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Buying Property? Make sure your Co-ownership Agreement is secure

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

Co-ownership? Property price, transfer costs, deposits & maintenance

As a result of the increase in price of properties and difficulty to raise the costs involved with maintaining and attaining a property; such as transfer costs, deposit and maintenance, many people are seeking to share some of the responsibility and financial exposure with another person/s.

Individuals opt to partner with another person to jointly buy a property, essentially co-owning the property. 

Buying a property - co-ownership agreements

The Importance of your Co-ownership Agreement

It is important to enter into a co-ownership agreement before the purchase of a property. The co-owners have to appreciate that they do not exercise the same freedom over the property as they would if they were the sole owner of the property.

The co-ownership agreement helps provide clarity on the rights, obligations and scope of each co-owner.

For example, unless the parties have entered into a prior agreement, transfer will automatically be given to the co-owners in equal shares.

In this situation, neither of the 50/50 co-owners have overriding decision-making authority: hence a potential stalemate; but further than that, in this stalemate there is no prior agreement on how the parties will resolve any disputes which arise between them.

An extensive co-ownership agreement will assist co-owners who find themselves in such a position. 

Important elements to cover in the agreement would be:

  • The shares each party owns in the property
  • Financial contributions to the loan repayment
  • Maintenance and upkeep costs of the property
  • Distribution of any profit
  • Management of the bank account
  • Arrangements regarding the renting or selling of the property, pre-emptive rights to buy the property etc.
  • A breakdown of the relationship between the parties
  • Death or incapacity of one of the parties
  • Dispute resolution options before issuing summons
  • Termination of the agreement

Velile Tinto Cape Inc. – Your Conveyancing Attorneys in Cape Town

There are many pros and cons to co-owning a property - to assist in creating a successful co-ownership with clarity on procedures, rights and obligations, a co-ownership agreement is an effective tool.

Velile Tinto Cape Inc. provide specialist advice on property law and conveyancing. Contact our attorneys in Cape Town for expert legal assistance with your co-ownership agreement.

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