What is Co-Ownership?

Co-ownership is when one or more people jointly own the same property. In essence, it is when they legally share ownership without dividing the property into physical portions for their exclusive use.
It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70 percent and the other 30 percent of the single property. The different shares can be recorded and registered in the title deeds by the Deeds Office.

The Benefits

On paper, it’s a great idea. For starters, the bond repayments and costs of maintaining the home are halved.
However, there can be problems—and although not every friendship or relationship is destined to disintegrate, there often comes a time when one of the parties involved wants to sell up and move on to bigger and better things.

The Risks

If ownership is given to one or more purchasers without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares
The risks, benefits, and obligations that flow from the property are shared in proportion to each person’s share of ownership. For instance, one of the co-owners may fail to contribute his share of the finances as initially agreed, resulting in creditors such as the bank or Body Corporate taking action to recover the shortfall.

Having an Agreement

If two people own property together in undivided shares, it is advisable to enter into an agreement which will regulate their rights and obligations if they should decide to go their own separate ways.
The agreement should address the following issues:

• In what proportion will the property be shared?

• Who has the sole right to occupy the property?

• Who will contribute what initial payments to acquire the property?

• Who will contribute what amounts to the ongoing future costs and finances?

• How the profits or losses will be split, should the property or a share be sold?

• The sale of one party’s share must be restricted or regulated.

• The right to draw funds out of the access bond must be regulated.

• 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.

Co-owning property can be a smart and affordable way to enter the market, but it’s not without its challenges. Taking the time to set clear expectations and put a proper agreement in place can prevent misunderstandings and protect both parties in the long run. Whether you’re buying with a partner, friend, or family member, being informed and prepared is key to making co-ownership a success.