“Co-ownership is the mother of disputes” (Roman law maxim)
Buying property can be an excellent investment, but it can also be expensive. So sometimes it makes a lot of sense to share the financial burden with someone else. Perhaps for example you are spouses or life partners buying your first home. Perhaps you are a group of families planning to share a holiday house, or two firms looking to co-own business premises.
Just be very careful here…
What can go wrong?
Co-ownership (or “joint ownership” – it’s the same thing) always starts off all fine and friendly. You’re life partners, or business partners, or best friends (you may even be all of those things together) and all is good between you. So nothing can go wrong, right?
Unfortunately it can, and as many bitterly fought court cases can attest, it does. “The sting’s in the tail” as the old proverb has it, and problems tend to raise their ugly heads only down the line, long after you first became joint owners. Imagine a scenario where you can’t agree on how to run the property and/or cover its expenses, or you need to wind up your co-ownership but can’t agree on how to do so. What happens if one of you wants to buy the other out but the other refuses or you can’t agree on a fair price? Or if (as co-owners are entitled to do if not bound to a contrary agreement) they sell their share/s to a total stranger? Or the time may come when you need to/want/must sell your share and your co-owner refuses to co-operate.
The issue here is that when you are co-owners of property you don’t each hold separate title to your own physically-delineated “share”. Your title deed (registered in our Deeds Office) will reflect each co-owner as holding an undivided share in the property. You have to act jointly or call in the lawyers.
A great deal of unhappiness and dispute – perhaps even the cost, delay and hassle of litigation – beckon. For example, a court can order one of you to buy the other out, or to subdivide the property, or even to order its sale (commonly by public auction) – but it really is a last resort to ask a court to decide what is best for you.
A simple solution and a checklist for you
The trick of course is as always to plan ahead. Before you buy the property, take advice on the best structure to use for your particular circumstances. Factors to bear in mind would include things like ease of ownership, cost of ownership, the tax angle, ultimate disposal, estate planning, asset security, protection from creditors, and so on.
A whole multitude of factors, unique to each situation, will determine whether you should own the property in a legal entity like a company or trust, or register it in your names jointly, or find some other way of ensuring that you share equally in both the costs and the benefits of property ownership.
Critically, you need to put in place a written, signed agreement setting out as clearly and as simply as possible –
The above is of course just a summary of some common issues, so ask your lawyer to help you with your own checklist.
The following two judgments are good examples of the practical application of the actio communi dividundo – Matadin v Parma and Others (4638/2009)  ZAKZPHC 18 and Mbalo v Makhosonke and Others (21021/2013)  ZAWCHC 91 also on SAFLII.
Jack Crook, Director at DotNews, is well known to law firms as the author of LawDotNews since 2005. Jack’s legal qualifications (LLB Lond and LLB Rhod) are supplemented by many years of practical experience in law, in marketing his own firm, and in helping other small and medium sized professional firms to prosper by using simple, low-cost, effective marketing strategies.
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