How different marriage contracts affect homeownership in South Africa
There are several marital systems recognized by the South African Deeds Office, each with a unique impact on property ownership and transactions. Understanding these differences is crucial for couples to make informed, long-term real estate decisions.
Purchasing a home as a married couple is an exciting milestone, but it's essential to take a long-term approach when considering real estate investments. It's important for couples to fully understand how their marriage contract will impact their shared homeownership, as the terms of the contract can influence their rights, responsibilities, and financial outcomes.
Below, we take a look at the different options
In Community of Property
This marriage contract fully embraces the idea of shared ownership—what’s yours is mine and what’s mine is yours. Any property purchased during the marriage is jointly registered in both spouses’ names. Moreover, any property you owned before marriage automatically becomes part of the joint estate after you marry.
One important aspect is that you cannot sell a jointly owned property without your spouse's consent, as both of you now co-own it. However, if you inherit property with the condition that it is excluded from the joint estate, this would be an exception.
Out of Community of Property
Also known as an Ante-Nuptial Contract (ANC), this type of contract allows for separate ownership of assets entering the marriage. You can buy and own property independently of your spouse, but you also have the option to purchase property jointly if desired. However, you are also able to purchase a property jointly if this is what you wish to do.
ANCs come in two forms: with or without accrual. Without accrual, the two estates remain separate throughout the marriage. With accrual, while the assets before marriage stay separate, everything acquired after the marriage is pooled and split fairly upon dissolution, unless excluded by the ANC.
If the marriage dissolves or there is a death of a spouse, then the items accrued during the marriage (unless expressly excluded in the ANC) are split fairly between the individuals.
According to Customary Law or Muslim rites
Unless an Ante-Nuptial Contract is in place, any customary marriage concluded after The Recognition of Customary Marriages Act 120 of 1998 came into effect on 15 November 2000 is deemed to be in community of property and will follow the same conditions as explained above. Those who were married before this Act came into effect can own property separately from their spouse or they may purchase property together as co-owners if this is what they prefer. Pre-2000 Customary Law and Muslim Rites marriages are similar. But, those married after 2000 under Muslim Rites would enjoy similar benefits of a marriage Out of Community of Property, whereas post-2000 Customary Law marriages are more similar to being married in Community of Property.
Purchasing and selling property jointly with a legal spouse
When purchasing property with your legal spouse, you would usually take out a joint mortgage loan, the property is then owned in equal parts and both parties are responsible for the mortgage loan jointly and severally.
The written approval of the other spouse is needed should one of the spouses wish to mortgage or sell the property.
In the event of divorce, the divorce agreement will set out how the property is to be dealt with. If it is to be sold, the spouses will share the proceeds in equal proportions. If one spouse retains the property, no formal transfer of ownership takes place, but the title deed will need to be endorsed by way of an application to the Registrar of Deeds.
In the case of marriage out of community of property, each party has their estate and therefore co-owns the property and shares equally in the proceeds when it is sold. Should one party elect to retain the property in the event of divorce, the transfer of the share must be done by way of a formal deed of transfer and not merely an application to the Registrar of Deeds.
What to do before buying a property with a spouse or partner
Have a serious conversation with your partner before getting married
Marriage is a serious step and so is purchasing a property with someone. Before tying the knot, sit down with your partner and speak to them about the variables involved in purchasing a property. Doing so not only signals a serious and honest attitude from both parties but will also safeguard you should the unexpected occur.
Meet with a lawyer to discuss the legalities
Once you have spoken to your partner, it may be a good idea for you both to sit down with a lawyer to discuss the legal implications involved in purchasing a property jointly before signing on the dotted line. A conveyancing lawyer will be able to assist you in dotting the i’s and crossing the t’s while also practically explaining to you what to do in the event of a partner dying or in the event of divorce. Taking the time to sit down with a lawyer not only creates a safe space for the conversation but can definitely assist you in the long run.
When the unexpected happens
Keep all communication strictly between the agent and buyer
In the event of losing a partner or significant other, it is imperative to keep all communication strictly between the agent and the prospective buyer. One must be aware of the emotions involved during this time and realize that sellers may be in a sensitive and possibly fragile state. Striking up any communication between buyer and seller could cause unnecessary distress for the seller and also potentially endanger their sale. A trusted and experienced real estate agent from a reputable agency should be the seller’s one and only port of call in communication with their sale.
Once you sell, invest a portion of your ROI safely so as to not squander your earnings
Coming into some money could certainly have an overwhelming effect on your physical and mental state and could influence your usual decision-making in some way or the other. As a precaution, use a significant portion of your earnings to ensure you have a ‘war chest’ of sorts for days you may need it. Be it for your own retirement or the education of your children, it is always prudent to have enough invested for the future.
Stay with family or a friend before making the decision to purchase a property
The decision to purchase a property in the frenzy and emotional distress of having lost or separated from a loved one can be a lot for anyone to deal with. If you have successfully sold your property, make the decision to stay with family or a friend until you are completely ready to purchase another property. Doing so will not only allow you time to regain your bearings but will also offer you the opportunity to look around and find the property perfectly suited to you.
More questions and answers
If I am married in community of property does my spouse or partner have to sign the sale agreement as a seller or buyer?
Yes, both spouses or partners need to sign the sale agreement and transfer documents if married in community of property.
If I am married out of community of property does my partner/spouse have to sign the sale agreement?
If the property is registered in both parties’ names, then both must sign the sale agreement and transfer documents as they both are equal owners. If, however only one spouse owns the property then only he/she needs to sign the sale agreement and transfer documents irrespective of the marriage arrangement.
