24 September 2014 | Property Services
If you are considering buying a property with someone other than a spouse, it is advisable to enter a co-ownership agreement.
A co-ownership agreement should deal with issues such as the sale of the property, resolution of disputes and maintenance.
The danger of not entering into a co-ownership was highlighted in Claassen v Quenstedt and Others (1199/2011) [2014] ZAECPEHC (25 March 2014).
Claassen and Quenstedt intended to marry. They bought a house together that was registered in both their names. They did not conclude a co-ownership agreement.
Quenstedt paid the deposit, bond payments, rates and maintenance costs.
The relationship broke down and Claassen vacated the property.
Although both parties wanted to seel the property, they could not agree on a number of issues:
1 Should Quenstedt, who remained in occupation of the property, pay rent to Claassen pending the sale of the property?
The court held that an owner cannot be required to pay rent and bond installments in respect of the property that he owns and occupies.
Quenstedt's occupation of the property was lawful, and Claassen could not demand rent. It would have been different if Quenstedt was receiving rental income, in which case he would be obliged to share the profit with his co-owner.
2 How were the net proceeds of the sale to be divided?
The court ordered the parties to sell the property, settle the bond, pay agents' commissions and other costs, and split the net proceeds equally.
3 Could Quenstedt demand payment from Claassen for a share of the costs he incurred in respect of bond payments, rates and maintenance?
And if so, for what portion?
The court held that:
The time and money wasted in protracted litigation could have been avoided if, at the outset, the parties had entered into a co-ownership agreement dealing with all these issues.