April 20, 2021

KVV | A Note from our Director



By now almost everyone has heard or encountered phrases such as “the new normal” or even more hectic concepts like “VUCA” (Volatility, Uncertainty, Complexity and Ambiguity). No doubt the emergence of the COVID-19 pandemic threw the world, as we know it, into a tailspin. Suddenly we found ourselves in the world of uncertainty. We started having discussions we never had before regarding our reality and its volatility. Many became alive to what is important and began to appreciate even the insignificant. A colloquial “walk in the park” was yearned for. Just to make a point.

Our reality may have been bended by a pandemic. However, I submit that it is equally true that humans have experienced worse. Imagine a pandemic in an age where there is no advanced communication, medical devices and advanced science to treat or manage the pandemic. Without digressing I wish to make a point that the human journey is that of resilience.

There have been instances in history where cities were levelled by war, people left hopeless by unexpected life events like the emergence of a pandemic. However, through it all, what has proved to be consistent in every encounter is human resilience. Levelled cities were raised more majestic and what was a novel organism became old and understood.

Like most people, at the peak of the pandemic, when all was but bleak I subscribed to the notion of the “new normal”. But recently, perhaps controversially so I have stated that all I see is return to the “normal” and the “new normal” appears to be dissipating. Perhaps I am experiencing and observing the effects of resilience. Where things inevitably normalize. This is my personal opinion.

The COVID-19 pandemic continues to ravage lifes and livelihoods. The cost is too much. The best we can do, I would argue, is to sustain each other while the storm withers. We can do so by extending a helping hand where we can. Protect others by complying to established protocols to curb the spread and be generous where circumstances permit.

I agree with the view that many of the challenges we are facing e.g., economic challenges, existed before the pandemic and were elevated by the advent of COVID-19. Perhaps this is an opportunity for a different perspective on all old challenges and I do not propose a solution. I am however convinced that like many challenges faced before the resilience of humanity will prevail. Despite the costs that we shall count, some recoverable and some, such as the precious human life, not recoverable, the resilience of humanity will prevail.

I am reminded of the brilliance of Walt Whitman as he expresses the passing of a leader just when victory is achieved and laments “O Captain! My Captain!”. Even though there are casualties in this crisis, humanity will prevail. A “new” story will be written and the future will read it when things are “normal”. The human journey is that of resilience.

Though disasters may befall humanity, humanity has a future. At this point allow me to borrow from an age-old wisdom – Jeremiah 29:11 For I know the plans I have for you – this is the LORD’s declaration – plans for your welfare, not for disaster, to give you a future and a hope – I therefore conclude that the human resilience is ordained and divine.

Kind Regards

Joseph Leotlela   |  Director

April 20, 2021

Who Gets the House on Divorce?

“I am a marvellous housekeeper. Every time I leave a man, I keep his house” (seven-times-divorced actress Zsa Zsa Gabor)
Historically 44% of South African marriages have ended in divorce, and there has reportedly been a 20% surge in new divorce applications since lockdown. For those unfortunate couples whose marriages do eventually fall apart, often the most important asset in play from both a financial and an emotional perspective is the family home. So it is crucial for any couple contemplating marriage, or currently married but considering a split, to understand what our law says about who gets what on divorce. Your divorce order as issued by the divorce court will be the “final word” here. If you have been able to agree on a split of assets and liabilities your agreement will typically be contained in a “consent paper”, and agreement is of course very much “first prize” here. Particularly if you have children – exposing them to a bitter fight over assets and to the risk of having to leave their childhood home and neighbourhood will only add to the disruption and trauma in their lives. In any event if you can’t agree terms, you are in for some emotional, time-hungry and expensive litigation before a court finalises the split for you. A variety of factors will be at play here, all linked to the question of what “marital regime” applies to your marriage so the first question you need to ask is whether you are married in or out of community of property – and if out, does accrual apply?
If you are married in community of property
This is the default marital regime for South African marriages, and if you didn’t sign an ante-nuptial contract (“ANC”) before you married, all your assets and liabilities at date of divorce (with a few specific exceptions) will automatically belong to both of you in “undivided shares” i.e. 50/50. Typically, your divorce order and/or consent paper will provide for one spouse to become the 100% owner, with a suitable financial adjustment between you to account for the value of the other spouse’s 50% share. No formal transfer of the property in the Deeds Office is needed, your attorney will just arrange for an endorsement on the property’s title deed to transfer ownership.
If you are married out of community of property
You have two separate estates and what you bring into the marriage remains yours, as does any growth in asset value during the marriage. As to who keeps (or gets) the house, and as to how much if anything the other spouse must pay in return, that will depend on a host of factors including the terms of your ANC and whether you were married with or without “accrual”. “With accrual” is the default unless you specifically opt to marry “without accrual”. In practice most modern couples specifically opt for accrual, in which event the combined growth in value during the marriage of your two estates will be split between you. If the house is currently registered in only one of your names and that spouse is to keep the house, no formal transfer nor endorsement of the title deed will be necessary. If however the other spouse is to become the registered owner, a full transfer of ownership in the Deeds Office is needed. Although an exemption from transfer duty applies in this case, there will still be other transfer fees and costs to consider. If you are co-owners of the property (in other words, if you are jointly recorded as owners on the title deed) you will almost certainly want to transfer full ownership to the one spouse. Again, a full transfer will be needed (see above re costs). There is however nothing to stop you agreeing on a temporary or permanent continuation of the co-ownership after divorce, perhaps to minimise disruption to your children’s lives, or perhaps while you jointly market and sell it at the best price (in which event your agreement should specify in detail who will pay what costs, what the minimum purchase price will be and so on).
Who pays off the mortgage bond?
If you are currently registered as co-owners, both of you will be equally liable for the full remaining debt owing to the bank. If one of you is the owner and the other is to take transfer, the current owner remains solely liable for the loan debt until released by the bank. Whichever spouse keeps (or takes over) sole ownership of the house will have to make a new loan application to the bank in his/her own name and be substituted as the sole debtor/mortgagor.
If you get the house, how will you pay out your ex-spouse?
As above, normally there will be a financial adjustment between you to compensate the other spouse, and if you don’t have the funds available you may need to ask the bank for a second mortgage. You could of course also agree to sell the house and split the proceeds after settling the existing bond.
What if our house is owned by a trust or company?
Houses and other properties have historically often been held in trusts or companies for estate planning and asset protection purposes, and our courts are regularly called upon to resolve bitter disputes along the lines of “it was all a sham, the house never really belonged the trust, so please Judge order the trust to put it back into the pot as a personal asset”. The spouse making such a claim will generally have to prove some form of “abuse” of the trust before a court will order that the house in fact belongs to the other spouse personally. But there are grey areas here and professional advice specific to your particular circumstances is essential.
Prevention being better than cure….
Your house could well be your marriage’s most important asset both financially and emotionally. Rather than fight over it when divorce looms, seek professional advice before you tie the knot on what marital regime is best for you, and on how best to sort out who gets the house if you should be unlucky enough to part ways down the line. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advices

© LawDotNews

April 20, 2021

Buying and Selling Property: Nine Important Questions

“Owning a home is a keystone of wealth… both financial affluence and emotional security” (Personal Finance Expert Suze Orman)
When you buy or sell your “Home Sweet Home”, particularly for the first time, the process can seem complicated, the terminology confusing, and the risks of making a costly mistake intimidating. You are after all dealing with quite possibly your most important asset! To help you navigate the process, as either seller or buyer, here are some common questions, with answers.
1. Where can I get a simple guide to the process?
When you come down to the details it certainly is important to get everything right, but a simple, broad overview to start with will go a long way to de-mystifying the process and to setting you safely onto the right path. Have a look at the Law Society of South Africa’s “Buying or Selling a House: What You Need to Know”. Download it in any of four languages here. Simply and clearly written, the guide is full of really important information and advice, both practical and legal – take the time to read it in depth! Turning now to a few of the other more common questions you will no doubt have…
2. Do I really need legal advice?
Our law reports are full of court disputes that could have been avoided with a simple upfront request for legal advice. The danger of not doing so is that many pitfalls await the unwary and you will be held to anything you agree to. It’s only sensible therefore to take advice early – well before you appoint an agent, start looking for a house, or get involved in submitting offers and negotiating sale agreements. Not having your “offer to purchase” or “agreement of sale” legally checked is a recipe for disaster. Once you sign on the dotted line you are on the hook for everything in the document. With very limited exceptions our law holds you to your signature and it is no good saying later “But I didn’t read the document, it all looked like the normal standard stuff” or “I had no idea I was agreeing to term x or condition y” – tough, you are bound. Bottom line – chat to your attorney before you do anything else! 
3. Whose name/s should I put the property in?
Should you buy the house in your name or in your spouse’s name? Should you buy jointly? Does it matter what marital regime applies to your marriage? What if you are in a permanent cohabitation arrangement rather than a formal marriage? Or perhaps you are wondering whether you should put the house into the name of a company or family trust. Your choice now will have far-reaching legal, tax and practical consequences; and with some complex areas of law involved, specialist upfront advice is a no-brainer.
4. What else should I ask my attorney?
Common areas of dispute and litigation include “bond clauses” and “72-hour clauses” in sale agreements, confusion over the need to identify or disclose both visible and invisible defects, disagreements over what is a “fixture” that comes with the house and what isn’t, misunderstandings over neighbours’ rights to build and encroach on views and the like, not checking for building plans and municipal Certificates of Occupancy (you will have a problem if a previous owner built or extended without proper plans), not checking the zoning and title deed restrictions (which could put a damper on any plans you have to extend, go up a storey, build a home office, or the like), servitudes or other rights of use over the property, limited “home business” options and so on. (Tip: Take lots of “before and after” photos of the house and property with your cell phone – a dated picture is hard to argue with!) Other “homework” items to ask about – what paperwork you will need (do you know where your title deed is?), how long your particular transfer is likely to take (and a linked question “what date of occupation should we agree on?”), to whom deposits and any occupational rental must be paid (and who gets paid the interest earned on monies held in trust), what compliance certificates you need, how to find the best bond rates, whether you might qualify for a FLISP (Finance Linked Individual Subsidy Program) subsidy, how to cancel and open municipal service accounts, the rights of any occupiers (not just tenants, also “unlawful occupiers”), and so on – you will have your own list.
5. What about planning my finances?
Ask your lawyer for a breakdown of who will pay what and when. Think deposits, bond and transfer costs, transfer duty, agent’s commission, bond settlement balances and so on. Cash flow forecasting, and a clear understanding of the timelines involved, are critical here to avoid unpleasant surprises down the line. As a buyer, factor into your “affordability budget” not only bond repayments and your projected regular monthly costs (rates, services, insurance premiums, security costs etc) but also an emergency fund to cover any unexpected costs that may crop up. On the subject of finances, cyber-fraud is a growing issue when it comes to electronic communications and payments so agree with your lawyer on measures to ensure that neither of you falls victim. Fraudulent “here are my new bank account details” emails are flavour of the month, but the scams are constantly evolving.
6. Should I buy-to-let in the current market?
Buying-to-let can be an excellent investment channel, and for a whole host of reasons this time of pandemic and disruption has opened up an abundance of opportunities to prospective landlords. Just don’t rush in blind – choose the right property in the right area, go into the process with your eyes fully open, and in particular beware the common pitfall of failing to minimise your risk of having to fight a difficult, destructive or non-paying tenant. Residential property occupiers enjoy strong protections against eviction even in normal times, and these protections are even stronger for the duration of the National State of Disaster. It is essential also to understand the impact of the Rental Housing Act on the landlord/tenant relationship – do you know for example the specific requirements around rental deposits and joint property inspections? “Ignorance of the law” is no excuse, and non-compliance could cost you dearly.
7. Who appoints the conveyancer and why do I need one?
In a nutshell, you need to appoint a specialist lawyer (a “conveyancer”) to pass transfer of ownership from the seller to the buyer in the Deeds Office. That’s because only on registration of the transfer does the buyer become the legal owner of the property. As a seller, insist on choosing the conveyancer – pick a firm you can trust to act with professionalism, integrity and speed.
8. What about buying into a complex?
 Owing a house and living in a community scheme come with substantial benefits, just understand exactly what you are letting yourself in for both on a practical level and in regard to the various rules and regulations you will be agreeing to. Our courts regularly have to sort out bitter (and unnecessary) disputes around owners desperately – and almost always unsuccessfully – trying to get out of complying with body corporate and Home Owners Association rules. Common areas of complaint are home businesses, pet ownership and control, vehicle parking, noise, nuisance objections and the like.
9. What records and paperwork should I keep?     
One thing is certain – the document you don’t keep on file is the one you will be desperately searching for in 10 or 20 years’ time! So when in doubt about a particular item keep it, but at the very least have a file (backed up electronically) with –
  • Your title deed (also called a “deed of transfer”) from the conveyancer. If your property is bonded the bank will keep the original in which event keep a copy plus a note as to which bank has the original. If you lose your title deed you can get a copy but there are delays and costs attached which you really want to avoid when you come to sell again down the line.
  • The full signed agreement of sale and annexures,  The conveyancer’s final statement of account and associated invoices,
  •  All bank loan and bond documents,
  • Your municipal Certificate of Occupancy if you undertook any building work (construction, renovations, extensions etc),
  • A running list with supporting documents of all tax-relevant expenses. For example, keep a running Capital Gains Tax schedule with –
    • A list of expenses relevant to the house’s “base cost” (purchase price, transfer costs and legal fees, bond costs, agent’s commission, costs related to the sale or purchase like advertising, architect’s fees etc) and
    • Ongoing capital expenses i.e. improvements and renovations (but not repairs or maintenance).
  • “Before and after” photos of the house and property,
  • Ask your lawyer if there is anything else you should keep relevant to your particular property and transfer.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

April 20, 2021

Landlords: Can You Cut Electricity to Collect Arrears or Evict?

“It is a fundamental principle that no man is allowed to take the law into his own hands” (Transvaal Supreme Court, 1906)
Landlords can be sorely tempted to force defaulting tenants to settle their arrears (or to vacate the premises altogether) with a bit of instant “self-help” by cutting electricity or water supplies, or perhaps by changing locks or disabling access codes. From the High Court comes another timely warning that you cannot resort to self-help without risking an immediate and costly “spoliation order”.
What exactly is a spoliation order?
In a nutshell, it is an order rapping you over the knuckles for taking the law into your own hands and forcing you to return to the previous status quo whilst you fight your weary way through proper legal channels. To quote from a 2012 Supreme Court of Appeal decision (emphasis supplied): “Spoliation is the wrongful deprivation of another’s right of possession. The aim of spoliation is to prevent self-help. It seeks to prevent people from taking the law into their own hands … The cause for possession is irrelevant – that is why a thief is protected … The fact that possession is wrongful or illegal is irrelevant, as that would go to the merits of the dispute”.
The two things the tenant must prove
At this stage, the court is not interested in how strong or weak the landlord’s claim may be. Your full-on fight over the “merits of the dispute” comes later, and all the tenant need show now is – 1) That it was in “peaceful and undisturbed” possession, and 2) That it was “unlawfully deprived” of that possession.
The filling station, the laundromat and the “personal rights” argument
  • A landlord was in a protracted clash with two of its long-standing tenants – a filling station and a laundromat – over disputed electricity arrears totalling some R240k. As often happens, the landlord was on the hook for the arrears, and was, it said, “facing financial ruin”. The leases had been cancelled and High Court litigation over the disputes was pending.
  • Eventually, by agreement, pre-paid meters were installed. The tenants loaded their first credit tokens but suddenly found themselves unable to top up the meters. It turned out that the landlord had instructed the electricity supplier to load the arrears onto the pre-paid meters, meaning that the tenants would have to pay the disputed arrears before they could buy more electricity.
  • When the tenants launched an urgent spoliation application, the landlord argued that the tenants’ rights to a supply of electricity were purely “personal rights” in terms of their respective leases. Thus, argued the landlord, spoliation could not apply.
  • The tenants countered that “the right to access to electricity supply is an incident to the possession of the property from which they conduct their businesses” which would come to a standstill without electricity.
  • The Court’s analysis of the various legal arguments around the “personal rights v incident of occupation” fight, and over whether our law recognises “quasi-possession” of an “incorporeal” (like electricity) – as opposed to “actual possession” of the property itself – will be of great interest to lawyers. But for landlords and tenants it is the practical outcome that really matters.
  • Finding that there was an “irresistible inference that the [landlord] effectively cut the electricity (by uploading the arrears on the pre-paid meter) to force the [tenants] to vacate and to avoid having to follow due process to recover the alleged arrears” and that “this is a matter where the interference on the supply of electricity … constituted material interference of the possession of the property itself”, the Court ordered the landlord to immediately (a) restore the tenants’ access to their electricity supply and (b) cancel the negative and arrear balances on their pre-paid meters. An adverse costs order rubs salts into the landlord’s wounds.
The lesson for landlords
No matter how strong your main case may be, taking the law into your own hands is likely to be a costly mistake. Seek legal advice before you take any form of self-help action!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

April 20, 2021

Buying a Property: Check the Seller’s Marital Status!

“…a third party is expected to do more than rely upon a bold assurance by another party regarding his or her marital status” (quoted in judgment below)
If you are taking advantage of our current low interest rates and reduced selling prices to buy a property, make sure that you establish the seller’s marital status with something more than what the seller tells you. Your risk comes in if the seller is married in community of property. That’s because, whilst our law generally allows spouses in such a marriage to “perform any juristic act with regard to the joint estate without the consent of the other spouse”, there are exceptions. And one exception relates to immovable property. A spouse needs the written consent of the other to sell, mortgage or burden the property (by granting a servitude over it for example). Without that written consent the transaction is void, unlawful and unenforceable. Which is where the danger comes in. Consider this scenario – you pay for and take transfer of a property from a seller who you think is unmarried, but a spouse suddenly appears and says “I never consented to that sale so it’s void. The transfer to you is cancelled so out you go and good luck getting your money back”. What now?
Competing rights and a balancing act
There is of course a fine balancing act for courts involved here – on the one hand, the rights of the non-consenting spouse and on the other hand your rights as a good-faith buyer from a seller who you believed to be unmarried. A recent Supreme Court of Appeal (SCA) judgment addressed exactly that situation.
“But I thought I was buying from an unmarried seller”
  • A husband married in community of property sold and transferred a house to a buyer in 2009. At the time, his wife was not living in the house, having moved to another part of the country due to old age.
  • When the seller passed away in 2013 his wife was appointed executrix of his deceased estate. Some four years later she successfully applied to the High Court for cancellation of the deed of transfer on the basis that the sale had been without her knowledge or consent.
  • The buyer appealed to the SCA on the basis that the wife’s consent to the sale should be “deemed” to have been given in that the relevant legislation provides for such deemed consent where a buyer “does not know and cannot reasonably know that the transaction is being entered into contrary to [the requirement for written consent]”.
  • He had, said the buyer, acted bona fide (in good faith) as he had not known of the marriage: “At the time I purchased the property from the deceased/seller, he was staying alone in the said property and he also confirmed to me that he was not married. He signed the deed of sale and also the transfer documents alone as unmarried.”
What the buyer must prove
The buyer had to prove that he did not know, and could not reasonably have known, that consent was needed but lacking. What the Court here needed to decide was whether the buyer should at the time of the sale have known of the marriage and the lack of written consent. “A duty is cast on a party seeking to rely on the deemed consent provision” held the Court “… to make the enquiries that a reasonable person would make in the circumstances as to whether the other contracting party is married, if so, in terms of which marriage regime, whether the consent of the non-contracting spouse is required and, if so, whether it has been given.” Finding that the buyer had indeed proved (1) that he did not know that the deceased was married and (2) that he could not reasonably have known this, the SCA allowed the appeal and the transfer to the buyer stands on the basis of deemed consent by the spouse. The facts of each case will be different, and it is important to bear in mind that in this particular matter the husband’s claim to be unmarried was supported not only by the absence of any sign of a wife but also by two official documents – the deed of transfer and the power of attorney to pass transfer. The bottom line is that as buyer you must make “reasonable enquiries” as to the seller’s marital status and as to whether the other spouse’s written consent to the sale is needed.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

April 20, 2021

Be Prepared for The Cost of Dying

“No matter how much you’ve been warned, Death always comes without knocking” (Margaret Atwood)
No one wants to contemplate their own passing, but the reality is that sooner or later it is inevitable, and particularly in these dangerous times we need always to be prepared. The loss of a loved one is always distressing. It can however be compounded by the challenge of dealing with their assets. Few people appreciate all the costs involved in settling an estate. Understanding these expenses and planning for how to deal with them can make a big difference to those left behind.
Executor’s fees and costs
Every estate must be wound up by an executor. Ensure that in your will you nominate an executor you can trust to act with integrity, professionalism and speed. An executor can charge a maximum fee of 3.5% plus VAT. That equals 4.025% of the value of the estate. Depending on the size and complexity of your estate this fee may be negotiable. The executor will also incur costs such as advertising to find any outstanding creditors, bank charges, accounting fees, conveyancing on the transfer of property and paying the fees due to the Master of the High Court. Together, these could run into tens of thousands of rands.
Taxes and estate duties
The South African Revenue Service (SARS) levies 20% estate duty on the value of any estate, but there is no estate duty payable on an estate with a net value below the R3.5 million abatement (allowable deduction). Any amount above R30 million will be taxed at 25%. An estate worth R40 million will therefore have to pay estate duties of R7.8 million (R5.3 million on the first R30 million, after the R3.5 million abatement, and R2.5 million on the next R10 million). These taxes will not, however, be paid on any assets left to a surviving spouse. In that case they effectively ‘roll-over’ and will only be charged upon the spouse’s death. The estate will also have to pay capital gains tax on any assets that are sold. SARS will also conduct a final income tax assessment. In addition, South Africans need to consider that if they have assets in other parts of the world, they may be liable to pay estate taxes in those countries as well. There are double taxation agreements in place with many countries that prevent most assets from being taxed twice, but where taxes elsewhere are higher than in South Africa, the estate will still have to pay the difference. Inheritance tax in the UK, for instance, is 40%.
Outstanding debt
The estate will have to settle any debt such as credit cards, loans, or bonds on property. Interest on these debts does not stop accruing when someone passes away, so it is best to deal with them as early as possible. It is most critical to consider how to handle home loans, especially if they are held over a property in which surviving family members are still living. Sometimes these individuals may not qualify to take over the bond due to their own financial position, which means that the house may have to be sold if the debt can’t be settled.
Being prepared – check what cash the estate will have
Even though an estate may have sufficient assets to meet all of these expenses, it can still be a problem if it doesn’t have enough available cash. That is because the executor may have to sell assets to free up money. This not only leads to potential extra costs and taxes but can be traumatic if something like a house where a loved one is living or a car that someone needs for transport has to be disposed of. This is why it is important to prepare an estate to make sure that there is enough cash available. One way of doing this is to take out a life insurance policy that will pay cash into the estate. This will ensure that your family members aren’t left with a potentially major financial burden and face additional stress after your death. The above is of necessity just a summary of the cost considerations involved, so speak to your attorney about how your will and estate are structured and how you can plan to meet all the costs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

January 13, 2021

A Note from our Director

Dear Client

I trust you have had time to reflect on 2020 and spend quality time with loved ones over the festive period.

What can we expect from the property market This year? Although 2020 has taught us that we should not try and predict the future, let’s look at a short overview of where we are at the moment.

As a result of the low-interest rates, the lowest in 50 years, a great opportunity developed for South Africans to enter the property market or even purchase investments properties. Tenants and first time home buyers are now able to afford to buy properties. People can afford bigger houses, with the prospects of working from home also becoming a reality. Although the stats indicate that millennials are still hesitant to purchase, the average age of buyers is younger. The forecast is that the interest rate will remain stable for the rest of the year.

The additional stress that COVID-19 has caused in the economy, like unemployment, has filtered down to the household, not just financially but also personally. The result has been an increase in property sales caused by forced sales and even unfortunate events like divorces. We could also expect an increase in distressed property to enter the market, leading to more competitive house prices. I recommend that you use expert agents and mortgage originators to assist with finding accurate market-related property prices and finance options.

Compliments for 2021, remember the lessons learned from 2020. To not plan too far ahead, be adaptable and agile this year!  Let us hold on to our faith, celebrate our small daily “wins” and control the controllable’s.

Finally let us remember to have some fun every now and then!

Regards

Diaan Van Wyk  |  Director

January 13, 2021

Building a Home in 2021: The Dangers of Not Being NHBRC Compliant

“Home, Sweet Home” 

2021 is shaping up to be a busy year for both property sales and home builders, thanks in no small measure to the pandemic-induced concept of “work from home, live anywhere”.

If you are one of the many landowners about to invite a team of contractors onto your property to build your new dream home, or holiday house, or perhaps a house-to-let on an investment property, remember to check for full compliance with the Housing Consumers Protection Measures Act. It offers you, as the “housing consumer”, significant protection against dishonest contractors and faulty workmanship, plus access to its mediation services should any dispute arise. Your home is probably one of your more significant assets so it will be time well spent.

On the other side of the coin, any building contractor or property developer not complying with the Act risks both criminal prosecution (with a penalty of up to a R25,000 fine or a year’s jail time) and loss of all rights to claim payment from your client. You could, in other words, lose everything – as a recent High Court judgment shows…

High Court: Builder registration is not enough

For the builder, first step is registration with the NHBRC (National Home Builders Registration Council), but a recent High Court decision confirms that there is also a vital second step – enrolment of the house itself. Note that the NHBRC certificate of enrolment must be issued before construction starts.

The facts were these –

  • A builder (a close corporation) contracted to build five homes for a housing consumer.  The builder had been duly registered with the NHBRC.
  • But, as it was involved in a dispute with the NHBRC, the builder did not itself enrol the homes. They were registered under the name of another entity.
  • The builder however carried out the work itself, and in due course it sued the housing consumer for R1.1m.
  • The builder lost, the Court holding that because of non-compliance with the registration requirements, it was “not entitled to claim compensation or payment for services rendered.”
  • The end result – the builder (both the close corporation and its members) leaves with nothing. Except of course a doubtless substantial legal bill and the risk of prosecution for giving false or misleading information to the NHBRC.

Before you build…

  • Make sure your builder is registered with the NHBRC and get a copy of the registration certificate – check that it is not expired. Go to www.nhbrc.org.za, call the NHBRC on 0800 200 824 or email it at nhbrc@nhbrc.org.za. Note that if you are an “owner builder” you may be exempt.
  • You must have the NHBRC “certificate of proof of enrolment” of the house before any construction starts (you will need it anyway to get a bond for new house construction).
  • Check that you are dealing with an experienced and reliable builder by asking for at least three recent client references, visit any active building sites to check quality of construction and materials for yourself, check with the NHBRC for the total number of houses enrolled by the builder and for any complaints lodged (check also on online consumer complaint sites for any negative or positive reports).
  • Sign a full written contract with the builder, but only after your lawyer has checked it for you. Look for things like timelines, detailed building specs and plans, compliance with NHBRC technical requirements and its Home Building Manual, warranties given, deposits payable, agreed progress payments and the like.
  • Make sure that all necessary municipal requirements have been met and that building plans have been approved.
  • Keep your neighbours in the loop every step of the way – there is nothing like clear and open communication to nip any unhappiness or problems in the bud!

© LawDotNews

January 13, 2021

Life Partners – You Need a Will and a Cohabitation Agreement!

A recent High Court decision has been widely viewed as an important victory for the rights of unmarried opposite-sex life partners. Until now, if one such partner died intestate (without making a will), the other could not inherit on the same basis as could a married spouse. Nor could the surviving life partner claim maintenance from the deceased estate (whilst a surviving spouse can claim).

The High Court’s pronouncement that the relevant legislation was unconstitutional and invalid in this regard must still be confirmed by the Constitutional Court, but it certainly is a clear indication that our courts want to see our laws amended to protect the rights of such couples.


The life partner who will now inherit

  • An unmarried 57-year-old man died leaving substantial assets. Both the executor of his deceased estate and the Master of the High Court rejected, primarily on the basis of existing law, his surviving (female) partner’s claim to inherit from the estate.
  • She approached the High Court with her claim, and the Court found on the facts that the couple had been “partners in a permanent opposite-sex life partnership, with the same or similar characteristics as a marriage, in which they had undertaken reciprocal duties of support”.
  • The provisions of the Intestate Succession Act and the Maintenance of Surviving Spouses Act were, held the Court, unconstitutional to the extent that they excluded opposite-sex permanent life partners from their provisions.
  • The practical effect is that the surviving partner will inherit as though she was a spouse.

But, if you are in an opposite-sex life partnership –

  1. You should still make a willThere’s no guarantee that the Constitutional Court will confirm the declaration of invalidity, but more importantly there are very sound reasons for everyone – married or not – to leave behind a valid and properly-drafted will.It is quite possibly the most important document you will ever sign. Without a will, you lose your right to choose who inherits what (your spouse for example will get only a “child’s share” on intestacy), you have no say in who will be appointed as the executor of your deceased estate, and you risk exposing your surviving loved ones to the trauma and expense of family dispute and litigation.

    In the context of life partners, perhaps you want your surviving partner to inherit everything, or perhaps you don’t. The only way to ensure your desired outcome is to specifically provide for it in your will.

  2. You should still have a cohabitation agreementAn enduring myth in our society is that our law recognises the concept of a “common law marriage”. There is no such thing in South African law and whilst there are some limited statutory protections for life partners, if and when you part ways you could well find yourselves embroiled in a prolonged and bitter dispute. Quite possibly one of you will be left destitute after many years of “living as man and wife”.The quick and easy solution is to enter into a cohabitation agreement, it’s the best way to safeguard both of your rights (personal as well as financial).

© LawDotNews

January 13, 2021

Don’t Fall Victim to a Ponzi Scheme in 2021!

 

“If it sounds too good to be true, it probably is” (wise old adage)

2021 could well be a bumper year for Ponzi schemes (and their equally evil cousins, pyramid schemes). They flourish in all countries and at all times, but with our pandemic-related economic woes and general disruption we will no doubt provide the scamsters with particularly fertile ground this year.

And these schemes just never go away. As soon as one collapses or is shut down, it is immediately replaced by a new one – or more (like the Hydra’s heads, cut off one and two grow back).


Who is at risk?

Everyone! It’s not just pensioners and retrenched employees desperate to recoup their 2020 investment losses. Past schemes have counted some of South Africa’s wealthiest and most savvy citizens as victims, the problem being of course that the con artists who originate them are highly skilled at picking their targets and at creating cover stories to make everything seem legitimate. Perhaps most importantly, they are skilled at the social engineering side of it, building trust and credibility in their target markets with endorsements and “success” stories.

2020’s R9.45bn parting shot at us

There’s often big money involved too. Witness 2020’s parting shot at us in the form of the late-December provisional liquidation of Mirror Trading International (MTI), reportedly involving some R9.45bn worth of Bitcoin and some 280,000 investors from all over the world, lured by promised returns of up to 10% per month. At time of writing MTI apparently still denies that it runs a Ponzi scheme or indeed that anything is amiss, plus its website is still up, but a flood of media reports to the contrary no doubt have investors panicking and wondering whether they have just lost everything.

See also the recent press reports of the Asset Forfeiture Unit’s seizure of R106m worth of assets (11 chunks of land, 5 aircraft and a motor vehicle) linked to a suspected pyramid scheme.

During the lockdown, another alleged scheme took R42m in deposits from over 230,000 unsuspecting investors.

Stand by for more…and protect yourself and others by knowing the warning signs.


Red flags to watch for

See Sanlam’s Infographic below for a summary of how to spot a Ponzi scheme.

As the infographic suggests, let your watchword be: “If it sounds too good to be true, it probably is”.

 

Another possible indicator of a fraud is a promoter with no physical address – and if you are given a physical address, make sure it is real!If your proposed investment is presented as a being a part of a legitimate multi-level marketing (MLM) scheme, it may or may not be genuine – tread very carefully and read “Understanding pyramid schemes and multi-level marketing” here for some pointers.

Warn others (including your staff and the “early birds”)

Please think of passing on this warning, and if you are an employer alert all your staff. These criminals often target workplaces because of the trust factor between fellow employees and colleagues.

Tell everyone not to fall into the trap of thinking that they can be winners by “getting in early”. Statistically, 88% of “investors” lose everything. And, as a number of South African court cases have shown, even the 12% “early bird winners” must, if sued by a liquidator or trustee, cough up not only their “profits” but also their initial stakes.

That’s because a liquidator (“trustee” in the case of a person or a trust) can recover any monies paid out by a liquidated scheme during the 6-month period prior to liquidation, unless the recipient can prove that the disposition was made “in the ordinary course of business” and without intention to prefer one creditor above another.  That’s likely to be impossible to prove with an illegal scheme. Even after 6 months the investor is still at risk, although the onus of proof then shifts to the liquidator.

In other words, even the “early birds” stand to lose everything.

So the bottom line is this – if you are approached by anyone with a “too good to be true” deal, don’t part with a cent until you are 100% sure it is legitimate!

© LawDotNews