By Sloan Wilson
We are quite often asked for advice on the advisability of registering property in the name of minors (unmarried persons under the age of 18).
Parents sometimes wish to invest in property and register the property in their minor child’s name. There can be any number of reasons why they consider doing this. Sometimes their intention is to provide their child with a home when they move out of the family home or the intention may be to give the child a “start in life” by providing them with an asset which generates income in the form of rental.
There is no legal impediment to registering property in the name of a minor. However, with regards to the contract (deed of sale) to purchase the property it must be noted that minors have no or limited contractual capacity depending on their age. Minors under the age of 7 have no contractual capacity and the deed of sale must be signed on their behalf by their guardians (normally the parents). Minors aged 7 to 17 years can sign the contract with their parents assistance or alternatively the parents can sign the contract on behalf of the minor.
There are potential disadvantages and also practical and legal implications arising from registering property in a minor’s name. Parents who are considering registering property in their minor child’s name should be aware of these possible disadvantages and implications before making any decision. The parents financial position and the purpose for which the property is being purchased are some of the factors that must be considered.
Once property has been registered in the name of a minor it may not be sold or mortgaged (bonded) without the authorisation of the Master of the High Court (if the value of the property or amount of the bond as the case may be does not exceed R250 000 – as at 2016) or the High Court itself (where the value of the property or amount of the bond exceeds R250 000 – as at 2016). The above amount of R250 000 may change from time to time.
If property which is to be registered in a minor’s name is being purchased for cash then no authorisation is required. However, if parents wish to raise money to purchase the property by registering a bond over the property then the authorisation of either the Master or the High Court is required. If property is originally purchased for cash and registered in the minor’s name and the parents at a later date wish to register a bond over the property the Master or the High Court must authorise the registration of the bond. Authorisation will only be granted if the mortgage is necessary for the preservation or improvement of the property or for the maintenance, education or other benefit of the minor.
Similarly if one wishes to sell property belonging to a minor the Master or the High Court will only authorise the sale if they are satisfied that the sale will be to the advantage of and in the interests of the minor.
To obtain the necessary authorisation a formal application must be submitted to the Master or the High Court. These applications, particularly the application to the High Court, are costly. The Master or the High Court will not grant authorisation unless it is proven beyond a reasonable doubt that the sale or mortgage of the property is in the interests of the minor.
Having regard to the above I suggest that anyone considering registering property in the name of a minor should get advice from an attorney before making a decision.