What to Know About Buying Property with a Partner
Category RealADVICE
"Properties are expensive, and the cost of living is higher than it's ever been, so buying a home with another party to split the costs is often the best option for first-time buyers to get onto the property ladder. However, before you sign on the dotted line with your partner, there are a few things you need to know," says Gerhard Kotzé, CEO of the RealNet Property Group.
"First and foremost, you should view property co-ownership as a transaction, and ensure you have an agreement in place that clearly states how the property will be managed in both good times and bad."
Managing Bond Repayments
While you might assume that bond repayments will be automatically split down the middle between the two parties, it's actually up to you as co-owners to decide how you will divide the costs. Whatever allocation you decide on, it should be clearly documented in a contract and signed by both parties.
It's also important to note that while the co-owners decide on their share of the property, the institution providing the loan will expect all parties to be "jointly and severally" liable for repayment. This means that the lender can recover the entire amount from any one of the partners if there's a default on the payments.
Other aspects of property ownership, such as taxes, property maintenance, rates, and levies, should also be agreed upon and divided accordingly from the outset.
**If Someone Wants Out of the Agreement**
Property is a long-term commitment, but not all parties may stay involved until the bond term is complete. That's why it's crucial to decide in advance what happens if one of the owners wants to sell their share.
Usually, if one owner wants to sell, the other has the first right of refusal. It is often easier if the remaining owner buys out the share for sale, but this isn't always possible. As with any business transaction, disputes and conflicts may arise, which is why you need a trusted property advisor and a lawyer to help structure an agreement that protects and promotes the interests of all parties involved.
We recommend contacting a property professional from your nearest RealNet Properties office to help ensure a smooth, worry-free transaction with your partner.
Author: RealNet
