Joint ownership agreement: holiday property

This document is useful to purchase a property together and use it for holiday occupation, with generally one owner occupying the property at any one time. It provides options for the management of the property: each owner can be responsible on a rolling basis or you could appoint one as a property manager. As well as the standard provisions you would expect in this type of agreement, the document covers: exit strategies (eventual sale), owners’ obligations, maintenance and repair of furniture and fixtures, and changes in ownership by operation of law (e.g. on death). It is not suitable for commercial use – where the owners are purchasing properties for a jointly owned business.
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About this document

This fractional ownership agreement covers the situation where two or more people share ownership and use of a house, flat or other property for holiday occupation. The house or flat may be enjoyed by both owners (although not simultaneously for long periods of time) or rented to others for short stays.

Broadly, the contents of this document cover three areas: ownership, management and sale.

Under the South African law, the registration of ownership does not record the shares in which a property is held. It assumes ownership proportions are the same as the proportions that the owners contributed to the purchase price. So if the arrangement is that one owner puts down a larger share of the deposit, but the other pays the majority of the mortgage and is entitled to a share of the sale price as calculated by a formula of their joint devising, all of that needs to be recorded in an agreement such as this one.

This agreement can also record a beneficial interest – that is the share owned by someone who is not registered on the deeds. For example, that could be a family member who has loaned one of the owner’s money to contribute to the purchase price.

Expenses relating to maintenance and excessive use by one owner to the perceived detriment of the other are common reasons for the souring of the business relationship. By setting out who pays for expenses and upkeep, and how use of the holiday property is shared, arguments can be reduced.

This contract also lets you decide what happens if either side wants to sell his or her share, or the whole property. An investment in a holiday home can be significant, and it will be important to both sides that neither holds up a sale or reduces the price if the other wants out of the arrangement.

Features

  • Suitable for ownership and use of a house, flat or other property for holiday occupation in the South Africa or abroad
  • Not suitable for a business letting, a lease of more than three months or a residential tenancy

Alternative documents

If you are living with the other owner in the house or flat for significant periods of time, we have another ownership agreement for residential property

Contents

  • Terms of beneficial interest
  • Price and payment
  • How many people allowed to occupy at one time and who they may be
  • Who and how will manage payment of expenses
  • Management
  • Detailed management structure ordered by annual meetings of the owners, possibility of proxy voting
  • Undertakings by the parties
  • Alternative exit strategies to allow for a share to be sold to a third party, after offering it to all other owners
  • Effect of termination
  • What happens when someone wishes to sell
  • Other legal provisions to protect your interest
  • Explanatory notes to help you edit the document
Draftsman

This document was written by an attorney for Net Lawman. It complies with current South African law.

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