Purchasing a commercial or industrial property is often a significant investment, and in some cases, the property may be owned by more than one person or entity. Joint ownership can be a practical way to invest in property, but it can also introduce additional considerations when the property is sold, leased, financed, or developed.
When a property has multiple registered owners, each owner generally holds an undivided share in the property. This means that while ownership percentages may differ, no individual owner necessarily owns a specific physical portion of the building or land. Instead, the owners collectively own the property according to their respective shares.
This becomes particularly important when the property is sold. As a general rule, all registered owners must agree to the sale and sign the necessary documentation. One owner cannot simply decide to sell the entire property without the consent and participation of the other registered owners. If one of the owners is a company, trust or other legal entity, additional documentation and approvals may also be required.
The same principle can create challenges when a property needs to be leased, redeveloped or significantly altered. Depending on the ownership structure and the nature of the decision, all owners may need to agree before the property can be leased, developed or subjected to certain legal arrangements.
Joint ownership can also affect the financing of a property. When owners wish to use the property as security for financing, lenders may require the consent and participation of all registered owners. This means that one owner's financial circumstances or unwillingness to participate can potentially affect the ability of the group to secure finance against the property.
For buyers considering purchasing a property with another person or entity, it is important to establish the ownership structure from the beginning. A written agreement between co-owners can help clarify responsibilities, contributions, decision-making processes and what happens if one owner wants to sell their share or exit the investment.
It is also important to understand that owning a share in a property does not necessarily give an owner the right to independently sell or occupy a specific part of the property. The legal position will depend on the ownership structure, title deed conditions and any agreements in place between the owners.
For sellers, identifying all registered owners early in the sales process is essential. All parties who are required to sign must be available and willing to participate in the transaction. If one owner is overseas, deceased, under business rescue, or otherwise unable to sign, additional legal processes may be required and could potentially delay the transfer.
Before buying or selling a jointly owned commercial or industrial property, it is therefore important to conduct proper due diligence and review the title deed and ownership structure. Professional legal and conveyancing advice can help ensure that all necessary parties are identified and that the transaction is structured correctly from the outset.
At Marder Properties, we understand that every commercial and industrial property transaction has its own complexities. Whether you are buying as an individual, through a company, or together with other investors, understanding the ownership structure before entering into a transaction can help prevent unnecessary delays and ensure a smoother path from agreement to transfer.
The key takeaway: When a property has multiple owners, communication and agreement between all parties are essential. Understanding who owns the property, what percentage they own, and who has the authority to make decisions can make all the difference when it comes time to sell, lease, or invest.
