Shared ownership of property as a live-in home, holiday residence or ‘To Let’ investment is a viable option to finance your first property or to enter the property investment market. Whether you co-invest with a partner, spouse, friend or family, be sure to construct a solid legal foundation for this relationship.
Live-in relationships
Agreements between parties who co-habit are seldom contracted, especially when one moves in to the other’s property as a partner or friend. Live-in relationships are centred on good faith and optimism and the one who moves in may find their contribution to the household – rent, levy, groceries, satellite television or contents – nullified when the relationship terminates unless a contract is put in place to specify monthly contributions made by each party and their resulting shares in the property.
A tenant paying rent for a room is a rental agreement, which should also be contracted.
Holiday homes
Shared holiday residence investments between friends, family or colleagues can work well, provided that an annual roster of usage fairly allocates time, taking high-demand holiday periods into consideration. All parties contribute to expenses and household contents, like electronics, appliances and furniture; every contribution must be documented. It is common for one person to handle administration of the property, like bond repayments, levies and maintenance. They also ensure that transparency around usage and finances is maintained.
Buy to rent
When property is bought as a ‘To Let’ investment, parties usually seek legal counsel to cement this business transaction. Thought should be given to administration, rental agreements, designating an investor as the tenant’s contact and financial transparency.
Sectional title considerations
Sectional title properties are those where a number of people together own the piece of land on which a development has been built and each of these people own a section (townhouse, flat) on this land or in the building.
Specialist sectional title attorney Marina Constas, author of ‘Demistifying Sectional Title’ explains that investors must be registered on the title deed as owners of the property. “They can attend body corporate meetings together and they can be elected as trustees but they will only have one vote,” she says.
Constas warns that while shared investment is a financial plus, both owners are legally responsible for the property. “Should the levy go into arrears, all parties will be sued and they will also be taken to arbitration, not just the administrator or ‘guilty’ party,” she explains. “When it comes to money, you do need to choose your partners wisely and to make sure that everyone knows what is happening at all times”.
Avoid heartache
Mixing money with friends, family and partners can lead to heartache. But, while it appears pessimistic to draw up contracts that make provision for relationship separations in the future, legal agreements should be put in place to quantify roles, contributions and shares to protect your investment and interest in every conceivable eventuality.
- Marina Constas
Marina Constas, a specialist Sectional Title attorney and Director at BBM Attorneys.
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