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Separating and joint bond - options?

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31 Jan 2013

A Property24 reader asks:

A reader says a friend in a traditional marriage with a joint home loan is in the process of separating, but her partner refuses to sell the house. What are her options?

A friend is in a traditional marriage with a joint bond and they are in the process of separating, however, her partner refuses to sell the house. 

Are there options my friend can explore? 

Gustav Zwiegelaar, Regional Manager at SA Home Loans in the Western Cape, advises:

When a loan is extended and a bond registered the parties involved are held responsible for the loan until such time as the bond is cancelled and the loan is settled. The reader is in a difficult situation as there is very little one can do once a property is jointly owned and the bond is registered in the name of both parties. Should either one of the parties cause the bond to go into arrears through non payment both parties suffer a degeneration in credit worthiness and both are held responsible for the outstanding loan amount plus potential interest. It is thus of absolute importance that the bond repayments are honoured. 

The reader refers to the fact that the partner does not wish to sell the property. The most practical and amicable solution I can suggest is that the partner who does not wish to sell the property purchase the half share owned by the other party. 

At SA Home Loans we are familiar with the mechanics of such a transaction and regularly attend to these applications. 

The parties may agree to a price which, typically, would be half of the current market value of the property. The purchaser can then apply for a home loan to cover the existing loan amount plus the balance of the purchase price. The difference between half of the property value and half of the current loan amount is then paid out to the other partner, who is the seller. This is commonly known as a half share transfer. A new bond is registered and the half share that is sold is registered in the name of the buyer through a property transfer at the Deeds Office, so that the buyer becomes the sole owner. The seller receives a cash settlement for the remainder of the value that is sold. 

The best route to take is to agree on a purchase price and for the buyer to obtain a home loan. A conveyance attorney must be appointed to attend to the transfer, which will also involve fees and costs, including transfer fees and possibly duties, depending on value. A local home loans consultant at a home loans institution will be able to give the best advice. 

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered. 

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