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Buying property with a partner, friend or family member
When two or more people buy a home together, the bank will usually hold each of you responsible for the whole bond, not just your share. Agree on the rules between yourselves in writing before you sign anything, because the bank and the municipality will not follow your private arrangement.
How the bank sees co-owners
Co-owners can hold undivided shares in a property. You might own half each, or 70% and 30%. But banks generally require every buyer to be jointly and severally liable for the bond. That means the bank can claim the full amount from any one of you, whatever the share split. If your friend stops paying, the bank can come to you for all of it.
The same applies to the municipality’s rates and to levies in sectional title. A co-ownership agreement between the two of you does not bind them. Read the actual bond documents before you sign, and ask the bank to explain anything unclear.
Banks assess the combined income and debts of all the buyers. Applying together can raise the amount you qualify for. It can also work against you if one buyer has a poor credit record. See how banks decide what you can afford.
Write a co-ownership agreement
Love, friendship and family ties are poor substitutes for a contract. A co-ownership agreement is a private contract between the owners. It does not change what the bank can do, but it protects you from each other. Ask an attorney to draw it up. It should cover:
- who owns what share, and who paid how much of the deposit and transfer costs;
- who pays what towards the bond, levies, rates, insurance and repairs;
- what happens if one person misses payments;
- how one owner can sell their share, and whether the others get the first chance to buy it;
- what happens if a relationship ends, if someone dies, or if someone wants out;
- how the property will be sold if you cannot agree, and how the proceeds will be split.
Do this at the start. It is far harder to agree on these questions once you are arguing.
If you are married
If you are married in community of property, you and your spouse share one joint estate. In that case the Matrimonial Property Act requires written consent from your spouse to sell or mortgage immovable property in the joint estate. It also applies to signing a credit agreement such as a bond. The consent must be given separately for each act and signed in front of two witnesses. A court can authorise the deal if consent is unreasonably withheld or cannot be obtained.
This does not mean a spouse must consent to every purchase. The rule applies to selling, mortgaging and bonds, and to certain instalment-type contracts. Property that falls into a joint estate must be registered in both spouses’ names. The deeds also state your marital status and your spouse’s name.
If you are married out of community of property, or are unmarried, different rules apply. Unmarried partners have no automatic share in a home registered in the other person’s name, so put both names on the title deed if you both pay. Ask your transfer attorney how your marital regime affects your purchase.
Practical things to settle early
- Who qualifies. Each buyer will need to provide ID and often proof of address, plus payslips and bank statements.
- The deposit. Record each person’s contribution in writing. This matters if you sell and want your money back in the same proportion.
- The offer. Every buyer should be named on the offer to purchase. See what to check in an offer to purchase.
- Monthly costs. Work out the total, then agree how it is split. The bond repayment calculator shows the instalment for different loan amounts.
Buying with family
Parents often join a child’s bond to help it qualify, or friends pool a deposit. These arrangements work best when everyone understands they are taking on the debt. A parent who signs as a co-buyer is liable for the bond even if they never live in the home, and the bond may count against their own borrowing capacity.
If you only want family to help with the deposit, you can ask whether it should be a gift or a loan, and put that in writing. For tax or inheritance questions, speak to an attorney or tax practitioner.
What to do next
Sit down together and be honest about income, debts and plans for the next five years. Then use the affordability calculator with your combined figures, and read the first home buyer’s guide for the wider steps. When you are ready, search for properties.
This article is general information for South African readers, not legal, financial or tax advice. Rules and rates change, so check your own situation with an attorney, your bank or a tax practitioner. Our property calculators can help you work out the numbers.