The implications of co-ownership of property

Buying property with another person is common, particularly between spouses or persons investing in property together. While co-ownership of property can offer several benefits, it is not without its legal and practical complexities, particularly when it comes time to sell.  

When a property is registered in the name of two or more people, each person generally owns an undivided share in the property. No formal subdivision of the property occurs, and accordingly ownership is not established over a distinct, specified portion of the land. Rather, each owner enjoys a percentage share in the ownership of the whole property. Each co-owner is only entitled to deal independently in his or her own registered share, and as such, the cooperation and participation of all co-owners is required when the entire property is to be sold.

A common scenario, however, is where only one co-owner wants to sell. While he or she will be unable to independently sell the entire property, or to force the other co-owners to cooperate, the individual co-owner may be able to sell his or her undivided share in the property, thus creating a new co-ownership arrangement with the owners who remain. The new purchaser takes the place of the outgoing owner without affecting the ownership rights of the other co-owners by transferring only the outgoing owner's relevant percentage share to the purchaser.

Such a transfer of a co-owner’s whole share in property can be effected by way of a conventional deed of transfer; however, where a co-owner wishes to sell only a fraction of their percentage share in the property, for example, if they own a 50% share in the property but only wish to sell half of that share, the co-owner must first obtain a Certificate of Registered Title on application to the Registrar of Deeds in respect of their 50% share before such a transfer can take place.

It is thus important to establish who owns a property, exactly what share they hold in it, and what percentage of that share is being sold. If you are a co-owner considering selling your interest in a property, or an individual wanting to purchase a property that is subject to co-ownership, it is advisable to obtain legal advice before entering into the sale agreement. Understanding what is owned, what can be transferred, and what the implications are for the other co-owners can prevent significant complications later in the transaction.

At Shepstone & Wylie, our Property and Conveyancing team can advise you on the implications of co-ownership in your specific sale and handle the transfer process meticulously and efficiently.