If your plan this Valentine’s Day is to seal the deal with the keys to a new home, it’s important to understand the pros and cons of co-owning a property, says Bradd Bendall, BetterBond’s National Head of Sales.

While South Africans are certainly not waiting for a spouse before buying a house, married and cohabiting couples account for around 30% of all property transactions, according to property data. “There are many advantages to applying for a bond with your partner. In addition to the emotional security of owning a home together, there is the advantage of combined incomes. A dual income means there is a better likelihood of securing a larger bond. Buying with a partner also means sharing costs of deposits, repayments and levies. This makes home ownership more affordable,” says Bendall. However, joint ownership does also come with some risks for both married and unmarried couples.

Property ownership is not based on relationship status or emotional commitment, according to South African law. Instead, it is based on what is recorded on the title deed, explains Bendall. “If both partners’ names appear on the title deed, they are legally recognised as co-owners regardless of who contributed more financially.” This applies to everyone, whether they are married or not.

Legally wed

Married couples benefit from legal protection when it comes to property ownership, although this depends on the type of marriage, explains Bendall. Couples married in community of property share all assets and debts equally, meaning both spouses must sign the offer to purchase and any other relevant documents.

For couples married out of community of property with an antenuptial contract, ownership depends on the terms of that contract. “Civil unions and customary marriages follow similar rules. Unless specified otherwise, a customary marriage is in community of property, which means that assets and debts are shared. If an antenuptial contract is signed before the customary marriage, this contract will determine how the property is managed.”

 When applying for a bond, married couples are assessed on their joint income. “The credit scores and incomes of both partners will be considered for bond approval.”

 Cohabiting partners

Unlike married couples, cohabiting partners do not automatically benefit from legal systems such as community of property, the accrual system or spousal claims during divorce. “This means any division of the property is determined by the title deed and any contracts or agreements between the parties.”

Bendall adds that unmarried couples are taxed individually on their proportionate share of the rental income, based on the percentage of the ownership recorded on the title deed. So, an owner with a 60% share will report that percentage of the rental income to Sars. For couples married in community of property, the income is equally split.

 Money matters

“It’s not something one thinks about at the start of a relationship, but there are issues that could arise at any stage,” says Bendall. Once the honeymoon period is over, couples may disagree about their contributions to the deposit, monthly bond repayments, household costs and municipal accounts. “Renovations and maintenance costs may also become sticking points later when the relationship ends and there are discussions about who is entitled to what portion of the property.”

 Bendall cautions that if one of the co-owners is unable to pay the bond, the bank will want to recover the debt from all parties, and may even, if necessary, recover the full amount from any one of the signatories on the title deed to make up the shortfall. “Irrespective of who contributed more financially to buying the home, if both partners' names are on the title deed, married or not, they are legally considered joint owners.”

 Put it in writing

For these reasons, a legally binding agreement that clearly sets out how the property and finances will be handled during the relationship – and if it ends – is critical. “This contract could include the ownership percentage breakdown, respective contributions to the deposit, bond repayment responsibilities and maintenance and renovation costs.” The contract should also include an opt-out clause stating that if a co-owner needs or chooses to sell their share, the remaining co-owners will have the first right to buy the home,” says Bendall.

Bendall also recommends keeping clear records of each party’s financial contributions in case disputes arise later. These should include invoices and bank statements for any household expenses linked to the property. “One often only seeks legal advice when challenges arise, or the relationship has run its course. Rather start the co-ownership journey, whether you are married or in a relationship, with sound legal support so that both parties can rest assured that their best interests will be protected.”

 “Love may be blind at times, but your property contract shouldn’t be. Formalising the terms of your decision and seeking legal advice at the outset could save much heartache later,” concludes Bendall.