When the bonds of marriage are declared irretrievably broken down, there is a myriad of administrative issues that need to be resolved. One of these issues relates to immovable property owned jointly by both parties to the dissolved marriage. This becomes even more complex when there is a mortgage bond registered over the property.
Determining how to deal with joint ownership and joint liability under a mortgage bond upon divorce is largely dependent on the provisions of the divorce order and, where applicable, the accompanying settlement agreement and whether the couple was married in or out of community of property.
Married in Community of Property
By operation of law, each spouse will be entitled to a one-half share in the property. Typically, however, the divorce order and/or settlement agreement will determine that one of the parties is awarded full ownership of the entire property. The party acquiring full ownership may apply to the Registrar of Deeds to endorse the existing title deed to the effect that he or she is now the sole owner of the property. No formal transfer is prescribed.
Married out of Community of Property
By virtue of their separate estates, the parties will already be co-owners of the property upon divorce. Once divorced, former spouses, however, rarely choose to remain co-owners of the property, and typically the divorce order and/or settlement agreement will provide for one party to acquire the other party’s share and become the owner of the entire property. Transfer of the share is effected by way of a formal deed of transfer and not merely by an application to the Registrar of Deeds.
Dealing with the Mortgage Bond
When there is a pre-existing mortgage bond over the property, both of the former spouses are co-mortgagors and still equally liable to the bank for the full debt amount under the bond. The parties will consequently have the following options:
- If the loan amount has been paid up, the bond can be canceled; or
- If the bond cannot be canceled due to the fact that there is still debt under the existing home loan, the party acquiring full ownership of the property will need to approach the bank with a loan application in terms of which he or she applies to be substituted as the only mortgagor under the existing bond and thereby assume full liability for the entire debt amount remaining on the bond. If the bank is satisfied that its client can afford the sole financial responsibility of repaying the bond, it will consent to the removal of the forfeiting party’s name and liability from the mortgage bond.
In practice and irrespective of having been married in or out of community of property, the party who has acquired the other party’s share will typically, and by virtue of the divorce order, need to compensate the forfeiting party for his or her share. Often, the acquiring party will bring an additional loan application requesting the bank to provide the necessary finance for this “buy-out” transaction. The bank will usually require that a second mortgage bond be registered over the property to secure the further debt.
Unique FAQs
- Can joint property ownership be maintained after divorce in Port-Elizabeth?While possible, it’s uncommon for former spouses to remain co-owners of property after divorce, as most opt to transfer ownership to one party through a formal deed of transfer.
- What happens if one party cannot afford to buy out the other’s share of the property?In such cases, the property may need to be sold, and the proceeds divided according to the divorce settlement agreement. Alternatively, the party retaining ownership may seek additional finance to buy out the other’s share.
- Is it possible to transfer a mortgage bond solely to one party’s name during divorce proceedings?Yes, if one party is awarded full ownership of the property, they can apply to be substituted as the only mortgagor under the existing bond, assuming full liability for the remaining debt amount.
- Are there any tax implications associated with transferring property ownership during divorce in Port-Elizabeth?While transferring property ownership during divorce typically does not incur additional tax implications, it’s advisable to consult with a tax advisor to understand any potential consequences.
- How long does it take to complete the transfer of property ownership and mortgage bonds after divorce?The duration varies depending on factors such as the complexity of the case, cooperation between parties, and administrative processing times. It’s advisable to seek legal counsel to navigate the process efficiently.
