While they were in the process of splitting up, our reader’s partner offered to buy her a house and to pay the bond on her behalf.
She would like to know from our panel of experts whether the property could be registered in her name and the bond in that of her soon to be ex-partner?
Grant Howard from Kaplan Blumberg attorneys in Port Elizabeth says where people who own property together are married, there are many laws that regulate their joint ownership of property as well as their position in the event of a divorce or death of a party.
“This is not the situation with couples who are merely in a long-term relationship, or any other people who decide to buy property together. It is therefore recommended that persons, who find themselves in such a position, consult with an attorney to establish their rights and obligations.”
In the reader’s case, where the partner is undertaking to purchase a house in her name and to assume responsibility for the financial aspects relating thereto, a long-term commitment is implied, according to Howard.
“This arrangement needs to be recorded in writing. It will ensure that they have a tailor-made contract in terms of which they can resolve financial and other disputes, should they arise,” says Howard.
He says it is not legally possible to register the property in the reader’s name and the mortgage bond in her partner’s name. “The bank will only grant a bond to the person or persons whose names appear on the title deed.”
Warren Jack, a commercial and residential property expert from the Warren Jack Property Group in PE, says if the reader’s partner will be financing the bond instalments, they may apply for the mortgage bond on the basis that he will sign unlimited surety for the home loan.
“As the principal debtor, the reader will however be accountable to the bank to service the bond. The fact that her partner will sign surety is merely a form of additional security given to the bank as a motivation for them to grant the bond.”
According to Jack, the reader may consider registering the property in both her and her partner’s names. “They will then be joint owners.”
He says irrespective of the actual proportion in which they own the property – ownership does not necessarily have to be equal – the reader and her partner will have to bind themselves jointly and severally to the bank for the proper fulfilment of their commitments.
“Simply put, this means that the bank can hold each of them liable for the full outstanding amount of the bond.”
Jack says the bank is not bound by the parties’ agreement with each other with regard to what share of the bond instalments they pay. “The bank is not forced, either, to proceed against each party for his or her share of the bond, but may claim the full amount from either party.”
It is therefore clear, says Jack, that if one party cannot or does not pay his share of the bond, the other party may be at risk of being held liable for the full outstanding balance as well as losing his/her share of the house, even though he/she has been meeting his/her commitments.