Consider joint ownership before you join hands
WHILE wilting in the Durban sun over the festive period, I was posed a question: when buying a property is it best to register it in the names of both spouses or lovers?
It is indeed better to own the property jointly - half of something is better than nothing at all. But there are exceptions to this general rule, as divorce attorney Colleen Currin of Bowman Gilfillan points out.
First, if you are married, it depends on the type of marriage agreement you've entered into. If you tied the knot under the in community of property regime, then it doesn't really matter in whose name the property is registered. That's because this regime confers equal ownership of the couple's assets to both spouses. So even if the house is registered in your husband's name, you own half of it.
And, says Currin, amendments to the law in the last few years mean both spouses now have control over the assets. (The new law scrapped the husband's marital power over his wife under in community marriages.)
If you are married under an antenuptial contract with or without accrual, the matter of joint property ownership has more relevance, especially if you are married without accrual.
These contracts do not confer equal ownership of assets and liabilities, as is the case with in community marriages.
Under an antenuptial contract without accrual each spouse owns the assets registered in his/her name only. It's the "what's yours is yours, and what's mine is all mine" scenario.
But there is an important exception - applicable to antenuptial contracts signed before November 1984. Currin says on the dissolution (by divorce) of such marriages, the court has the discretion to order a fairer distribution of the couple's assets. "Despite this fact, I advise all women married under an antenuptial contract without accrual, to go for, first, sole ownership of the property and if not, joint ownership of property," says Currin.
This is obviously only so if the property is not heavily bonded and there is no risk that the bond will not be paid, because otherwise the wife is liable for her share of the bond repayments. Even worse, adds Currin, if the sale of the property does not cover the outstanding bond amount, the wife is liable for 50% of the shortfall.
If you are married with the accrual system, the legalities are slightly different. Each spouse still owns the assets belonging to him or her, but they share equally in the growth of those assets during the marriage.
"In this case, joint ownership of property may not matter so much, but I would still advise it as it gives both spouses a measure of control over the property," says Currin.
The second aspect of joint ownership to consider is that of insolvency. And this is where the urban legend of "my house is registered in my wife's name to keep it from my creditors" springs from.
If your debts exceed your assets, an irate creditor may apply for your sequestration, which will entail selling your assets to defray the debts.
Once again, the marriage contract has relevance here. For marriages in community, the home and other assets are sure to be sold: each spouse jointly owns the assets and is jointly responsible for the debts of the other. But the parties in antenuptial contracts, with or without accrual, do not share in the liabilities of the other spouse.
So if the house is in your name, and your husband goes insolvent, his creditors cannot attach your home.
If you own the home jointly, then your husband's creditors have rights to his share of the asset only. If one spouse does bear a higher risk of insolvency, for example running his own business, then registering the family home in the name of the other spouse makes sense.
For couples who are not married but who live together, joint ownership of the family home is crucial. "What I see a lot of is the man registering the house in his name, and the woman pays the household bills. And when they split up, there is huge drama as his money was going into an asset while she has nothing to show for her money," says Currin.
The ideal arrangement is to enter into a strictly business agreement with your partner.
Joint property ownership can be achieved in a number of different ways.
The property can be jointly registered, or you can form a close corporation, a trust or a company giving each party a percentage interest, or a separate agreement can be entered into.
"There are no blanket rules, it's important to get professional advice to formulate the best structure for your needs," advises Currin.