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
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
December 17, 2020
Before You Buy or Sell Property this Festive Season…
“Who acts in haste repents at leisure” (Aesop)
Our Festive Season is always a busy time for property sales, and this year should be no different – pent up demand, increased affordability, relocations, record low interest rates and availability of bonds are all factors likely to drive a busy property market for at least the next few months.
If you are one of the many property sellers or buyers planning to take advantage, you are in for an exciting time, and as far as practical advice goes you have a treasure trove of it awaiting you on the internet.
Just don’t neglect the legal aspects – rushing in without legal advice risks falling foul of any one of the many pitfalls out there, and if that happens you really will “repent at leisure”.
Here’s 12 reasons to call your attorney first
Let’s look at some of the benefits of making your lawyer your very first port of call –
- Local, specialised knowledge: Lawyers have their fingers on the pulse of what is happening locally – what is happening in the property market, who is selling and who is buying, what marketing strategies are producing results, which banks are granting bonds on the best terms, and so on. All invaluable information for both sellers and buyers.
- Choosing a conveyancer: As a seller insist on choosing which conveyancing attorney will attend to the transfer in the Deeds Office. Pick a lawyer you trust to act quickly and efficiently, protecting your interests at every step.
- The Offer to Purchase/Deed of Sale: Typically a written offer from a buyer becomes the Deed of Sale on acceptance by the seller, and it is that Sale Agreement that is at the heart of whether a sale proceeds smoothly or whether it devolves into a nightmare of cost, delay and dispute. Prevention being as always better than cure, both buyer and seller should sign nothing until they fully understand and accept all the terms and conditions in the document. Our law will with very few exceptions hold you to your agreements – and if you sign in haste you are likely to regret at leisure!
- Agent’s commission: Don’t risk any misunderstanding or dispute if you decide to market your property through an agent or agents – in a worst-case scenario when dealing with multiple agents, you could even risk double commission. Have your lawyer check the agent’s mandate before you sign it, and as a buyer look for any undertakings you may be giving in the sale agreement regarding commission disputes.
- Other costs: Both parties need to fully consider their total costs, and not all of them are immediately apparent. As a seller for example you need to consider things like bond cancellation costs, compliance certificate costs, tax risks (capital gains tax can be a big factor here) and the like. Buyers of course need to plan for transfer duty, transfer costs etc. Ask your lawyer to give you an estimate.
- Bond clauses: Our courts are regularly called upon to resolve “bond clause” disputes. A properly worded clause, correctly recording what you have both agreed to, is essential. As a seller ask about the “72-hour clause” concept if you are selling subject to the buyer getting a bond and you think you may get another and better offer in the interim.
- Other suspensive and resolutive clauses: A “suspensive” clause is one that says the agreement is “suspended” until the happening of something – for example the granting of a bond to the buyer as we covered above, or the granting of a sub-division or something similar. A “resolutive” clause on the other hand provides that the agreement is binding on signature but falls away on something happening. Both can cause all sorts of confusion and their interpretation is best left to the experts.
- Views, alterations, home businesses, title deed restrictions etc: As a buyer if you have fallen in love with a house because of its spectacular sea views for example, or because it is perfect for adding on that second story or granny flat, or because you plan to move your pandemic-hit business into the garage, have your lawyer check the title deeds and local town planning regulations for what is allowed and what is not. Many a bitter neighbour dispute has its roots in building extensions that block views or exceed local zoning restrictions, or in objections to business activities on residential property. A title deed inspection will also reveal any hidden pitfalls such as servitudes, usufructs and the like.
- Investment Properties: Property can be an excellent investment, but good upfront advice is essential, particularly if you plan to undertake any development or alterations. Understand the costs, the tax implications, and the risks of property “flipping” if you plan to resell, or of managing tenants if you plan to be a landlord.
- Who will the buyer be? Trusts, joint ownership, life partners and other considerations: Should you buy in your personal name or hold your house in a trust or company? Should you buy jointly with your spouse or life partner? These are critical decisions, involving questions of estate and tax planning, marital regime if married, cohabitation agreements if not married, financial status, risk profile in the commercial sense, and a host of other factors. Not getting this 100% right upfront is a recipe for disaster.
- Defects and the old “voetstoots” chestnut: Avoid any risk of dispute over defects, be they “patent” (easily identified on inspection) or “latent” (hidden or non-obvious) with a properly structured voetstoets (“as is” or “without any warranty”) clause. Buyers – bear in mind the old “buyer beware” maxim. Sellers – manage your potential liability for undisclosed defects.
- Community Schemes: Buying into a community scheme comes with many advantages, provided that you understand fully what you are letting yourself in for. For example, our courts will hold you to whatever housing complex rules and regulations apply. It will avail you nothing to say you weren’t aware of them when buying. In a sectional title development understand exactly what you are buying and how the concepts of “exclusive use” and “common property” areas affect you.
Every situation will be different so tell your attorney everything that could possibly be relevant.
© LawDotNews
November 9, 2020
Parking bay disputes – enforcing complex rules
“By subscribing to the constitution, each member accepts the benefits stipulated in his or her favour by the other subscribing members. One of those benefits is that there shall be rules of conduct to give substance to the objectives and rights promised and conferred by the constitution … and that the other members will be required to comply with them … and that any breaches thereof will be called to account” (Extract from judgment below)
There are many advantages to living in residential estates and sectional title developments, but there are also rules and responsibilities.
A common source of friction in complexes is parking, leading to complaints such as “there’s never any parking for my visitors because owners hog the visitor bays for their own cars” and “our complex roads are a nightmare of parked cars jutting out of driveways”.
In yet another reminder to community scheme buyers and owners to fully understand and comply with all the rules and regulations you are agreeing to, the High Court recently barred a home owner from parking his vehicles anywhere except in his own garage and driveway.
- The owner in question lives in a residential estate governed by a Homeowners Association (HOA), one of whose rules forbids the parking of owners’ vehicles either in visitors’ bays or in the street.
- Able to park only one of his three vehicles in his own double garage (because of household equipment stored there), an owner persistently parked his second vehicle outside his garage (its size meant that it jutted into the street), and his third vehicle in a visitor’s bay.
- Other owners complained and the HOA asked the High Court for an interdict against the owner in question.
Two of the owner’s contentions in fighting the application are no doubt commonly raised by rule-breakers generally –
- “The HOA has waived compliance with its rules by not enforcing them”
The owner claimed that failures to strictly enforce the rules against other offenders amounted to the HOA waiving compliance with them. Not so, held the Court, the HOA’s duty was to enforce the rules for everyone’s benefit, plus it had no power to waive compliance. HOAs must however both check the exact wording of their constitutions and recognise the need to conscientiously enforce compliance with rules – both factors mentioned by the Court in reaching its decision.
- “The HOA is applying the rules in a discriminatory manner and shouldn’t be allowed to”
The owner’s argument here was that the HOA was discriminating against him and could not be permitted to do so. This being a contractual right, held the Court, any failure to enforce it against other owners would have no legal bearing on its right to enforce it against this owner. The Court did however warn that “An irrationally discriminatory system of enforcement might well in a given case justify a decision by the court in a matter like this to refuse to grant the interdictory relief in the exercise of its equitable discretion.” In other words, HOAs should be careful to avoid any form of “irrational” discrimination in enforcing rules.
The result – the owner is “prohibited from parking his vehicles, motor bikes, caravans, boats or trailers anywhere … other than in his garages or outside his house wholly within the boundary of his property.” He must also pay the HOA’s legal costs.
An end note on the CSOS dispute resolution service
The CSOS (Community Schemes Ombud Service) provides a dispute resolution service and can adjudicate a wide range of disputes in community schemes. In this particular case it had no jurisdiction to grant an order against the owner, but it should always be your first port of call if possible – take specific advice.
© LawDotNews
November 9, 2020
Landlords and Tenants: Alert Level 1 and the New Eviction Rules
“Only in our dreams are we free. The rest of the time we need wages” (Terry Pratchett)
The flood of lockdown lay-offs and salary reductions has left many tenants struggling to find rent money, and their landlords wondering how to cover their bond repayments and other expenses.
Whether you are a landlord or a tenant (note that we are talking here only about residential leases) you need to be aware of the new Alert Level 1 Regulations applicable to evictions “for the duration of the national state of disaster”.
In a nutshell (this is of necessity only a brief summary of some highlights from the full regulations so take professional advice specific to your circumstances) –
- Evictions can take place but only with a court order.
- Courts have the power to suspend eviction orders until after the “lapse or termination of the national state of disaster”. Expect courts generally to lean towards suspending eviction orders; in other words landlords will in all probability have their work cut out for them.
- Landlords will in practice have to convince the court that it would be “not just or equitable” to suspend the order, taking into account a whole range of listed factors such as health considerations (public health as well as that of the parties), the tenant’s ability to immediately access another residence and basic services, the impact of the disaster on both parties (with the court balancing the prejudice to each of them from delaying eviction) and whether the landlord “has taken reasonable steps in good faith, to make alternative arrangements with all affected persons, including but not limited to payment arrangements that would preclude the need for any relocation during the national state of disaster”.
- The Rental Housing Tribunal has new powers to urgently restore occupation and/or services to tenants deprived of either by the landlord. This would be by way of an “ex parte spoliation order”, i.e. without the landlord having any right to be heard, although the landlord can ask for an urgent hearing on 24 hours’ notice.
- “Unfair practice” is presumed where –
- Services are terminated without reasonable notice, alternative payment arrangements have unreasonably not been made, or where “no provision has been made for the ongoing provision of basic services during the national state of disaster”’
- Any penalty for late payment of rental (where the default is caused by the disaster) has been levied (only interest can be charged),
- Either the landlord or the tenant have failed “to engage reasonably and in good faith to make arrangements to cater for the exigencies of the disaster”,
- “Any other conduct prejudicing the ongoing occupancy of a place of residence, prejudicing the health of any person or prejudicing the ability of any person to comply with the applicable restrictions on movement that is unreasonable or oppressive having regard to the prevailing circumstances.”
Notes for landlords and tenants
Keep a full record of everything in case your dispute ends up before the courts or the tribunal.
Both landlords and tenants will have to act fairly and reasonably towards each other here, taking into account your respective abilities to comply with the terms of the lease during the state of disaster.
Where tenants are struggling to pay rent as a result of the lockdown, landlords should be open (to whatever extent possible) to any reasonable request for rental deferments or reductions. Tenants in turn should be fair and reasonable in asking for relief. Good faith negotiation is key if landlords can expect to have any chance of obtaining an immediately-enforceable eviction order.
© LawDotNews
November 9, 2020
Home Businesses – Is Yours Legal?
The sharp upsurge in businesses operating remotely as a result of the pandemic lockdowns means a lot more people working from home – most presumably in low-profile home offices, but inevitably some in the form of full-on business activities from home. What effect is that having on the property market?
Work-from-home and what’s hot in property market trends
Let’s firstly have a look at what trends are emerging in the “hot property” market, driven by both the work-from-home phenomenon and by the general economic fallout from the pandemic and the lockdowns –
- Increased interest in coastal and country properties from employees and businesses looking to work remotely away from congested highways and crowded cities.
- Upsizing by stay-at-home workers looking for extra home office space and facilities.
- Downsizing by financially-stretched homeowners reducing costs and looking to realise the value in large houses they no longer need (either by selling or by renting out).
- Increased demand for rental properties in some sectors, driven presumably by owners selling homes to cut costs, perhaps also by sales in anticipation of emigration or semi-gration.
The law
The next question of course, regardless of whether you are selling, buying or staying put, is this – what does the law have to say about home businesses? As a small business are you clear to move your business into your house? As an employee is there anything in the law to stop you from setting up a home office? As a neighbour do you have any right to object?
Those are of course important questions to ask before you buy a “home-office-house” and before you open up a home business in your existing house. The last thing you want is to be shut down by unhappy neighbours or the local municipality.
The two questions to ask
The High Court has confirmed that there are essentially two questions to ask –
- Is the activity in question allowed by local zoning and land use laws?
- Is there any other legal block in place, for example are there any title deed restrictions or, if the residence is part of a community scheme like a Home Owners Association (HOA) or a Sectional Title complex, do the complex’s rules allow it?
Living in a complex – the hair salon allowed by zoning laws but closed down by the HOA
- A homeowner had for many years run a hair salon business from her home in a complex, although both the HOA’s constitution and its conduct rules allowed only residential usage of houses except with authorisation via a special resolution. She was bound by the constitution and rules both by the terms of her purchase agreement and by her title deeds.
- When she refused to cease business the HOA approached the High Court for an interdict. Her central argument was that her home business was permitted by the local zoning regulations in terms of which certain small scale non-residential activities were allowed in the area.
- Not relevant, held the Court in interdicting the homeowner from continuing her business. She had agreed to a limitation of her rights, she had agreed to forfeit her right to use their land for anything but residential purposes and the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.
In other words, HOA and Body Corporate rules can in principle be more restrictive than local zoning laws and effectively override them in such a case. Bear in mind that each case will be decided on its facts, and in addition there has been some speculation recently that the National State of Disaster regulations and orders could be used to justify a departure from that principle. Much safer however to assume that you are bound by your complex’s rules (which may in any event allow you to work from home and/or to run a small business, although perhaps only with consent).
Must you apply for rezoning or municipal consent? 3 categories to consider
If you don’t live in a residential complex or if you do but are in compliance with the complex’s rules, you need to check that you aren’t going to be stopped from operating (perhaps even fined) by your local authority.
Your local municipality will have its own land use and zoning regulations and bye-laws, but generally speaking your business activities will fall into one of three categories –
- Micro business: Depending on the zoning of your particular area, working alone from home in a home office is highly unlikely to cause any issues either legally or practically, and you are also likely to be allowed to conduct small scale business activities from home without consent where your business activities fall into your municipality’s “micro-business” or “home enterprise/undertaking” category (check with your local municipality on its rules in this regard).
- Municipal consent: As soon however as your activities go further (there are normally limits on things like the nature of the business, number of staff, percentage area of the house used for the business, parking availability, noise/nuisance factors and the like) you will probably have to apply for municipal consent or a permit to operate.
- Rezoning: In other cases you may need to go further and apply for complete rezoning of the property, possibly also for removal of title deed restrictions.
Take specific advice in any doubt!
© LawDotNews
September 21, 2020
Property: Don’t Pay Double Commission!
“… in certain circumstances the principal may be liable to pay commission to both agents where it is impossible to distinguish between the efforts of one agent and another in terms of causality or degrees of causation.” (Extract from judgment below)
With many property sellers allowing multiple estate agencies to market their properties in their attempts to sell during what is still (for the moment at least) a buyer’s market, now is perhaps a good time to remind both sellers and buyers of the double commission danger.
Consider this scenario – you mandate an agent who introduces a potential buyer to your property, but no acceptable offer results. Later on you bring another agent in, and this time the same buyer makes an acceptable offer. Which agent must you pay commission to – the agent who originally introduced the buyer to the property, or the agent who eventually closed the deal?
In a nutshell, an agent must be the “effective cause” of the sale to be entitled to commission and our law reports are replete with disputes between sellers and agents over who is and who isn’t the effective cause of a particular sale. As the High Court put it a few years ago: “Our Courts have repeatedly acknowledged how difficult it is, when there are competing estate agents, to determine who the effective cause of the sale that eventuates is.”
The big danger for the seller of course is being held liable to pay full commission to two estate agents. The factual disputes that arose in the High Court case in question illustrate…
R1.6m commission claimed
- A property seller engaged agency A to sell the property, and later signed a sole and exclusive mandate with agency B to sell the property by auction.
- One (unsuccessful) auction later, and after much negotiation and to-ing and fro-ing, the first agency (A) presented an offer from buyer C which the seller accepted.
- Agency B claimed to have been the effective cause of the sale to C and sued the seller for R1.6m in auctioneer’s commission. The seller, at risk of paying (substantial) double commission, resisted vigorously.
- Most of the relevant facts were in dispute, with A and B presenting the Court with substantially different versions of events in virtually every important respect. B’s application was dismissed by the Court on the ground that because of the critical disputes of fact it should have proceeded by way of “action” not “application” – a technical distinction of great interest to the legal fraternity but not relevant here.
- What is highly relevant to sellers, buyers and agents is the ease with which the seller’s decision to engage the services of two agencies led to such bitter disputes of fact and law.
Sellers, Buyers and Agents: How to protect yourself
Sellers: As always, agree to nothing without legal advice, and insist on formal agency mandates. If you give mandates to multiple agencies, ask them each for a list of the prospective buyers they have introduced, and insist on the buyer indemnifying you against multiple commission claims (necessary because you might not know if your buyer has dealt with more than one agency). You may be advised in some cases to have the various agents give you a similar indemnity.
Buyers: Again, agree to nothing without advice! When viewing a property tell the agent if you have viewed it before with another agent and in particular if the offer/sale agreement you are asked to sign contains any warranties/indemnities, make sure it is safe to agree to them.
Agents: Don’t put your hard-earned commission at risk – avoid uncertainty and dispute with clear, properly-drawn mandates. Comply also with the EAAB’s Code of Conduct’s requirements on exposing a client to the risk of double commission.
© LawDotNews
