July 24, 2019
KVV Inc | A Note from our Directors
Henry Miller once said: “One’s destination is never a place, but a new way of seeing things”. I was fortunate enough to be able to travel to Spain and Portugal recently. Only my second opportunity to fly over the big waters, and for sure a wonderful adventure! To travel is certainly a huge blessing. To see how other countries live, experience their culture, foods, traditions and way of living really broadens your horizons.
I can concur what Gustav Flaubert said: “Travel makes one modest. You see what a tiny place you occupy in the world”. But I can also honestly say that the tiny place we occupy in the world, the little southern corner of Africa, is home. On the long flight back I thought a lot about the negativity that is being distributed to us daily in the media and social media. However when you experience other cultures you realize a few things about South Africans. Firstly, we are a friendly nation. People in South Africa greet each other with a genuine smile and friendliness. We are a helpful nation. As tourists we were taken aback sometimes on how people refuse to accept our help. Then you realize this is how we are raised. The “ubuntu” principle of compassion and helping others is part of our DNA. We are also a very tolerant nation when it comes to language barriers. Since we know that for most of us English is not our mother tongue, we tend to try to understand and communicate with each other. In other parts of the world, things are so different. And we have good coffee in SA!!
Landing back in South Africa the first thing I noticed is how friendly people were greeted at customs, how people are greeting passers-by, how friendly the waiters and shop stewards are, and how people are helping each other in their daily activities. After being able to easily order my delicious South African take away coffee at a restaurant, with the waiter smiling and fully understanding my order, I returned home with a thankful heart and a huge smile on my face.
Travel is amazing and such a wonderful blessing. But Lin Yutang was so right in saying: “No one realizes how beautiful it is to travel until he comes home and rests his head on his old, familiar pillow”.
Kind Regards
Mariëtte van Zyl | Director
July 24, 2019
You Signed a Property Sale Agreement, Can You Still Accept a Better Offer?
You put your property on the market and an acceptable but not-perfect offer comes in. On the “a bird in the hand is worth two in the bush” principle you want to accept the offer even though it’s not ideal.
Perhaps it’s not perfect because it’s subject to a suspensive condition – common ones give the buyer time to sell his/her current house or to obtain a bond. In both scenarios your sale will fall through if the buyer is unsuccessful within the stated time, and if that happens you are back to square one after a long and fruitless delay. Bear in mind that that delay could be a protracted one depending on what your sale agreement actually provides – normally no less than 30 days to get a bond, sometimes several months to sell an existing house. That’s a lot of very valuable marketing time lost – and you’ll never know for sure whether you just missed out on that “perfect offer”.
The “72-hour clause” and what it does
This is where the “72-hour”, “continued marketing” or “escape” clause comes in handy.
In a nutshell, it allows you to continue marketing your property until suspensive conditions are met. If your marketing pays off and an unconditional offer does come in, you can give your existing buyer 72 hours’ notice to match it. So the buyer would have an opportunity to make the sale unconditional – either by waiving (abandoning) the condition or by fulfilling it.
If the buyer fails to do whatever the clause requires within the 72 hours, you are clear to accept the new offer. If on the other hand the buyer does perform in time, the existing sale immediately becomes fully binding and the transfer process can get underway.
A note for buyers
The clause is usually there for the seller’s benefit so perhaps avoid it when you can. But if it’s a choice between your offer being accepted or not, bear in mind that having a signed sale agreement at least gives you a solid base for a full bond application and/or a concerted effort to finalise your own house sale.
Just be ready to react quickly if the seller does indeed give you the 72 hour notice – you don’t want to be rushing around in a last-minute panic.
Buyers and sellers – check the wording!
Although 72-hour clauses are common in standard sale agreements, the exact wording can vary substantially, and may need tailoring to meet your specific needs. You might for example want to be given proof of availability of funds together with a bond clause waiver, or proof that the sale of the buyer’s house is a viable one – every situation will be different.
Apart from everything else, make sure that –
- The 72 hour period specifically excludes Saturdays, Sundays and Public Holidays (religious holidays too if important to you),
- You can extend the 72 hours by mutual agreement if you want to,
- There are clear requirements for the method and timing of giving notice and of waiving conditions, and
- You aren’t binding yourself to anything else that could turn around and bite you down the line.
Delete the clause if it doesn’t apply.
As always, have your lawyer check it all for you before you sign anything!
© LawDotNews
July 24, 2019
Property Transfers and Trust Account Theft: A R720,000 Warning
“The issue of whether a conveyancing attorney receives the money as the agent of the seller, or of the purchaser, or of both, or as trustee for both to await the event, is a somewhat vexed question … and each case must be considered in the light of its own facts and the particular contractual terms under which the conveyancer received payment” (Extract from judgment below)
A lot of money changes hands in property sales, and for many of us buying or selling a house is the largest single financial transaction of our lives.
A recent High Court judgment involving a theft of R720,000 by a dishonest conveyancer (transferring attorney) provides a timely warning to both buyers and sellers to proceed with extreme caution. And as always, the core message to both is this: Sign nothing without your lawyer’s advice!
The conveyancer who stole from her trust account
- A seller sold a sectional title unit to a buyer for R720,000. The sale agreement provided for payment in full by the buyer to the conveyancer, the funds to be held in trust in an interest-bearing account until transfer, interest to accrue for the buyer’s benefit.
- The conveyancer had, as is usual unless otherwise negotiated, been nominated by the seller. In this case the buyer asked to use her own attorneys but the seller “vehemently” insisted on nominating his attorney.
- On request from the conveyancer, the buyer paid the R720,000 (plus R16,700 towards the transfer costs payable by her) into the conveyancer’s trust account.
- When later it became clear that the conveyancer had stolen these funds, the buyer demanded transfer from the seller. The seller refused – the money was gone and he wasn’t prepared to lose both his property and the purchase price.
- At the same time however he (the seller) lodged a claim with the Legal Practitioners Fidelity Fund, which was at that time still called the Attorneys Fidelity Fund and is referred to below as “the Fund”. In the event of such a theft, the Fund will in its own words “assist you with the reimbursement of your monies if your claim is valid.”
- However, the Fund refused to pay the seller’s claim because of its view that the loss was sustained by the buyer, not by the seller.
- The buyer disagreed. It wasn’t, she said, her loss, it was the seller’s. She wasn’t going to now pay the purchase price over again and then have to claim from the Fund. So she asked the High Court to order the seller to pass transfer to her.
- What the Court had to decide is whether or not the conveyancer was the seller’s agent to receive payment of the purchase price from the buyer. If so, the buyer had paid and was entitled to transfer. If not, the buyer had not paid and had no right to transfer.
- The danger for both seller and buyer here is that as the Court put it “the issue of whether a conveyancing attorney receives the money as the agent of the seller, or of the purchaser, or of both, or as trustee for both to await the event, is a somewhat vexed question … and each case must be considered in the light of its own facts and the particular contractual terms under which the conveyancer received payment.”
So whose agent was the conveyancer?
In the end the Court ordered the seller to pass transfer to the buyer, finding on the facts and on the Court’s interpretation of this particular payment clausethat –
- The conveyancer in this matter had acted as agent for both the buyer and the seller – as agent for the buyer in investing the funds pending transfer, but as agent for the seller in receiving payment of the purchase price.
- Accordingly the buyer “complied with her obligation in terms of the deed of sale by making payment of the purchase price to the [conveyancer] who was nominated by the [seller] to receive payment of the purchase price on the latter’s behalf”.
- “In addition, the Deed of Sale provided for the mode of actual payment of the purchase price and once this was done, the [buyer] had discharged her obligations. She did what was required contractually in respect of the purchase price and had no control of the process thereafter.”
The seller is therefore down R720,000 plus costs, and will be hoping that the Fund will now pay out his claim without further ado.
Sellers
Choose a competent and trustworthy conveyancer. Don’t ever be railroaded by anyone into appointing someone else! And if your attorney isn’t also an admitted conveyancer, ask him/her for a referral to a trusted colleague who is.
Buyers
As we saw above, the wording of the sale agreement is central to the level of risk you run – it should be clear that in paying the purchase price to the conveyancer you are paying the seller in complete discharge of your obligations under the sale agreement.
Bottom line – as always, ask your attorney for advice and assistance before you sign anything!
© LawDotNews
July 24, 2019
Your Last Will: The Dire Consequences of Neglecting Formalities
“It is not intended for the Court to make a will for the deceased based on what his intentions may have been” (Quoted in the judgment below)
As a general rule our law holds us to our agreements and statements, whether we express them verbally, electronically or in written form.
But there are exceptions – some things just have to be in writing and signed before the law will recognise them. One of those exceptions is quite possibly the most important document you will ever sign – your “Last Will and Testament”. Ultimately it’s your final gift to your loved ones – a gift that ensures they are properly provided for when (not “if”) you die.
Don’t neglect this or procrastinate – without a will you have forfeited your right to choose who inherits your assets and who is appointed as executor. And it’s equally vital to validly update or replace your will after a significant “life event” (marriage, birth, death, divorce etc) – we’ll consider below the sad case of an accountant who intended to change his will but just never got around to it.
But first, what must you do for your will to be valid?
The formalities
To be valid, a South African will must comply with a list of formalities. There are several of them and they require strict compliance, so getting specific legal help is a no-brainer here. But in general terms your will should be in writing and signed by you in the presence of two “competent” witnesses.
The question arises whether in this age of electronic contracts and signatures an “electronic will” (perhaps in an email, a video, a Social Media post or the like) might suffice. In short, the answer is almost certainly no, it won’t. The Master of the High Court (who accepts your will as valid or not) needs to see a piece of paper and physical signatures. And the same applies to any subsequent amendments to your will.
An escape route
There is however a possible escape route – our Wills Act provides that a Court may order the Master to accept an otherwise invalid will when satisfied that it was intended by the deceased to be his/her last will. That’s a great tool which has often enabled our courts to avoid situations of “injustice through formality”, but there is still absolutely no safe substitute for a properly-executed will.
As this recent High Court judgment illustrates all too clearly…
The accountant who emailed his “Final will” to his fiancée
- In 2006, a “very meticulous” accountant drew up a written will, properly drawn and formalised. In it he left everything to his then wife, from whom he was divorced in 2011.
- In 2014 he became engaged to another woman with whom he had been in a “romantic relationship”.
- On 4 January 2016 he emailed his new fiancée, under the subject line “Final will”, recording in part that “This serves as my final will and testament … If I die, all my assets and investments go to [my fiancée] … “My life policies must all go to [my fiancée]”.
- Subsequent emails made it clear that both the accountant and his fiancée were aware that there could potentially be disputes regarding the validity of the emailed “will”, and accordingly an “Action” list that the fiancée then sent to the accountant included an action item “Will”. In the end however he never got around to actually making and signing a written will.
- When the accountant died on 14 September 2016, the Master appointed as executor the bank nominated in his 2006 will.
- The fiancée approached the High Court for an order recognising the 2016 email as the true will, alternatively revoking the part of his 2006 will leaving the estate to his ex-wife. Unsurprisingly, the ex-wife opposed this application.
- Firstly, the Court accepted on the facts that the accountant had indeed drafted the email, but it then turned to the second leg of its enquiry – “Whether the deceased intended the disputed Will to be his Last Will and Testament”.
- Commenting that “it is not intended for the Court to make a will for the deceased based on what his intentions may have been”, the Court found that it was “improbable that he would have intended the disputed Will to be his Last Will and Testament”, and that – this is the critical part – his email was “nothing more than an email in which he was assuring the applicant that he will make her a beneficiary of his estate”.
- The end result – the accountant clearly intended to leave his estate to his fiancée. But he never got around to drawing up a formal written will to that effect, so the 2006 will stands, the ex-wife takes all and the fiancée leaves with nothing.
The bottom line – “intention” is not enough!
Whatever you intend should become of your worldly goods, and no matter how you may have recorded your wishes, the only safe way to ensure that they are honoured is to execute a valid written will.
This is a vital document and there are dire consequences to not getting it 100% right so ask your lawyer for help!
© LawDotNews
July 24, 2019
Airbnb Owners and Buyers – Should You Be Worried About the New Regulations?
“While travel on our platform accounts for less than 1 in 8 visitors to South Africa, those guests boosted the economy by R8.7 billion and helped create 22,000 jobs last year alone” and “Regulation is a useful and necessary tool of good policy, but policy comes first. Sadly, the current wording of the draft Bill is very vague and unclear. It indicates the creation of specific regulatory approaches without any explanation of what they are trying to encourage or solve.” (Airbnb)
Firstly, there is no doubt that Airbnb can be highly profitable for you if you have – or buy – the right property in the right place at the right time.
Just be sure to comply with all municipal zoning and other by-laws and (if you are in a community housing scheme) any Body Corporate or Home Owners Association requirements. There is also a host of other legal, tax, financial and practical concerns to consider – proper legal advice (and a short-term letting contract tailored to meet your particular needs) will pay handsome dividends.
A new factor to take into account now is government’s proposed new regulation of short-term rental schemes like Airbnb and its accommodation booking platform. The news has sent shivers down the spines of both existing and prospective Airbnb owners.
But is there actually anything to worry about? It’s much too soon to be sure but there may be grounds for optimism. Let’s start with a look at what has actually happened to date.
Here are the facts so far
- Government’s declared intention is to regulate short-term home rentals because, it says, of perceptions that it may be hurting the tourism sector. Like other digital disruptors – Uber springs to mind – Airbnb has literally thrown a cat among the pigeons, and we are no doubt now seeing the fallout.
- The proposal is contained in the Tourism Amendment Bill, published on 15 April 2019 with a 60 day window for public comment which has now been extended to 15 July. The Bill includes a provision for “the determination of thresholds for short-term home sharing”.
- The relevant new definition in the Bill is: “‘short-term home rental’ means the renting or leasing on a temporary basis, for reward, of a dwelling or a part thereof, to a visitor.”
- Reaction from stakeholders has been varied to say the least, with media reports suggesting a heady mix of both strong support for, and bitter opposition to, the new proposals. Perhaps most pertinently Airbnb has met with the Minister of Tourism and reportedly supports “fair and proportional rules that are evidence-based, benefit local people, and distinguish between professional and non-professional activity taking into account local conditions.”
So where to from here?
Time alone will tell what the final Amendment Act will actually look like, but the majority opinion does seem to be that in the end result a fair and workable balance will be struck between the need to regulate the industry on the one hand, and the need to encourage entrepreneurship and grow tourism on the other.
Expect an outcry and court challenges if that doesn’t happen.
© LawDotNews
July 24, 2019
Business Rescue: Are Your Suretyships Enforceable? A R5.5m Lesson for Directors and Creditors
“Some people use one-half their ingenuity to get into debt, and the other half to avoid paying it” (George Prentice, newspaper editor and author)
You are owed a lot of money by a company that goes into business rescue. The business rescue plan provides for creditors like you to accept a dividend of only a few cents in the Rand in settlement of your debt. You stand to lose heavily.
But perhaps there’s hope yet – a director with assets has signed personal suretyship. Can the director now say “sorry, you adopted the business rescue plan so your claim no longer exists”, and refuse to pay you?
The directors’ defence
- A creditor was owed R6.5m for the lease of mining equipment to a company which was placed under business rescue. In terms of a business rescue plan approved by the creditor it was paid only a portion of its claim, losing its right to claim anything further from the debtor company.
- The two directors of the debtor had signed a deed of suretyship in terms of which they stood as co-sureties and co-principal debtors with their company for all amounts owing.
- The creditor duly sued the directors for its shortfall of some R5.5m The directors’ defence was that they were not liable because –
- The suretyship entitled the creditor to go after them only for “any sum which after the receipt of such dividend/s or payment/s may remain owing by the Debtor.” (Own underlining).
- Nothing remained owing by the debtor which had been released from its debt by the business rescue plan.
In other words, argued the directors, nothing was owed by the debtor company, so they were liable for nothing.
- Not so, said the Court. That “would render the terms of the deed of suretyship nonsensical and militates against the very reason for a creditor obtaining security against the indebtedness of a debtor i.e. to mitigate the risk of the debtor being unable to fulfil its obligations due to inter alia business rescue.” The business rescue plan made no provision for the position of sureties and therefore “the liability of the sureties is in my view preserved. And while the debt may not be enforceable against [the company], it does not detract from the obligation of the sureties to pay in the circumstances of this case.” In other words, a surety’s liability is unaffected by the business rescue unless the plan itself makes specific provision for the situation of sureties.
- Bottom line – the directors must personally cough up the R5.5m (plus interest and costs).
Lessons for directors and creditors
The outcome here could have been very different had the wording of either this particular suretyship or the business rescue plan supported the directors’ defence.
Creditors – when securing your claim with a director’s suretyship check that you are fully covered in any form of business failure situation. And ensure that a business rescue plan specifically provides that its adoption does not release sureties.
Directors – when you sign personal surety understand exactly what you are letting yourself in for. And if you are unlucky enough to find yourself in the middle of a business rescue, actively manage your personal liability danger – particularly when it comes to the wording of the rescue plan.
© LawDotNews