Buying with your boyfriend? Know this about property co-ownership

Property is a big and exciting (and expensive!) purchase, which is why it often makes sense to do with your significant other, a friend or family member 

Johan van Schalkwyk, a trusted property advisor and principal at Leapfrog Roodepoort, answered some of our questions about owning property with another person. 

First things first - what does the co-ownership of a property entail?

Property co-ownership refers to a situation in which two or more people jointly own a property. There is no limit to the number of people that can simultaneously own a property though the admin can become complex when there are too many cooks in this metaphorical kitchen. 

What are the benefits?

For many people, particularly first-time buyers, co-ownership is the most affordable way to get into the property market as the burden of the bond repayments - and the general maintenance and upkeep of the property - is shared. 

What are the risks and/or drawbacks?

The main risk is always that one of the owners could default on their share of the monthly repayments which puts the other owner(s) in a difficult position. When one party can no longer afford to contribute their share of the mortgage or maintenance it will cause problems, for which plans need to be in place around how the situation will be remedied. Similarly, when a party wants to sell their share in the property it can cause tension, especially if the remaining party cannot afford the property on their own.

What's the "proper" way to go about it?

Forewarned is forearmed, which is why it is crucial to have a co-ownership agreement in place that stipulates how disagreements, or any issues, will be dealt in - in the best interest of all parties involved. A trusted property advisor will be able to assist with such an agreement, though it's worth getting a lawyer's input too. 

What are the main points to note in a co-ownership agreement?

The agreement should references the specific needs and interests of the owners but typically answers the following questions:

• Which of the owners will be occupying the property?

• What happens in the case of the death of one of the partners?

• What if one of the parties wants to sell the property and the other doesn't?

• What happens in a case where one of the co-owners default on the monthly bond repayments?

• Should the property be sold, how will the potential profits or losses be divided?

• Who is responsible for securing financing for the property?

• What happens if one party is able to contribute to a deposit and the other can't?

• How is the responsibility of property maintenance to be divided?

• Are either of the co-owners allowed to use the property as collateral for another loan, or permitted to draw from the access loan? 

The bottom line?

Go for it! And make sure you have a comprehensive co-ownership agreement in place.