January 13, 2021
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!
Diaan Van Wyk | Director
January 13, 2021
“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 firstname.lastname@example.org. 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!
January 13, 2021
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 –
- 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.
- 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).
January 13, 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!
January 13, 2021
Whether 2020’s lockdown gave you a great idea for a new business, put you out of a job, or killed your old business, 2021 may well be a year full of new opportunities. If the excitement and rewards of entrepreneurial life appeal to you, have a look at “Starting a Business” on the Small Business Site here for checklists and articles like –
- “Small business compliance guide”,
- “Where can I register my company in South Africa”, and so on.
Your first port of call however should always be your lawyer – not only are there important legal requirements to consider before you start up, but you need to choose the right vehicle and structure for your business (sole trader, partnership, company, trust etc) upfront.
December 17, 2020
We are almost through 2020. What a year it has been. I have learnt that life happens on its own despite our own planning or expectations. How we respond to the unexpected is what determines the real outcome.
I have been in a wheelchair for eight years now. My wife has a photo of us dancing at a wedding in the November just before the accident. Little did we know that was the last dance we would have had. As the song goes save the last dance for me. The lesson for me now in 2020 is to have that last dance, because tomorrow may not come. Enjoy the moment and be present in the moment. Time is precious and all of us have the same minutes per day. Make them count. Make the call, go on the date, write the book, and do whatever it is you dream of. If not today when? Tomorrow might change, or worse, it may never come.
I wish you all a very merry Christmas and prosperous new year. My wish for you is to be present in the moment and live life to its fullest. We all have the time and ourselves to give and dedicate to others. Let’s make it a better world for you and me and the entire human race.
2020 gave us a world of opportunities to do just that. Let us continue with it into 2021.
Roy Kapp | Director