There are many assumptions when it comes to who gets to keep, or live in, the matrimonial home after a divorce order is granted.
But the truth is that ownership of the home will either depend on who the property is registered to, or how the couple is married.
If they are married in Community of Property (COP) the home will be in both names, even if it was acquired by one partner before the marriage.
If, however, a couple is married out of COP, Maria Davey of Meumann White Attorneys, says the property can either be registered in one or both names.
“The property is an asset in the joint estate if it is a marriage in COP. If they are married ANC (antenuptial contract) with accrual, it is an asset in the estate of the registered owner/s.
“I mention it being an asset because everything gets taken into account in determining the value of the joint estate (if COP) or individual estate if ANC with accrual. Who keeps the property depends on how the parties eventually settle the proprietary consequences of the divorce,” she says.
Echoing this, Eduan Milner of Eduan Milner Attorneys, Notaries and Conveyancers in Cape Town, says it is important to differentiate between a marriage in COP and one out of COP because the legal consequences differ markedly.
If the marriage is one of COP the property belongs to both spouses in equal shares. This is the case even if it was owned by and registered in the name of one spouse only.
“The day they got married the other spouse legally acquired a half-share in the property, even though the title deed was not amended.”
The normal legal consequence flowing from such a marriage, he says, is that both parties retain their half-share in the property. The one party can, in the summons at the start of the divorce proceedings, request that the other party forfeits his/her share, but the reasons for this will have to be alleged and proved.
Settlement agreement during divorce
If the couple decides that one partner will keep the home, a settlement agreement will be drawn up and, usually, the partner keeping the home will pay the ‘leaving’ spouse for his or her share.
However, Milner often finds that parties are not aware of the costs involved with such agreements.
“They think that it is merely ‘a change of name’ on the deed, but it requires a transfer of ownership in the deeds office, with the usual conveyancing costs. They must also keep in mind that, if there is still a bond registered over the property, that bond must either be cancelled simultaneously with the transfer of ownership – with the remaining balance to be paid on registration to the bank by means of a new bond to be registered by the retaining owner – or the party retaining ownership must take over the existing bond.”
In both instances, the banks will do a full credit application to see if the retaining owner can afford the bond on his/her own.
“Very often parties agree that the one spouse will ‘buy out’ the other spouse, but then when it comes to the practical implementation thereof, they realise that they cannot afford it.”
Thus, he advises that, before agreeing to such an arrangement, the couple checks with the bank to ensure the relevant partner qualifies to take over or replace the existing bond. They should also get quotes on the costs of the transfer of ownership and the bond registration.
“Usually with a divorce, there is not too much money lying around. Therefore, it could very often be best to sell the property and divide the proceeds equally. That will give each party much-needed cash to make a fresh start.”
While sometimes people wish to retain the property for sentimental reasons or because they want to remain in the property to not further disrupt the lives of minor children, “the finances to do that exercise is sometimes a sobering factor”.
Home ownership complications during divorce
Many people have assumptions on how a court decides which party gets to keep the house, but Davey says the most common scenario is the sale of the property.
David Campbell, also an attorney at Meumann White, explains that this is either because neither of the parties can afford the property individually – bearing in mind the bond installments, rates, and taxes, or because they cannot agree on who will keep the home and who will move out.
Echoing Milner, attorney Simon Dippenaar of Simon Dippenaar and Associates, also finds that many people do not realise that, if they are transferring ownership of the property to the other spouse – for example, if the husband’s name is on the bond but the wife is remaining in the home – then the deed will need to be transferred to the new name, with the associated fees.
“If both names are on the bond, which is the most usual scenario for a married couple, then the process will depend entirely on the matrimonial regime.”
Citing Section 57 of the Deeds Registries Act 47 of 1937, Dippenaar says a substitution of debtor (SOD) is used when an existing owner takes over the obligation of a mortgage bond from a co-owner.
This section states that “the registrar may…register the transfer and substitute the transferee for the transferor as debtor in respect of the bond”.
He says the cost to register the transfer is “high”.
“However, this only applies to owners with no relationship to each other or couples married out of community of property. Couples married in COP pay no transfer fees. They are only required to pay a conveyancing tariff fee for a bond endorsement on the SOD. It is an administrative and relatively inexpensive solution.”
Couples married out of community of property must pay full transfer fees, Dippenaar notes.
The court has no favourites during divorce
If one of the spouses feels that he/she can afford the property and wishes to retain it, Milner ays the couple can simply agree to it.
“Such an agreement will obviously depend on the valuations that they obtain for the property and the amount of the ‘pay out’. If the one spouse feels that he/she will get a better price if they sell the property and divide the proceeds, that spouse cannot be forced to accept the offer of the other spouse.”
Failing an agreement, he says the court will usually order that the asset be sold and the proceeds be divided equally.
“So the spouse making the offer will have to make it something worthwhile to consider. If both can afford to retain the property and are adamant that they wish to keep it, they will have to sell it. Alternatively, once again, the court will order it. Keeping the property in co-ownership is definitely not recommended.”
If the marriage is out of COP though, irrespective of whether the accrual system applies, Milner says the process “could be slightly simpler”.
“If the property is registered in the name of one spouse, he/she will retain the property. If however the property is registered in both their names, the same principles discussed above will apply.”
How to protect yourself during divorce
Ownership is always the best way to protect yourself, Milner says.
“Therefore, if you are contributing to the asset, make sure that your name is on the title deed representing your share...If that cannot be done, the second option is to conclude an agreement with the spouse who is the sole owner, which states what contributions are being made, what will happen when the property is sold, and what will happen on divorce.
“However, I always say to my clients, it remains a piece of paper.
“Yes, it is a valid agreement and enforceable in a court of law, but you will have to go through the courts to enforce it, which may be a long and costly process. By the time you obtain judgement against the other spouse, the property might be sold and the money spent. If that spouse has no assets to attach, your court order won’t put money in your pocket.”
Davey agrees that you should have a partnership agreement detailing how the property – and its repairs, maintenance, upkeep, rates, taxes, and rentals, are to be dealt with.
“Such an agreement will be binding between the parties but not necessarily third parties.”
The best way to protect your rights to the matrimonial home, Dippenaar says, is to ensure your name is registered as a co-owner of the property.
“There is no right stronger than a real right registered against the immovable property.”
Campbell adds: “Whilst parties generally do not want to think about separating when they are acquiring their matrimonial home, this is unfortunately a reality that, if dealt with upfront, can prevent a lot of issues down the line.”