Buying half a house?

C

Cicero

Expert Member
Joined
Jul 20, 2010
Messages
2,286
Reaction score
14
Location
Coastal
Hi,

I currently rent on a property owned by family members. They stay in the main house, and I'm on the secondary property.
They've run into financial issues and it could mean losing the house, and hence where I live too.

The property is worth probably R1.5mil, or so. But they only owe on their bond (I think) around R500k.
I'm wondering whether its possible for me to buy half the house, or a pro-rata amount, say R600k from them so that they can pay off their bond for good.

The plus side for me is I will end up owning half a property and get to stay where I am. And the plus side for them is they will not lose their house.

I will not kick them out of the main house or anything stupid, my main reason is just to take a burden off their shoulders until they are back on their feet or something.

Is this kind of thing possible? I'd obviously consult a lawyer, but I would just like to know from you guys whether its possible or not. There are also quite a few things I'd want to avoid that the lawyer can sort out. Like the unlikely event that they, or me, get into huge debt that the bank can't just repossess the house, etc.

Anyway, appreciate any thoughts, tips?
 
Definitely possible. You sign an offer to purchase for a portion, say 50%. Will you be paying off the bond? They won't be able to increase the bond - or register a new/2nd bond without your consent.

Risks - fuzzy, but should they get into more financial difficulties someone could attach their portion of the property if judgement is obtained. I'm not sure exactly how the process works, but the creditor could probably force the sale after attachment, in which case you will still receive your half of the proceeds - but it may be at forced sales price.
 
^^ is right... unless you can fully trust them, things can go wrong. I suggest you talk to them firmly, and tell them that if they cause crap, you also stand to loose big.
 
markface said:
Hi,

I currently rent on a property owned by family members. They stay in the main house, and I'm on the secondary property.
They've run into financial issues and it could mean losing the house, and hence where I live too.

The property is worth probably R1.5mil, or so. But they only owe on their bond (I think) around R500k.
I'm wondering whether its possible for me to buy half the house, or a pro-rata amount, say R600k from them so that they can pay off their bond for good.

The plus side for me is I will end up owning half a property and get to stay where I am. And the plus side for them is they will not lose their house.

I will not kick them out of the main house or anything stupid, my main reason is just to take a burden off their shoulders until they are back on their feet or something.

Is this kind of thing possible? I'd obviously consult a lawyer, but I would just like to know from you guys whether its possible or not. There are also quite a few things I'd want to avoid that the lawyer can sort out. Like the unlikely event that they, or me, get into huge debt that the bank can't just repossess the house, etc.

Anyway, appreciate any thoughts, tips?
Click to expand...

I would strongly suggest you NOT do this. In my opinion and in my experience, it causes trouble a lot of the time, even in the best of familial relationships. Too many "what ifs" .... example: one wants to sell / make structural changes / get a 2nd bond and the co-owner does not want to. Just too messy.

Other than a couple married ICOP, I do not think that any 2 or more individuals should co-own property. Not referring to property consortiums here, but even there you often find drama.

Just my 2 c.
 
Yeah, i understand all those issues. Its not something I'm gonna enter into lightly, and without a lot of thought. In fact, its rather a last resort. However, I am in a -financial- position whereby I can help out. I do not want them on the street, or to lose the house or anything. Obviously they also have the option to sell and downgrade, buying a property worth R600k cash. Then I'd have to look elsewhere, which is also fine I guess.

I trust them completely. They are not stupid/reckless by any means.

Thanks for the responses, these are the kind of things I need to think about.
 
As far as i know, you can " sub divide" the property, and "buy" the portion you stay on. This incurs a fee to do the division ( i heard 10% of value). You then own your part, and they can pay for theirs.

Talk to a lawyer.
 
luxe said:
As far as i know, you can " sub divide" the property, and "buy" the portion you stay on. This incurs a fee to do the division ( i heard 10% of value). You then own your part, and they can pay for theirs.

Talk to a lawyer.
Click to expand...

+1
 
Sounds like a bad idea overall (mixing business and family and especially with one side having money and one side not). The subdivision idea sounds decent though. Essentially it's then 2 properties.
 
Have a look at registering a usufruct on the property as well.

A usufruct is a legal institution in which someone, who is not the owner, is given the right to use and enjoy the profits and advantages of something belonging to another, for a certain period of time.

Basically the owners of the property would register a usufruct at the deeds office giving you rights to use the second property till you die while still retaining ownership.

Farmers do it often to avoid estate duties. For example the farmer donates his land to his son but has a usufruct on the right to live on the property till he dies.

The son has a property that is not worth a lot because he does not have the right to live on it.
The farmer has use of the property that is not worth a lot because he does not have owership of the land itself.

This should protect you should the owners get their property attached. Even if that happens, you still have the right to live on it till you die.

Google for further info. Its a very clever and complex piece of legislation and you would have to retain a person specialized in usufructs, usually an attorney
 
Last edited:
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X