Buying one party’s share of a jointly owned property

There are a number of ways to deal with the undivided shares in fixed property held by two or more people. In the case of joint ownership by married persons, one such way is by one party becoming the sole owner of a property. The process for this will depend heavily on the matrimonial regime selected at the time of marriage.

Property Blog Articles | Advice | Contractual Matters | Market News

Terms of the settlement

The settlement agreement between the spouses will dictate how the fixed property registered in both their names will be dealt with. For example, if one spouse is awarded the house in terms of the settlement, the other party’s half share will have to be transferred to that party and the marital regime will dictate how this transfer is to be done.

If the parties were married in community of property, the transfer of the half share may take place by way of endorsement in the Deeds Office in terms of Section 45 of the Deeds Registries Act, 47 of 1937. This is an abbreviated form of transfer done by way of application, specifically catering for marriages in community of property being dissolved as a result of divorce or death. If the parties were married out of community of property, the transfer of the half share will have to be done by way of conventional transfer. In other words, the process followed will be the same as with the typical purchase and transfer of a property.

By law, a share in fixed property is an undivided share and can only be equated to percentages and not to a specific portion of the property. The transfer of an undivided share will take the same time as a normal transfer subject to the parties and the shareholding being uncomplicated and certain.

Transfer fees

The transfer fee payable in a situation where one spouse is buying the other’s share in a jointly owned property will be based on the value of the property as a whole. Transfer duty will be calculated on the value of the whole property and then divided by the relevant percentage held.

Financing of the property

A bond registered over a property held in the name of more than one party can be dealt with in one of two ways, subject to the bank’s credit approval. Firstly, the existing bond can be cancelled and a new bond be registered in the name of the remaining sole owner. This can be quite a costly exercise as there will be a bond cancellation and a registration fee, however, in certain circumstances a bank may insist on this course of action.

Alternatively, the one debtor/owner can be substituted as the sole debtor/mortgagor under the bond. This will be done in terms of an application to the Deeds Office to this effect in terms of Section 57 of the Deeds Registries Act. The bondholder will have to consent to this application and  the costs of such application will be less than the aforementioned cancellation and registration.

The simplest course of action before initiating a transfer of ownership to one of the property’s co-owners is to consult with reputable conveyancing attorneys who will be able to offer advice on how best to proceed depending on the specific case.

Follow Snymans on Facebook for more legal information, tips and news about property.

5775

Recommended for you

Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

Buying a property off-plan

1148

Buying off-plan can seem daunting for purchasers as you are buying a property that is yet to be completed. On the upside, this has become a profitable approach to the property market and indeed, the proverbial early bird does then catch the worm. There are of course many factors to consider before such a decision is made.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Beware of scams

1201

Fraudulent scams affect all industries and can be hugely detrimental and costly. The best way in which consumers can protect themselves from falling victim to such a scam is being able to identify the warning signs.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

The right of first refusal

7516

A right of first refusal is a mechanism in a contract that affords the holder of such right the preference to buy a particular property, should the owner ever choose to sell it.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

Different forms of ownership

7421

There are a number of forms of ownership of immovable property in South Africa, and sometimes prospective buyers as well as homeowners are not aware of the intricacies of each. To take the mystery out of this for you, we have put together the basics on each of the 3 most common types of ownership: full title ownership, sectional title ownership and long-term lease.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Auctions in the property industry

9614

To help buyers looking to purchase property on auction, here is some crucial information relating to auctioned property.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Buying one party’s share of a jointly owned property

There are a number of ways to deal with the undivided shares in fixed property held by two or more people. In the case of joint ownership by married persons, one such way is by one party becoming the sole owner of a property. The process for this will depend heavily on the matrimonial regime selected at the time of marriage.

Property Blog Articles | Advice | Contractual Matters | Market News

Terms of the settlement

The settlement agreement between the spouses will dictate how the fixed property registered in both their names will be dealt with. For example, if one spouse is awarded the house in terms of the settlement, the other party’s half share will have to be transferred to that party and the marital regime will dictate how this transfer is to be done.

If the parties were married in community of property, the transfer of the half share may take place by way of endorsement in the Deeds Office in terms of Section 45 of the Deeds Registries Act, 47 of 1937. This is an abbreviated form of transfer done by way of application, specifically catering for marriages in community of property being dissolved as a result of divorce or death. If the parties were married out of community of property, the transfer of the half share will have to be done by way of conventional transfer. In other words, the process followed will be the same as with the typical purchase and transfer of a property.

By law, a share in fixed property is an undivided share and can only be equated to percentages and not to a specific portion of the property. The transfer of an undivided share will take the same time as a normal transfer subject to the parties and the shareholding being uncomplicated and certain.

Transfer fees

The transfer fee payable in a situation where one spouse is buying the other’s share in a jointly owned property will be based on the value of the property as a whole. Transfer duty will be calculated on the value of the whole property and then divided by the relevant percentage held.

Financing of the property

A bond registered over a property held in the name of more than one party can be dealt with in one of two ways, subject to the bank’s credit approval. Firstly, the existing bond can be cancelled and a new bond be registered in the name of the remaining sole owner. This can be quite a costly exercise as there will be a bond cancellation and a registration fee, however, in certain circumstances a bank may insist on this course of action.

Alternatively, the one debtor/owner can be substituted as the sole debtor/mortgagor under the bond. This will be done in terms of an application to the Deeds Office to this effect in terms of Section 57 of the Deeds Registries Act. The bondholder will have to consent to this application and  the costs of such application will be less than the aforementioned cancellation and registration.

The simplest course of action before initiating a transfer of ownership to one of the property’s co-owners is to consult with reputable conveyancing attorneys who will be able to offer advice on how best to proceed depending on the specific case.

Follow Snymans on Facebook for more legal information, tips and news about property.

5775