Married in Community? You Cannot Take a Loan Without Written Consent

Most South Africans choose a matrimonial property regime once, at a desk, in about four minutes, and then live inside the consequences for decades. It is the single largest financial decision in a marriage, and it is usually made with less thought than a cellphone contract.

There are three regimes. Which one you are in decides who owns what, who owes what, and — the part almost nobody is told — whether you may take out a loan at all without your partner's signature.

That last point is not a bank's policy. It is in the Act, and the form the consent must take is prescribed.

The default: in community of property

If you married without an antenuptial contract, you are married in community of property. There is one joint estate. Assets are shared, and so are debts — including debts incurred before the wedding.

Within that estate, the general rule is freedom: a spouse may perform any juristic act with regard to the joint estate without the consent of the other. But the Act then carves out a long list of exceptions, and they are the exceptions that matter most in ordinary financial life.

Written consent is required before a spouse may:

• alienate, mortgage, burden with a servitude or confer a real right in immovable property of the joint estate — or contract to do so;
• alienate, cede or pledge shares, stock, debentures, insurance policies, mortgage bonds, fixed deposits or similar assets, or an investment held at a financial institution;
• alienate or pledge jewellery, coins, stamps, paintings or other assets held mainly as investments;
• withdraw money held in the other spouse's name at a bank, building society or the Post Office Savings Bank;
• enter, as a consumer, into a credit agreement to which the National Credit Act applies;
• enter, as purchaser, into a contract under the Alienation of Land Act; or
• bind himself as surety.

The credit-agreement entry has a sensible qualification: it does not require written consent before each successive charge under an existing credit facility. Consent is needed to open the facility, not to swipe the card.

The consent must be per act, and witnessed

This is the detail that turns the rule into a practical obstacle, and it explains a lot of frustrating afternoons at a bank.

For immovable property, a contract to deal with immovable property, a credit agreement, an Alienation of Land Act purchase, and suretyship, the consent must be given separately in respect of each act and must be attested by two competent witnesses.

So a general authority signed once, or a clause buried in an application form, does not do the job for those acts. Each loan needs its own consent, signed and witnessed. When a lender insists on this, it is not being difficult; it is complying with a statute.

Two softeners exist. For most of the other listed acts, consent may be given by ratification within a reasonable time afterwards — though not where the consent is needed to register a deed in a deeds registry, where it must be in place first. And the requirements for credit agreements, suretyships, land purchases and the securities category fall away entirely where the act is performed in the ordinary course of that spouse's profession, trade or business.

There is a second, shorter list where consent is required but need not be written: dealing with household furniture and effects, receiving money due to the other spouse — salary, damages for lost income, a bequest, a bursary or prize, income from separate property, dividends, or insurance proceeds — and donating or giving away joint-estate assets.

What happens when consent was not obtained

The Act protects the outsider, not the estate, and this is worth understanding before assuming a transaction can simply be undone.

Where the person on the other side of the deal does not know and cannot reasonably know that consent was missing, the transaction is deemed to have been entered into with the required consent. The sale stands. The loan stands.

The remedy runs internally instead. Where the contracting spouse knew, or ought reasonably to have known, that consent would probably not be given, and the joint estate suffers a loss as a result, an adjustment is made in favour of the other spouse when the joint estate is divided.

A related principle applies to damages. Where a spouse is liable for a delict, those damages, any contribution and the costs are recoverable from that spouse's separate property first — and from the joint estate only in so far as there is no separate property, with an adjustment on division where the joint estate ended up paying.

Out of community, with accrual — the default nobody realises is a default

If you signed an antenuptial contract excluding community of property and community of profit and loss, you are out of community. Each spouse keeps a separate estate. Neither needs the other's consent for anything in the list above.

Here is the part that surprises people: the accrual system applies automatically to such a marriage unless the antenuptial contract expressly excluded it. Accrual is not something you opt into. It is what you get unless the contract took it away.

How accrual works. At dissolution of the marriage — by divorce or by death — the spouse whose estate shows the smaller accrual acquires a claim against the other for half of the difference between the two accruals.

An estate's accrual is the amount by which its net value at dissolution exceeds its net value at commencement. So growth is shared; the starting position is not.

Several things are kept out of the calculation:

• an inheritance, a legacy or a donation received during the marriage, and any asset acquired by virtue of possessing it — unless the antenuptial contract says otherwise, or the testator or donor stipulated otherwise;
• donations between the spouses, which count on neither side;
• damages other than for patrimonial loss — compensation for pain and suffering is not shared; and
• any asset the antenuptial contract expressly excluded, along with what was acquired by virtue of holding it.

One protection is worth knowing during the marriage rather than at its end. The right to share in the other spouse's accrual is, while the marriage subsists, not transferable, not liable to attachment, and does not form part of an insolvent estate. A creditor of one spouse cannot reach the other spouse's future accrual claim.

Out of community, without accrual

The third regime is complete separation: an antenuptial contract that excludes community of property, community of profit and loss, and the accrual system. Each estate stands alone at the beginning and at the end, and there is no sharing claim on dissolution.

It is the regime that most rewards the higher earner and most exposes the spouse who steps back from paid work. Whether that is appropriate is a question for the couple and their adviser, but it should be a decision rather than a discovery.

One duty survives regardless: a spouse married out of community is liable to contribute to the necessaries of the joint household pro rata according to his or her financial means. Separate estates do not mean separate households.

Changing regime after the wedding

It can be done, and it needs a court.

Spouses may jointly apply for leave to change the matrimonial property system applying to their marriage. The court may grant it only if satisfied that:

• there are sound reasons for the proposed change;
• sufficient notice of the change has been given to all the creditors of the spouses; and
• no other person will be prejudiced by it.

If satisfied, the court authorises the spouses to enter into a notarial contract regulating their future system, on whatever conditions it thinks fit.

The creditor-notice requirement is the substantive one. The provision exists so that a couple cannot move assets out of reach of people they already owe, which is also why the application is not a formality.

What to actually check

1. Establish which regime you are in. If there is no antenuptial contract, you are in community of property. If there is one, read whether it excluded the accrual system — that single clause decides whether there is a sharing claim at the end.
2. If you are in community, treat credit and suretyship as joint decisions, because legally they are. Expect to sign separately for each one, before two witnesses.
3. Do not sign a suretyship casually. It is on the written-consent list for a reason. If you are working out how to run money together day to day, our guide to joint accounts and shared money covers the mechanics; a suretyship is a different order of commitment and is worth specific advice.
4. Keep the antenuptial contract somewhere you can find it, along with proof of the commencement values it recorded. Accrual is arithmetic against a starting figure, and the starting figure has to be provable.
5. Keep bequests and their proceeds identifiable if you are on accrual, since they sit outside the calculation.
6. If the regime no longer fits, apply to change it rather than working around it.

Two things beyond this page. Retirement fund interests are dealt with on divorce under separate legislation, and a divorce order is what allows a fund to pay a non-member spouse. And what happens on death depends on your will — or, without one, on the intestate rules, which our guide to wills introduces. If a bond is involved in a separation, our guide to divorce and the joint bond covers that specific problem.

For everything else, start at our money guides.

Frequently asked questions

What happens if I marry without an antenuptial contract? You are married in community of property. There is one joint estate, and both assets and debts are shared.

Can I take out a loan if I am married in community of property? Not without your spouse's written consent. Entering, as a consumer, into a credit agreement to which the National Credit Act applies is on the list of acts requiring written consent.

Does that mean consent for every card swipe? No. The section expressly does not require written consent before incurring each successive charge under a credit facility. Consent is needed to enter into the agreement.

What form must the consent take? For immovable property, a contract over immovable property, a credit agreement, an Alienation of Land Act purchase and a suretyship, consent must be given separately in respect of each act and attested by two competent witnesses.

Is there any exception? Yes. The requirements for credit agreements, suretyships, land purchases and the securities category do not apply where the act is performed in the ordinary course of that spouse's profession, trade or business.

What if my spouse transacted without my consent? If the other party did not know and could not reasonably have known, the transaction is deemed to have had the required consent and stands. Where your spouse knew consent would probably not be given and the joint estate lost money, an adjustment is made in your favour when the estate is divided.

Does the accrual system apply automatically? Yes, to a marriage out of community entered into after the Act commenced, unless the antenuptial contract expressly excluded it.

How is an accrual claim calculated? Each estate's accrual is its net value at dissolution less its net value at commencement. The spouse with the smaller accrual claims half the difference.

Is an inheritance shared under accrual? No. An inheritance, legacy or donation received during the marriage, and assets acquired by virtue of it, fall outside the accrual — unless the antenuptial contract or the testator or donor says otherwise.

Can a creditor attach my spouse's accrual claim during the marriage? No. While the marriage subsists the right to share is not transferable, not liable to attachment, and does not form part of an insolvent estate.

Can we change our matrimonial property system? Yes, by joint application to a court, which must be satisfied that there are sound reasons, that sufficient notice was given to all creditors, and that nobody else will be prejudiced. It then authorises a notarial contract.

If we are married out of community, do we split household costs? A spouse married out of community is liable to contribute to necessaries for the joint household pro rata according to his or her financial means.