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.

The ins and outs of subject to bond approval clauses

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.

Recommended for you

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

Buying and selling property – the implications for married foreign nationals[post_view before=""]

In a recent article, we looked at the question of whether foreign nationals are permitted to own property in South Africa. A related question is what happens when a foreign national, who has entered into a marriage outside of South Africa, wishes to buy or sell property. Let’s take a look.

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

Foreign property ownership in South Africa[post_view before=""]

Can foreign nationals own property in South Africa? The short answer is yes. But before we explore this topic in any detail, let’s first define what we mean by foreign national – someone who is a non-resident, meaning that they are neither ordinarily resident nor meet the requirements of the physical presence test.

Read More
My name has changed - what happens to my property’s title deed?
Contractual Matters

Power of Attorney: Can it lapse?[post_view before=""]

A power of attorney is a useful tool that can be used in many situations. For example, an elderly parent who, due to their age, finds it difficult to attend to their affairs may decide to grant power of attorney to their adult child.

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

Why identifying the ultimate beneficial owner matters[post_view before=""]

In the past, detecting funds from unlawful activities as they entered the financial system was relatively straightforward. However, with the dishonest among us increasingly making use of juristic or corporate entities to hide their true identities and introduce illicit proceeds into the system, it’s becoming more and more difficult for the relevant authorities to identify these funds. And it’s not only South African officials who find themselves in this position – the challenge cuts across international borders.

Read More
Minors and immovable property
Contractual Matters

How does divorce affect transfers in the case of joint ownership?[post_view before=""]

The end of a marriage can result in several administrative challenges, not least of which is tackling the joint ownership of immovable property. And while divorce can be a traumatic and emotional experience, with the proper legal advice, the transfer of ownership doesn’t need to be.

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.

The ins and outs of subject to bond approval clauses

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.