It happens often that an unmarried couple in good terms wishes to purchase a home through finance. Home loans are often quite substantial and require that there be a bond over such a property and this involves checking the affordability and the risk by the creditor on the debtor against their credit score.

What happens if an employed unmarried partner with very bad credit record who does not qualify for a home loan, wishes to purchase property with their unmarried partner that has a good credit record and qualifies, if the partner that has bad credit record indirectly pays for the house on a month to month, ca it be said that they both own the property even if, for purposes of the home loan the property is registered in the name of the other partner?

Let us consider the legal position to this as it applies in South Africa.

How does Immovable Property acquisition work in South Africa?

Immovable property acquisition is when a person or more than one person purchase or get to legally own a property. Our law recognizes only one officially proof of ownership of immovable property. That is, a person can only be said to own an immovable property if that property is registered in their name or title in one of the Deeds Registry Offices having jurisdiction in South Africa. In other words, ownership and acquisition of rights take place by means of a legally valid transaction through registration in the Deeds Registry Office. This is also known as the abstract theory.

Once a property has been acquired and delivered through delivery by registration of title in another person’s name, only the title holder is the legal owner who attracts legal rights, responsibility and obligations to the exclusion of anyone else in the strict sense.

This means that, in our scenario above, even if the unmarried couple have an understanding that, the partner with a good credit record applies for a loan and register “their home” in his or her name, even if the other partner is indirectly the one paying for the house on a month-to-month basis, there is only one legal owner who has rights over the property.

What maybe the Legal Consequences? 

Given the legal position, it must be acknowledged that regardless of the promises between romantic partners, it is not only death that separates people. There are a number of reasons which are ever lingering. Consequently, this reality of life must be considered.

If you are the partner that has bad credit record and cannot qualify for the home loan in your own right, it may not be worth the risk to sponsor or fund the bond payment of a property registered in another person name or title. You will not have any legal rights.

Should the relationship end, unlike perhaps in a marriage in community of property or out of community of property with accrual, you will not have any right of recourse or claim in the property. This may result in monies being wasted to the benefit of someone else, even if you would have wrongly thought that you may have a claim, rights or entitlement to the property.

One needs to consider their motives and after considering all necessary factors, apply their mind and reconcile their thoughts and intent. It may also prove wise to visit a family and/or property lawyer to get advice on this subject, and other viable alternatives to secure your interests.

Reference List:

• Alienation of Land Act 68 of 1981.
• Legator McKenna Inc. v Shea [2009] 2 All SA 45 (SCA).