownership.

In such a co-ownership agreement, one should typically provide for what share each party owns in the property, financial contributions to the loan repayment, maintenance and upkeep costs of the property, the distribution of any profit, management of the bank account, arrangements regarding the renting or selling of the property and pre-emptive rights to buy the property.

The agreement should also deal with the situation if a co-owner passes away.

Who will inherit or have the option to buy the co-owner’s share?

Clearly co-ownership has pros, but also cons – many of which can be quite onerous if not properly engaged with beforehand and addressed in a clear agreement between the co-owners.

Our advice would be to seek the assistance of a property specialist and discuss the option of co-ownership as well as other potential structures for investing in a property portfolio before making any final decisions.
– Natalie Steenkamp, associate, Phatshoane Henney Attorneys

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.
NEXT ON NEWS24X

Inside News24

 
/News
Traffic Alerts
Traffic
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.