May 16, 2023
Losing Your Property to Acquisitive Prescription
“… a person shall by prescription become the owner of a thing which he has possessed openly and as if he were the owner thereof for an uninterrupted period of 30 years or for a period which, together with any periods for which such thing was so possessed by his predecessors in title, constitutes an uninterrupted period of 30 years.” (Prescription Act)
Here’s another warning to be vigilant when it comes to someone else occupying any part of your property for 30 years or more – you could wake up one day to find you’ve lost your ownership altogether. With not a cent’s purchase price to show for it.
And whilst 30 years may seem like a long time, judging by the cases that come before our courts it does regularly take property owners by surprise.
A feature of our law since Roman times, “acquisitive prescription” is a legal process that allows a person to acquire ownership of a property through long-term occupation.
The requirements for acquisitive prescription
To succeed in such a claim under our Prescription Act, the possessor must prove at least 30 years of continuous “possession” both openly, and as if the owner. “Possession” in this context refers to “civil possession”, a concept which (to put it as simply as possible) means physical possession with the intention of owning the property. Whether or not you think you are the true owner or know that you aren’t, is irrelevant here.
Somewhat more colourfully, you may also come across the Latin phrase (beloved in legal circles) “Nec vi, nec clam, nec precario” – meaning in essence that your possession must be “without force, without secrecy, without permission.”
Let’s have a look at a recent and illustrative case in which a property owning company’s attempts to retain ownership of a piece of its land came to nought.
The buyers who didn’t notice a nursery and park on their land – for 31 years
- In 1993, two individuals bought a property-owning company and were appointed directors. Their plan was to develop and sell the thirty-nine plots owned by the company.
- Unknown to them, a neighbour had since 1990 occupied a portion of the (then undeveloped) property. The possessor had at her own cost transformed the land into a nursery and community park, using water and electricity from other neighbours and reimbursing them.
- The directors had never noticed the nursery and park as they drove past because neither was visible from the road, being hidden by dense vegetation. They assumed the nursery was on neighbouring land.
- After 31 years of continuous occupation the possessor asked the High Court to order registration of the occupied land into her name.
Was the possessor’s illegal use of the property a factor?
- One can imagine the directors’ shock at learning that they stood to lose a portion of their property, with zero compensation.
- One of the defences they raised was that the possessor’s illegal use of water and electricity on the property, her failure to apply for rezoning, and her unauthorised use of the property as a nursery all prevented her from meeting the requirements for acquisitive prescription.
- Not so, held the Court, her possession was in itself not unlawful and her illegal usage did not affect her possession of the land as owner.
- The property will now be registered into the possessor’s name.
Owners – monitor your property!
As a registered owner monitor your property and take action against any occupiers. Or indeed against anyone using your property for anything, because “servitudes” (rights of use or access over your property) can also be acquired by prescription.
Before you buy…
The losers in this particular case would have saved themselves a lot of pain if back in 1993 they had checked properly for occupiers on the company’s land – don’t fall into the same trap!
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
March 19, 2019
Property Buyers: Beware Unlawful Occupiers!
“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell” (Sir John Templeton, billionaire investor)
You are it seems in good company if you view times of depressed property prices and general uncertainty as a great buying opportunity.
Just be aware that if it is a house you are after, whether as an investment or to live in, you should do your homework if the property is (or might be) occupied. Generally speaking, buying a property with occupiers is fine if you know about them and have a binding deal in place with them (see the end of this article for more on that).
But, as a recent High Court decision illustrates, if you aren’t aware of occupiers and/or don’t have a proper agreement in place with them, you could find yourself unable to evict them even if you buy the property “free of lease”.
Before we discuss the case itself, it is important to know that to get an eviction order from a court, you need to prove in terms of PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act) both –
- That the occupants are “unlawful occupiers” and
- That it is “just and equitable” to grant such an order after considering all the relevant circumstances.
The Bo-Kaap flat, the sale in execution, and the occupiers
- A property investor bought a flat in a sectional title development on a sale in execution. As we shall see below, the history of the flat’s ownership, and its location in Cape Town’s historic Bo-Kaap area, were relevant to the outcome of this matter.
- The Sheriff of the High Court sold the flat for R375,000 “free of lease”, but also with “no warranty that the Purchaser shall be able to obtain personal and/or vacant occupation of the property or that the property is unoccupied and any proceedings to evict the occupier(s) shall be undertaken by the Purchaser at his/hers/its own cost and expense….”
- The people living in the flat refused to leave or to “legalise … their rights to the property”, and the investor applied to the Court for their eviction.
- The eviction order was refused firstly because the investor was unable to prove that the persons it was trying to evict were “unlawful occupiers” for lack of information as to –
- Who the occupants of the flat actually were, with the result that “the court has scant knowledge of essential details of the occupiers of the property in circumstances where these are material to the exercise of the court’s discretion under the provisions of PIE”. Crucially, there was nothing before the court as to the ages or circumstances of the occupiers, so it was unable to consider “all the relevant circumstances including the rights and needs of the elderly, children, disabled persons and households headed by women”.
- When and under what legal right the occupiers originally took occupation (lease, right of habitation, usufruct etc), when that right was terminated and under what circumstances. Note that timing is important here because once unlawful occupation has lasted for more than 6 months, the question of relocation to land supplied by the municipality or government becomes relevant.
- Whether or not the occupants had any form of written or verbal lease. That’s important because of our law’s “huur gaat voor koop” principle – literally “lease goes before sale”, meaning that you are generally bound to honour an existing lease (there are a few exceptions – take specific advice).
- Secondly, the investor failed to convince the Court that it was “just and equitable” to grant the eviction.Again, the lack of information as to the occupiers was relevant, and the Court’s comments on the particular facts of this matter are worth noting in full (our emphasis): “The residents of the area are, generally speaking, not wealthy and Bo-Kaap is home to many poor and working-class people. An eviction of the type sought in this matter, in which a group of related persons appear to occupy a family home that was acquired from the City of Cape Town some time ago, might well render them homeless or at the very least require them to relocate to one of the outlying suburbs that are now home to the many who fell foul of the Group Areas Act. If those circumstances obtain, a court would be required to think long and hard about the justice and equity of ordering people to vacate a dwelling, long occupied, which has been snapped up by a buyer distant to the neighbourhood for investment or development potential. Certainly, it is to be expected of such buyers that when they seek to move established families out of their homes, they do their homework properly and place all relevant facts before the court.”
Do your homework, and do it properly!
Investor or not, the Court’s warning to do your homework applies to you. Establish whether anyone is living in the house, exactly who they are, how long they have been there, and on what basis.
Bear in mind that because leases need not be in writing, you could find yourself battling occupiers who claim to be tenants under a verbal lease. Without a written record they could well claim to be entitled to pay minimal rent and to have many years left on their “verbal lease”.
So first prize will always be to reach a written, water-tight deal with any occupants before buying – ask your lawyer for help.
© LawDotNews
February 20, 2019
Property Owners, Buyers and Agents: Check for the Title Deeds Before 25 February!
“Time is of the essence” (legal phrase meaning ‘speed is essential, there’s a deadline, this is an emergency, hurry up, do it now’ – The Phrase Finder)
You sell your house/apartment/office/factory/plot of land. You instruct your conveyancer to pass transfer to the buyer, and start dreaming of what you will do with the proceeds.
But then your lawyer says “Hang on, you didn’t give me the property’s original title deed and I need it before I can pass transfer – where is it?”
Panic!
You can’t find it. The bank doesn’t have it (bondholders normally insist on keeping the title deeds of properties bonded to them as a security measure, at least until the loan is repaid in full and the bond cancelled). You didn’t leave it with your lawyer for safekeeping (perhaps you should have). You search high and low both at home and in the office, to no avail. Your spouse has a vague memory that you may have left it with Uncle Festus to lock away in his vault; but Uncle F died 10 years ago and his house and all his worldly goods are long gone. Or perhaps it was stored in your holiday home and went up in smoke (literally) in that bush fire in ’93? Panic!
Relax. There is – for a short while longer anyway – a quick and cost-effective remedy. Have your lawyer apply for a certified copy of the Title Deed. All you need to do is attest to an affidavit, say that a “diligent search” has failed to locate the title deed, and confirm that it isn’t pledged or held as security by anyone.
All being well, a few weeks and a reasonable legal fee later, the Deeds Office issues a certified copy of the title deed and the transfer proceeds.
Act now, before it all changes
What has thrown the cat amongst the pigeons is a recent change to the applicable Regulations which will, from 25 February, require that –
- Your affidavit now has to be “attested by a notary public”. A Notary Public is a specialised attorney who “notarises” documents in a formal recording and certification process that carries more weight than would attach to a normal affidavit signed before a Commissioner of Oaths. That translates into extra cost and delay.
- Your application must now be advertised in the Government Gazette, and for 2 weeks after publication must lie open for inspection by the public at the Deeds Registry. Again, that’s more cost. And a lot more delay.
Owners, buyers and agents: Your urgent action plan
In a property transfer, time really is of the essence. The last thing any of the parties wants is delay, or extra cost. So here’s what you should do right now –
- If you own property, and whether or not you have thoughts of selling in the near future, this is a great time to confirm that you know where your original title deed is. If you can’t find it, ask your lawyer for help.
- If you are buying property, forward this to the seller or estate agent with a request that they confirm possession of the title deed or act to replace it immediately.
- If you are an agent, do the same – forward this to everyone with a property on your books (you’re doing them a favour as well as yourself).
And a note for bondholders
The new Regulations apply equally to lost mortgage bonds, notarial bonds, registered leases, holders of real rights etc, so what is said above applies equally to you.
These new requirements kick in on 25 February, so your window of opportunity here is a narrow one.
© LawDotNews
February 20, 2019
Buying Your First Home with a Government Subsidy
Note: If you earn over R22k p.m. (the subsidy threshold) or aren’t personally in the market for a house in the “affordable housing” bracket, please think of forwarding this article to someone who might be – perhaps a relative, friend, colleague or employee. You could be helping them take that important first step onto the property ladder!
Unless you already own your own house, our current buyer’s market – while it lasts – could be your golden opportunity to find one at a reasonable price. But affordability isn’t what it used to be, and you should take advantage of any help you can get.
That’s where FLISP, government’s “Finance Linked Individual Subsidy Programme”, comes into the picture – if you qualify.
How does it help you?
The subsidy allows you to bring down your home loan instalment to an affordable level, by reducing your bond amount or increasing the cash component of the purchase price. You can buy new or old residential property, or you can build on a vacant plot.
The size of the subsidy granted to you will depend on your earnings, with a maximum of R121,626
Do you qualify?
To qualify you need to meet these requirements –
- You must be a South African citizen with a valid ID or a permanent resident with a valid permit
- You must be over 18, and married/co-habiting or single with financial dependants
- You cannot have previously benefited from a Government Housing Subsidy Scheme
- You must have a home loan approval
- You must earn between R3,501 and R22,000 per month.
© LawDotNews
January 17, 2019
Property Developers Beware: Deemed Accruals Can Seriously Disrupt Your Cash Flow
“Never take your eyes off the cash flow because it’s the lifeblood of business” (Richard Branson)
A recent Supreme Court of Appeal (SCA) judgment has confirmed that when a property developer enters into an agreement with a buyer to transfer the property, even if the developer only actually gets paid in a subsequent tax year, the income is deemed to have accrued to the developer at that date. The developer must therefore include the full proceeds of the sale in its income tax return for the year the agreement was signed.
This has the effect of the property developer paying tax before receiving the proceeds of the sale, putting the developer out of pocket until transfer to the purchaser takes place.
A R1.9m tax assessment challenged
A property developer in Cape Town entered into sales agreements for 25 units. Each agreement called for a deposit of R5,000 with the balance of the money to be paid on completion of the development. Purchasers could take possession once the full sale price had been secured or within 60 days of the sale. By the end of the first year 18 purchasers had taken possession and in all 25 cases the purchase price had been fully secured.
Transfer of the properties took place in the next tax year. The developer did not include the sale proceeds in his tax return for the year of concluding the agreements but showed the proceeds in the next tax year.
The Court upheld the decision by SARS to tax the developer in full in the first tax year. The assessment at just under R1.9m was based on taxable income of R6.8m.
Why the developer lost
Property developers assume a substantial risk when they undertake a development – they spend millions of Rand upfront and if they can’t sell the developed properties they make a considerable loss. They mitigate this risk by selling the properties upfront – usually before they commit to building. Clearly they will not get paid until the property is transferred, so they accept a deposit plus a guarantee (usually from the purchaser’s banker) for the balance of the selling price, or alternatively the buyer placing the funds in the conveyancer’s trust account.
Once the developer is assured of selling the properties it then proceeds with the development. On this basis, banks will advance the cost of the development to the developer.
However, in terms of the law as now confirmed by the SCA, the proceeds of the sale of the properties are deemed to have accrued to the developer and are taxable in the year the agreement is signed.
Developers need to be aware of, and plan for, the cash flow implications.
© LawDotNews
January 17, 2019
Beware the Building Deadlines When Buying-to-Build
Here’s yet another warning from our courts to take seriously the building deadlines commonly imposed on buyers of plots in residential estates. Failure to comply with them could expose you to heavy fines, recurring penalties and even the risk of losing your plot altogether.
- A Home Owners Association (HOA) imposed “double levy” penalties totalling R105k on the owners of a plot when they failed to start development before deadline.
- Taken to court, the owners challenged the validity of the penalties on a variety of technical and other grounds, but failed on every count.
- The end result is they must now pay the penalty levies, late payment penalties, and attorney-and-client legal costs for both the original magistrates’ court hearing and for the unsuccessful appeal to the High Court.
3 lessons for HOAs and buyers
The HOA’s victory in this case highlighted several important factors that both HOAs and buyers would do well to take note of –
- The HOA’s power to raise “recurring penalties” was upheld only because of the wording of its articles of association. They specifically gave the HOA the power to “impose a system of fines or other penalties”. Had the wording only allowed “a fine”, its attempt to impose a recurring penalty would have been shot down (exactly that happened to another HOA in an earlier case).
- Penalties must be proportionate to the prejudice suffered by the HOA, but courts are unlikely to interfere unless “the penalty is unduly severe to an extent that it offends against one’s sense of justice and equity”. Here, the double-levy penalties were upheld because the “ongoing delay in developing their property in accordance with their obligation … prejudiced the underlying rights of other owners … to enjoyment of a fully developed estate.”
- The title deed gave the HOA the right to claim the plot back for breach of the building clause, but, held the Court, that right did not replace the right to claim penalties; it was an additional right available to it.
The bottom line for “buy to build” plot purchasers is this – make absolutely sure before buying that you will actually be able to build by deadline.
© LawDotNews
December 13, 2018
Lending to a Friend or Selling Property on Credit – Must You Register as a Credit Provider?
“Neither a borrower nor a lender be
For loan oft loses both itself and friend” (Shakespeare)
It seems logical that the very strong consumer protections in the NCA (National Credit Act) are designed for commercial situations in which credit is advanced by “credit provider” businesses to “credit consumers”.
But does the NCA also apply to non-commercial, once-off loans? Like a loan to a friend or relative? And what about property sales?
Why should you be worried?
If you aren’t in the business of providing credit it seems counter-intuitive that you should have to worry about NCA registration when making a single loan or giving credit on a once-off basis. And in fact until now our various High Courts have been split over the question.
But that has all changed with a recent Supreme Court of Appeal (SCA) decision, and your danger is this – if you should have registered as a credit provider but didn’t, your agreement is unlawful and could be declared void. You might have to write off your whole loan.
A “family” fall out and a R2m “time to pay” share purchase deal
- A couple brought into their business a businessman who was “like a son” to them. The idea was that eventually he would take over the business and over time he became a substantial shareholder. Alas however some 12 years down the line there was a falling-out and a mutual decision to part ways.
- It was agreed that the businessman would sell his interest in the business to the couple for R2m, to be paid by way of a R500,000 deposit and monthly instalments of R30,000 p.m. Interest was payable on the deferred amount and a mortgage bond registered over the couple’s house as security.
- The businessman (as seller) registered as a credit provider (in order to get the mortgage bond registered in his favour) but only after the credit agreement was signed.
- When the business ran into trouble the couple couldn’t continue paying and the seller sued them for the outstanding balance of R1.13m. The couples’ defence was that the agreements were null and void due to non-compliance with the NCA.
- The SCA held that the seller should have registered as a credit provider before the credit agreement was entered into. He didn’t, the agreement was thus unlawful, and he loses his R1.13m.
What is excluded from the registration requirement?
So are you at risk? Firstly, the NCA has many general exclusions and situations of limited application, such as to “incidental” credit agreements, interest-free loans, larger corporates and agreements (thresholds apply – take advice for details).
Secondly, the NCA only applies if you are “dealing at arm’s length”. What does that mean in practice?
- To start with, there are specified exclusions for certain shareholder loans and for loans between family members who are “co-dependent” or “dependent” on each other. Think for example of parents supporting a student daughter or the daughter supporting her parents.
- Then there’s the much wider provision excluding “any other arrangement … in which each party is not independent of the other and consequently does not necessarily strive to obtain the utmost possible advantage out of the transaction”. That might suggest that loans to close friends are also excluded, but it’s not nearly as simple as that.The lender in this case couldn’t of course claim to be an actual family member of the couple. But he did argue that because of his “almost familial relationship” with them, he didn’t try to get the “utmost possible advantage” out of the deal and therefore the NCA didn’t apply. On the facts however the SCA disagreed, the relationship between the parties having become hostile and threatening prior to signature of the agreement. The point is that if there is an element of “independence” between you and the debtor, you are at risk.
Outside those specific exclusions, deciding whether or not a court will consider you to be “at arm’s length” is always going to involve grey areas.
Sale of property with deferred payments
There’s particular danger here for the increasing number of property sellers who, in order to attract cash-strapped buyers in these tough times, are agreeing to sell their properties on a deferred payment or instalment sale basis rather than the standard “pay in full against transfer” basis. Watch out also for a normal “pay in full” deal morphing into a “pay me the rest later” sale when the buyer can only get a bank loan for part of the total price.
If either of those scenarios apply, your sale may have to comply with both the NCA’s obligation to register as a credit provider and with the strict requirements of the Alienation of Land Act. Specific legal advice is essential before you agree to any form of “deferred payment” property sale.
The bottom line
Unless and until the NCA is amended to make it clearer, less confusing and more pragmatic, tread very carefully in lending money or giving credit – in relation to a property sale or otherwise – to anyone. Even family and friends.
Ask your lawyer for advice on your specific circumstances – do you fall into one of the exceptions or must you register as a credit provider? If you do need to register, prepare for lots of red tape and delay!
© LawDotNews
December 13, 2018
Buying Property this Festive Season? Check the Title Deed First!
“Don’t wait to buy land, buy land and wait” (Will Rogers)
If you plan to buy property this Festive Season – perhaps your new dream house, or a holiday home, or an office for your business, or purely as an investment – check the title deed of the property you have your eye on before you sign anything.
Why is that so important?
Firstly, what exactly is a title deed and why check it?
In a nutshell, a “Title Deed” (also called a “Deed of Transfer” – they’re the same thing) is proof of who owns a particular property. It’s issued by the local Deeds Office after a conveyancing attorney has registered transfer to a new owner.
The title deed is a mine of crucial information relating to the property, its history, and conditions attaching to it. So check it thoroughly, it’s well worth the effort –
- You may well pick up valuable pointers to the property’s value, such as what the seller paid for it and when, things that could affect what it’s actually worth to you, and so on.
- If you don’t do a proper check, you could be in for a very nasty surprise down the line. To take just one example, you really don’t want to find out after you buy that servitudes apply and you must now live with neighbours crossing your property whenever they feel like it, or that you can never build that double-story you have dreamed of, nor subdivide when you decide to retire.
The reality is that our courts regularly have to deal with disputes arising from title deed conditions of which the buyer was blissfully unaware – until it was too late. And it’s no use crying “but I had no idea I was buying a property with a zoning restriction/height restriction/right-of-way servitude”. Because the property register kept by the Deeds Office is open to the public, everyone, including you, is presumed to have notice of registered rights like those.
You can get a copy of the title deed direct from the Deeds Office or online, but it will be easier to ask the seller (estate agent if applicable) or your lawyer for one.
So what should you look for before buying?
Look for the following in particular –
- Who the current registered owner is, when they bought the property and what they paid for it.
- What the property’s history is.
- The full description of the property, its erf or section number, exact size and references to boundaries.
- Any rules or contracts applying to it. For example if you are buying into a residential complex managed by a Home Owners Association, there is likely to be an obligation to join the HOA.
- “Restrictive conditions” relating to your rights to use, build, sell the property and so on. For example, no matter what the local zoning laws allow, you could find that you are specifically limited to residential usage only, or to a single story house built on no more than 50% of the erf, or you may not be able to subdivide a large piece of land.
- Real rights registered over the property. Because they are “real”, they come with the property and will be enforceable against you if you buy. And they can seriously limit not only the property’s value but also your use and enjoyment of it. Imagine for example if all the neighbours have a “right of way” servitude to use a road or footpath through your property. Or that someone has a lifetime usufruct giving them the right to live in your new house until they die.
- Any mortgage bond will also be endorsed on the title deed, as will the fact that it has been cancelled if the owner has paid it off in full – factors that may help you in deciding on where to pitch your offer.
- Each title deed will be different. Scrutinise it for anything else that may be relevant to your decision whether or not to buy, or to the price you are willing to pay.
Check that everything in the title deed ties in with the offer you are being asked to sign. And that you are happy with all obligations and restrictions on your use of the property.
Most importantly, even the simplest title deed can be full of legalese and pitfalls for the unwary. So as always, ask your lawyer for help before you sign anything!
© LawDotNews
November 21, 2018
Can I have pets in a residential complex?
“I never married because there was no need. I have three pets at home which answer the same purpose as a husband. I have a dog which growls every morning, a parrot which swears all afternoon, and a cat that comes home late at night” (Marie Corelli, English novelist)
Residential complexes and estates are becoming more and more popular for the many advantages they provide. Remember however that – in everyone’s interests – they also come with restrictions on your freedom to use and enjoy your property, and that you bind yourself to whatever Conduct Rules apply in your community scheme.
One of those restrictions is likely to be your right to keep a pet, and that’s a topic that can be a source of much conflict and unhappiness.
Residents tend to fall into one of three camps –
- “I really need to have my little dog/cat/parrot/lizard living with me”
- “I simply cannot handle any more of that parrot-screeching/lapdog-yapping/midnight-cat-yowling – it has to go!” or
- “Pets – don’t need them myself but hey, fine so long as they don’t cause me any trouble”.
Regardless of which category you fall into, it’s important to understand before you move into any form of residential complex whether or not you and other residents are allowed to keep pets, and to obtain any necessary prior authority to do so.
Sellers, buyers and estate agents would do well to address this specifically in sale agreements to avoid disappointment and dispute down the line.
Sectional title schemes
Your Body Corporate has the right to impose limits on pet ownership. It can for example prohibit pets altogether, or it can impose limits on the number of pets allowed, types of pet, breeds or sizes allowed, access to common areas, noise-control, replacement on the pet’s death and so on. Trustees should take care here to define clearly what is allowed and what isn’t. Are only dogs banned or also cats and cage birds? What about pet pigs? Guide dogs? Hamsters? Pet snakes? Goldfish? The more detail the better.
You need to find out exactly what rules apply in your particular complex, but the standard “Prescribed Conduct Rule” below will be in force unless your Body Corporate has amended it. This Rule reads –
“Keeping of animals, reptiles and birds
- The owner or occupier of a section must not, without the trustees’ written consent, which must not be unreasonably withheld, keep an animal, reptile or bird in a section or on the common property.
- An owner or occupier suffering from a disability and who reasonably requires a guide, hearing or assistance dog must be considered to have the trustees’ consent to keep that animal in a section and to accompany it on the common property.
- The trustees may provide for any reasonable condition in regard to the keeping of an animal, reptile or bird in a section or on the common property.
- The trustees may withdraw any consent if the owner or occupier of a section breaches any condition imposed in terms of sub-rule (3).”
Note that where this Prescribed Rule applies unamended, the body corporate is specifically required to act “reasonably” in all the circumstances of each matter. That entails a delicate balancing act between the competing rights of pet-owning residents and their neighbours, which means grey areas and fertile ground for dispute.
Hence the advice to get clarity on your rights before buying into a complex.
Home Owners Associations (HOAs)
HOAs have similar rights to restrict the keeping of pets, but no “Prescribed Rules” apply as they do with sectional title and their powers will depend on whatever founding documentation underlies them. HOAs normally govern free-standing estate houses rather than apartments and so are perhaps more likely to be pet-friendly but again, find out what the complex’s Rules say before you buy.
Trustees barking up the wrong tree? Polly ruffling feathers? The ADR alternative
If you find yourself embroiled in a dispute with your body corporate/HOA or a fellow resident or owner, first prize will of course always be a chat over a friendly cup of coffee to find common ground and a win-win outcome.
If that fails, the (relatively) new Community Schemes Ombud Service provides an alternate dispute resolution (ADR) service designed to assist with just this sort of situation. Ask your lawyer for help in any doubt.
© LawDotNews
October 24, 2018
Selling Your House: Disclosing Defects
“Honesty is the best policy” (Benjamin Franklin)
A recent High Court decision again confirms that when it comes to selling your house, honesty is indeed the best policy.
Specifically, disclose all defects you know of to potential buyers, or risk expensive litigation and damages claims.
Defects and Defences
The buyers of a house, who had paid R2.3m for it (the seller having reduced her original asking price from R3.6m to get a sale), sued the seller for damages in respect of various defects. These, they said, had only come to light after transfer.
The Magistrates Court awarded them R92,352-80 in damages, and the High Court upheld that award on appeal. The seller must also pay legal costs, which will no doubt be substantial. Her loss is a practical lesson in the dangers of trying to hide defects from potential buyers.
The seller did not dispute the existence of the defects complained of, nor did she claim to have shown or disclosed them to the buyers, but she did raise various legal defences to the buyers’ claims –
- Leaking roofs, defective windows, broken mirrors, defective pool equipment and missing keys: The seller argued that all of these defects were “patent” (easily identified on inspection) rather than “latent” (hidden or non-obvious). The buyers, said the seller, had an opportunity to thoroughly inspect the premises but had chosen not to do so and therefore had no claim. The Court however found that there was no evidence to corroborate this – there being for example no evidence that the buyers had inspected the house on a rainy day when the leaks would have been detectable.
- The electric fence: In regard to latent defects such as the defective electric fence, the seller claimed protection from a voetstoots clause in the sale agreement. But our law is that a seller has a general duty to deliver the thing sold to the buyer without defects, and whilst a seller should always try to guard against liability for latent defects with a “voetstoots” (“as is” or “without any warranty”) clause, it offers no protection where the seller has acted fraudulently.Thus a buyer can sidestep a voetstoots clause by proving that the seller “at the time of the conclusion of the contract was aware of the existence of the latent defect in the [house] sold and deliberately concealed the existence of the defect to the purchaser or refrained from informing the purchaser of its existence.” On the facts of this case, held the Court, the seller had deliberately concealed defects such as the defective electric fence energiser.
- The pool filter and cleaner: The sale agreement included a specific one-month warranty in regard to fixtures and fittings, which included the pool equipment. These, said the seller, had been in normal working order at the time of the sale. But the evidence showed that defects in them, resulting from years of wear and tear and requiring complete replacement, had in fact been discovered within the one month period after the sale. The seller had to honour the warranty.
- The electrical compliance certificate: The certificate required by the sale agreement and provided by the seller was found after transfer to have been invalid. The house was accordingly not electrically compliant and the buyers could recover their costs of fixing the defects.
A note for sellers
Don’t fall into the trap of assuming that buyers will find defects for themselves, or of believing that a voetstoots clause will automatically protect you from liability. Avoid all doubt by thoroughly inspecting your property, annex to the sale agreement a written list of all defects you find or know about, then get the buyer to sign it in acknowledgment. There is no substitute for proper legal advice here.
© LawDotNews