The role of the buyer and new owner
While it is possible for someone to purchase a property for someone else, the individual who is to be the owner (i.e. the person taking transfer of the property and who will be reflected on the title deed) must be listed as the purchaser and must sign the Offer to Purchase.
The person financing the transfer in such a case will have no right of ownership to the property unless there is an underlying agreement between him or herself and the new registered owner of the property or unless that person registers a third-party bond over the property in his or her favour. It is possible for the intended owner and the financier to enter into an agreement prior to the property transfer being concluded, in which certain terms may be stipulated (e.g. that the owner must repay a specified sum over a period of time).
It is worth noting that, this scenario is different to a property be given as a gift which implies that the donor is the registered owner of the property. In the case of a gift, the property would be transferred with a zero value, however, this form of transfer is largely unpopular due to the high donations tax onus payable by the donor.
The process for the transfer remains largely unchanged from that of a typical transfer where the buyer intends to become the owner of a property.
The intended title holder will sign all documents and provide the necessary information relating to FICA, while the individual financing the purchase, in the case of applying to a financial institution, will have to sign the necessary forms in respect of financing and will also be required to provide FICA documentation.
From a bond perspective, the person providing the finances will also be relied upon to qualify for the necessary bond, and may be required to stand surety or, in some situations, become a co-owner of the property by taking an undivided share in the property.
While there are no significant differences when it comes to documents required or transfer duty / VAT implications when purchasing a property for someone else, it is important to work closely with a reputable attorney to ensure all the correct information is gathered and the process is adhered to accurately.
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