South African banks have noticed what stokvels have known for years: you get further pooling money than going it alone. FNB now offers a home loan called Collective Buying, which lets up to 12 family members or friends apply for one bond together. Combining your incomes means a bigger loan, and a monthly instalment that's easier for everyone to carry. Absa offers something similar through a product called MultiPlan, which splits a single bond into separately structured sub-accounts for each co-applicant, though everyone still remains jointly and severally liable for the total loan.
This is a good thing, in principle. Five colleagues earning R15,000 each can qualify for a bond that none of them could get alone on their own. It's also exactly how the "property stokvel" trend gets started, not with a company and a legal agreement, but with a group of friends and a joint loan application. We cover that trend in our piece on property syndicates
What the bank's approval doesn't include is a plan for what happens between you (if the friendship sours, someone loses their job, or you simply disagree about the house). That plan is the co-ownership agreement. You need it before the bond is registered, not after the first argument.
What The Bank Actually Signs You Up For
Before you draft an agreement, every co-owner needs to understand what the bond itself already commits you to. It is more than most people realise.
You're Each On The Hook For The Whole Amount
When several people sign one bond together, South African banks can legally chase any one of you for the full amount owed, not just your share. This is called being jointly and severally liable. In plain terms: if one co-owner stops paying, the bank doesn't write off their piece. It comes after whoever it can collect from, for the full instalment, not a third or a fifth of it.
This means two things for you:
- Your credit record depends on everyone else's behaviour. If any co-owner misses a payment, it shows up against all of you, because the debt is recorded against the whole group.
- You could lose more than your share of the house. If the bank can't recover what it's owed from the property alone, your other personal assets are at risk too.
Without An Agreement, Ownership Is Assumed Equal
Here's something that catches people out: the title deed only records that you own a percentage of the property, not why. So if five people buy a house together and don't say otherwise, the law assumes you each own an equal fifth, even if one of you paid a much bigger deposit or covers more of the monthly instalment.
If your contributions aren't equal, you need to write the real split down, in the Deed of Sale and in your co-ownership agreement. If you don't, the legal default wins, no matter what you agreed verbally.
Why A Verbal Understanding Is Not Enough
South African law gives every co-owner a simple right: nobody can be forced to stay a co-owner against their will.
If you and your co-owners can't agree on what to do with the property (sell it, divide it, manage it), any one of you can take the matter to court. The court can order the property sold and the money split, or award the house to one owner if they pay out the others. Lawyers call this remedy the actio communi dividundo (it goes back to Roman law, and South African courts still use it today).
The important thing to understand: if it gets to court, the terms are decided by a judge, not by you or your family. A co-ownership agreement exists to prevent that. If you've already agreed, in writing, what happens when someone wants out, you never need a court to decide it for you.
What The Agreement Must Cover
A co-ownership agreement is a private contract between the co-owners. It's separate from the title deed and separate from the bond, and it sets out how you'll treat each other for as long as you own the property together. At minimum, cover the following.
1. Ownership Shares, And How You Worked Them Out
Write down each co-owner's percentage, and show how you calculated it: deposit paid, share of the monthly instalment, money put into renovations. If you expect this to change over time (say, one person starts paying down more of the bond), say how that affects ownership, or say clearly that it doesn't.
2. Ongoing Costs
- Agree how you'll split the monthly bond instalment, rates, levies (if it's a sectional title unit), insurance, and maintenance.
- Agree what happens if someone misses their share of a payment. The bank doesn't care whose fault it was; it will still come after all of you. So your agreement needs its own consequence: a grace period, interest on the missed amount, or a right for the others to cover it and get paid back later.
3. Who Lives There, And Renting It Out
- Agree who's allowed to live in the property, and on what terms (rent-free, or paying the other owners market rent).
- If you rent it out to someone else, agree who chooses the tenant, who holds the deposit, and how the rent gets shared.
4. What Needs A Vote
Agree what needs everyone's sign-off and what just needs a majority, for example, renovations above a certain amount, refinancing the bond, or changing how the property is managed. Don't make small decisions, like fixing a leaking tap, as hard to agree on as selling the house.
5. Selling Or Leaving
This is the clause that prevents most arguments:
- Right of first refusal: before anyone sells their share to an outsider, the other co-owners get first chance to buy it, at an agreed valuation, within an agreed time.
- How you'll value the share: an independent valuer, an agreed formula, whatever you choose. Just decide it now, while everyone's still getting along, not later during a dispute.
- Transfer duty: when one owner buys another's share, SARS charges transfer duty on that amount, but only above R1,210,000. So on a typical starter home, an internal buyout often pays no duty at all. On a more expensive property, it's different: split a R4.5 million house three ways, and a departing owner's third (R1.5 million) attracts roughly R8,700 in duty. Whoever buys the share pays it. Say so upfront, so it isn't a surprise later.
6. Getting Out Of The Bond
Selling your share in the house and getting off the bond are two different things, and your agreement should be clear that both need to happen:
- If one of you wants out while the others keep the house: the remaining owner(s) ask the bank to take over the bond alone, known as a "substitution of debtor." The bank will run a fresh credit check; it's the bank's call, not yours, so agree on a backup plan in case the bank says no.
- If you're all selling and exiting together: the bank needs 90 days' notice, and the full balance plus interest and fees must be settled before the bond is cancelled.
- Either way, there are attorney's fees. Agree upfront who pays them.
7. If A Co-Owner Dies
Say what happens to a co-owner's share if they die. By default, it goes to their estate. Decide whether the remaining co-owners get first option to buy that share before it can be sold or left to someone else.
8. Sort Out Disagreements Before Court
Agree on a way to sort out disagreements yourselves, such as a mediation step, or a process like the one in our Scheme Rules Template, before anyone goes to court. A forced sale through the courts is slow, expensive, and rarely makes anyone happy. It's almost always better, faster, and cheaper to sort it out yourselves.
Going Bigger Than A Simple Co-Ownership
A few friends owning one house together, in their own names, is one way to do this. But if your group is bigger, plans to buy more than one property, or wants the protection of a company structure instead of changing the title deed every time someone leaves, a Pty Ltd-owned property syndicate is usually the better fit. We compare the options, including the tax differences, in A Beginner's Guide to Property Syndicates and Stokvel, Trust, Or Pty Ltd?
The Checklist
Before you sign a joint bond application:
- Agree each co-owner's percentage, and how you worked it out
- Write that percentage into the Deed of Sale, don't rely on the legal default
- Draft a co-ownership agreement covering costs, usage, and decision-making
- Agree a right of first refusal and a way to value a share when someone leaves
- Agree what happens if a co-owner dies
- Agree how you'll sort out disagreements before going to court
- Get a conveyancing attorney to check the agreement and the Deed of Sale (this article is a starting point, not a replacement for one)
Important: This article explains, in general terms, how co-owning property works in South Africa. It is not legal advice. Get a conveyancing attorney to draft or check your specific co-ownership agreement and Deed of Sale before you transfer.
References:
- Collective Buying Home Loans (FNB)
- Understanding Joint Bond Ownership (Rawson Properties)
- How To Escape Joint Liability Under A Mortgage Bond (Abrahams & Gross Attorneys)
- Actio Communi Dividundo: The Judicial Partition Of Co-Owned Property (Adams & Adams)
- When Co-Ownership Becomes Unworkable: The Actio Communi Dividundo (SchoemanLaw)
- Joint Property Ownership In South Africa: A Comprehensive Guide (Red Properties)