Dual Ownership of Property - Transferring Shared Ownership | Legal Articles


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Dual Ownership of Property - Transferring Shared Ownership

There are many benefits of entering into a dual ownership of property, especially when individual finances don’t allow for single ownership of a home or property.

However, there are complications when it comes to one or more parties involved in the co-ownership of property deciding to cancel the original arrangement.

dual ownership of property

Transferring Dual Ownership of Property – Joint Property Ownership Disputes

Due to personal disputes that may arise, one party may choose to take full ownership of the entire property.

Alternatively, owners may decide to transfer each of their shares to an independent third party.

A common misconception regarding this process is that it is easier and less costly than that of transferring a property owned by a single individual.

How to Transfer Property Ownership

The process of transferring a shared portion of a property requires the payment of the following where relevant:

  • Advance homeowner’s association levies
  • Advance sectional title levies
  • Advance rates and taxes
  • Mortgage bond cancellation costs
  • Mortgage bond re-registration costs
  • Transfer fees to the conveyancer

All of these fees must be paid before the documents can be submitted to the Deeds Office.

Costs Involved with Transferring Dual Ownership of Property

Transfer Duties

According to the Transfer Duty Act, the acquisition of a shared portion of property is still deemed an acquisition of property, regardless of the size of the shared portion.

Therefore, unless otherwise exempted, transfer duty is payable by the transferee and the purchaser.

The conveyancer will need to lodge the various clearance certificates as well as the transfer duty receipt or transfer duty exemption receipts in the Deeds Office.

Furthermore, a written sale or disposal agreement which is signed by all parties involved will be required by the Receiver of Revenue and according to the Alienation of Land Act. Without this document, the disposal of the shared property will be invalid.

Reconciling Capital

Sometimes, the bank may not agree to the transferee taking over the existing bond. In such cases, the co-owners must agree to first cancel the bond and may have to raise new funds to pay off the original bond.

Should the joint owners choose to sell the whole property to an independent third party, the purchase price is generally used to pay off the existing bond as well as the estate agent’s commission.

In this case, only the nett proceeds made from the sale will be split between the co-owners according to their respective shares.

Conveyancing Attorney Fees

If not previously exempted, transfer costs which include the attorney’s fees and transfer duty must be paid.

In terms of industry recognised guidelines, conveyancing fees are based on the market value of the property being transferred.

When the conveyancer is transferring only half or a portion of the property, the fees are calculated according to market value of the portion.

Calculating Transfer Duty

If the value of the entire property is less than R900 000 (on property acquired after March 2017), then transfer duty is exempt by default.

There is a two-step calculation that is used to determine transfer duty on properties exceeding R900 000:

  • Calculate the combined value of the shared property
  • Divide the transfer duty for the value of the whole property by the amount of shares

Exemption of Transfer Duty

Only in cases of a High Court Divorce order or Will, is the transfer duty completely exempt.

Existing Mortgage Bonds

Banks often allow the purchaser of a half share of a property to take over the existing bond debt of the seller.

The purchaser will first need to submit an application to the bank for credit approval for a substitution of the debtor.

This credit check will ensure that the person taking over the property as sole owner is able to afford the entire bond on their own.

Once this application has been approved, the bank will forward an instruction with the original title deed to the relevant conveyancing attorney who will then submit it to the Deeds Office for registration.

Van Deventers & Van Deventers Incorporated – Conveyancing Attorneys Cape Town & Johannesburg

For more information about transferring dual ownership of property to a single owner or to a third party, please contact our attorneys.


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