The family home: comparing a sale with a buyout
Keeping or selling the family home requires two separate enquiries: how the value should be dealt with between the spouses, and whether the proposed transaction can actually be completed. An agreed amount is not the same as approved funding, registered transfer or release from a home loan.
Establish the starting figures
A home proposal should be tested both as an allocation of value and as a transaction that can actually be completed. Start with an indicative market value, a current bond-settlement figure, other secured obligations and realistic costs. An asking price is not guaranteed sale proceeds.
Use figures measured at compatible dates. Distinguish an asking price from a supported market estimate, and a monthly loan instalment from the outstanding capital or settlement figure. Identify other security, any arrears and costs requiring a quotation. Do not round away a material liability because the proposed allocation looks easier without it. Mark information still awaited so that a tentative figure is not mistaken for a final settlement amount.
Compare a sale on its own terms
For a sale scenario, deduct the applicable entered costs and secured settlement amounts before discussing the net amount available. Identify who bears each cost and what happens if the selling price changes. Do not assume that the remaining amount must be divided equally without considering the legal regime and settlement terms.
For illustration, a sale at R2,400,000 less a R1,500,000 bond settlement and R120,000 entered sale costs leaves R780,000 before any other applicable amounts. A proposed 60% allocation of that figure is R468,000. These are arithmetic examples only: they do not establish the correct legal percentage, predict the selling price or include an assumed tax calculation. Specify what happens if the actual proceeds differ and whether a payment is fixed or depends on the net proceeds.
Calculate a buyout separately
For a buyout scenario, use its own costs and funding requirements. Estate-agent commission should not automatically be carried over from a sale scenario. Consider the proposed payment to the departing spouse, conveyancing requirements, any bond arrangements and the cash available.
A buyout needs its own schedule. Identify the amount proposed for the departing spouse, transaction costs, the existing loan arrangements and the cash available. Do not automatically carry an estate agent’s commission from a sale scenario into a private buyout. For example, a R500,000 proposed payment plus R40,000 entered costs, less R100,000 available cash, leaves a R440,000 funding gap for those items. It says nothing about any additional refinancing required to deal with the existing loan.
Check the lender and conveyancing requirements
An agreement between spouses does not by itself release a borrower from the bank or transfer registered ownership. Ask for advice on the lender's requirements and the conveyancing process. A funding-gap estimate does not constitute bond approval or an affordability assessment by a lender.
Ask the lender and conveyancer what documents, approvals and instructions are required, and who will obtain them. A lender may still need to assess a financing proposal rather than accept the spouses’ agreement as approval. Keep a written record of the stage reached. Do not treat the issue of a settlement quotation or payment of the loan balance as proof that every account, security or registered bond has already been formally closed or cancelled.
Provide for the period before completion
Record occupation, bond instalments, rates, levies, insurance, maintenance and the risk of damage during the period before transfer or sale. Agree a practical fallback if refinancing is refused or a deadline is missed. Negative equity requires particular attention and should not be treated as an automatic payment entitlement.
The period between signature and transfer can be lengthy enough to create practical disputes. Address who occupies the property, which recurring bills each person pays, access for valuations or viewings, repairs and the handling of damage. An agreement about paying instalments should be considered alongside the actual loan obligations. Ask what records of payments are needed and whether any adjustment on completion is intended. Do not leave those questions to an informal assumption.
Record costs and a workable fallback
The figures used in a home comparison do not establish transfer duty, tax or an exemption. Obtain transaction-specific advice before accepting a proposal. A clear implementation timetable can be as important as the headline allocation.
A proposal should explain what happens if finance is declined, a signature is delayed or a sale cannot proceed at the expected price. Ask whether time extensions require written agreement and which person is responsible for each step. Tax, transfer duty and any exemption require transaction-specific advice, not a standard percentage inserted into every divorce calculation. Review the complete settlement and implementation documents before signing, particularly where the home is linked to other claims or debts.
Related guides
Official information
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Contact the Family Law Department at Spence Attorneys. Keep the first enquiry brief and identify a safe way to contact you. Fees, scope and appointment arrangements are agreed before confirmation.
The button opens an email to natalie@spencelaw.co.za. It does not send automatically. Do not attach identity documents, children’s full details or financial records before conflict screening and an agreed private transfer arrangement.
General information, not advice on an individual matter. An enquiry is not an accepted instruction or confirmed appointment and does not protect a court deadline. This is not an emergency service.
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