Category: Property

Property Owners: Your Rates Could Quadruple for Unauthorised Land Use

“The said penalty … was imposed due to the fact that the property was being used in contradiction to its zoning” (extract from judgment below)

Municipalities all have the right (and the duty) to regulate land use in their areas, and amongst other sanctions, properties that are used unlawfully or without authorisation can be subjected to rates and charges on a penalty tariff.

These penalties can be steep, and the Supreme Court of Appeal (SCA) has now held that they can be imposed without the municipality first having to change the property’s category on its valuation roll to “illegal or unauthorised” use. All it has to prove is that it acted in terms of a lawful rates policy.

The house whose rates bill quadrupled

• A house valued (on the municipality’s valuation roll) at R1,650,000 had its monthly rates bill quadrupled from R898-01 to R3,592-05.
• The municipality took this step after notifying the owners of their “wrongful and unlawful use of the property as a student commune, in contravention of the town planning scheme and zoning thereof without the necessary authorisation.” Authorisation was necessary, said the municipality, because the commune was a “commercial concern”.
• This after the owners had let out two of their five bedrooms to “students or young professionals” and had continued to do so despite two years’ worth of notices from the municipality to terminate the unlawful use, and despite a High Court interdict against the continued contravention.
• The legal challenge mounted by the property owners against the penalties was based on a series of legal arguments, and the Court’s analysis thereof (on appeal from the High Court) will be of great interest to property professionals.
• For property owners however, the practical punchline is that the SCA upheld the penalty charges, and the owners must pay them.

If your neighbour breaches land use laws…

That punchline is also important for neighbours, because in practice unlawful land usage of this nature will often only come to a municipality’s notice when a concerned neighbour blows the whistle.

So, if you think your neighbour is about to open up an unauthorised office, commercial or other non-permitted operation next door, and if you can’t settle the matter peaceably over a cup of neighbourly coffee, call in professional help immediately. Just the threat of a quadrupled rates bill could be enough to make the problem go away.

Different strokes for different municipalities

Property owner or neighbour, find out what your local authority’s land use and rates policies are. This particular case related to the City of Johannesburg Metropolitan Municipality, and your local municipality will have its own land use bye-laws, which could well be less or more restrictive than Joburg’s.

Check the zoning before you buy property

Perhaps the property owners in this case planned all along to let out rooms, and perhaps that extra income is what put this particular house within their financial reach. If so, the mistake they made was in not checking the local zoning upfront.

Knowing the zoning and building restrictions in your chosen area is also vital if you want to avoid unpleasant surprises, like a new neighbour opening up a guesthouse or building a triple story which cuts off your sea views. Ask your lawyer to check for you before you offer. 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

Beware The Badly Worded Bond Clause!

“The terms of the contract are the decisive criterion by which any potential expiry of a deadline has to be determined” (extract from the judgment below)

A recent High Court decision provides yet another reminder to have your property sale agreement drawn (or at least checked) by a professional. Before you sign anything!

As is the case in many such property sale disputes, it started with one of the parties – in this case the seller – looking for a way to escape the agreement after getting cold feet.

The seller tries to escape the sale

• The sale agreement in this case contained a bond clause, a very common “suspensive” clause giving the buyer an agreed period of time within which to obtain a bond, failing which the agreement would come to an end automatically.
• Bond clauses commonly specify a 30-day period from the date of the sale agreement, making it clear when exactly the period expires.
• The problem in this case was that the bond clause was worded somewhat differently, no doubt because of an issue with unlawful occupants on the property.
• This clause gave the buyer 30 days, not from the date of the sale, but from the date on which she was given “sole beneficial occupation”.
• For a variety of reasons the transfer was delayed for four years, and the seller – now keen to get out of the sale because she had decided that the agreed price was too low – argued that the agreement had fallen away automatically. The bond clause period, she said, expired 30 days after the buyer took possession and occupation (the date of the sale) and the buyer’s failure to get her bond within that period put an end to the sale.
• The buyer on the other hand argued that the 30 days never started running at all, because even four years later there were still unlawful occupants on the property (the sale agreement authorised her to evict the occupants at her own cost, and she hadn’t done so).
• The Court held that the sale agreement distinguished between “possession” and “occupation” – which had both been given to the buyer immediately on signature of the sale agreement – and “sole beneficial occupation”. In the context of this agreement, held the Court, “sole beneficial occupation” meant that the buyer, “to the exclusion of all others, was to enjoy the benefit of occupation of the property pending transfer.”
• Although the buyer had indeed been given “possession” and “occupation” four years ago, she had never been given “sole beneficial occupation”. The 30-day period had never started running and the seller is bound by the sale agreement.

For want of a well-drawn bond clause…

Badly drawn bond clauses have been the downfall of many a seller and many a buyer in the past. In this case the seller is not only stuck with an unsatisfactory sale price, she also loses four years’ worth of income because the buyer is not liable for occupational interest until sole beneficial occupation is given. Plus of course the seller must now pay all the legal costs.

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

© LawDotNews

3 Steps to Buying Your First House

“Happiness is… buying your first home” (Anon)

Step 1: What’s your price range?

What will your monthly costs be?

• Your bond repayments: Your big monthly expense is likely to be your monthly bond instalments, so start off by using one of the many online calculators to establish how much you will be able to borrow on a home loan without breaking your budget when it comes to the repayments. Think carefully about how happy you will be with the lifestyle you can afford after paying your bond every month. When you first apply for a bond shop around for the best interest rate and, with rates already starting to rise again, be absolutely certain that even if interest rates do at some stage return to the high levels we have seen in the past, you will always be able to afford the monthly repayments. Get a bank pre-approval here – with today’s restrictions on credit grantors when it comes to responsible lending practices, it will help you gauge affordability. And as a bonus, it gives you a great negotiating tool when you move on to the offer stage!
• Other monthly costs: Then – and this is an important aspect easily overlooked in the excitement of your purchase – remember to factor in all the other monthly expenses that come with property ownership. Think homeowner’s insurance, rates/taxes/levies, home security services, services like electricity and water and the like. When budgeting for home and garden maintenance costs, include a provision for long-term expenses like repainting, roof repairs and so on.

How much cash will you need upfront?

• The cash deposit: Unless you can pay the full purchase price in cash, you will need to raise a home loan (bond). And although you might perhaps qualify for a 100% bond, most first-time buyers will need to pay at least a 5% to 10% cash deposit.
• Bond costs: Your bond needs to be registered in the Deeds Office by the bank’s attorneys. Provide for both the registration costs and the bank’s initiation fee.
• Transfer costs: Unless your sale agreement provides otherwise (very unlikely), you will be paying the transfer costs to the conveyancer (“transferring attorney”) attending to the registration of the property into your name in the Deeds Office.
• Transfer duty: Unless there’s VAT on the sale, the sale agreement will almost certainly also require you to pay the transfer duty, which is a government tax on property sales. No duty is payable on a property valued up to R1m and a sliding scale applies to houses above that threshold as per the table below –

• Moving costs: This step is easily overlooked, but your total moving costs can turn out to be much higher than expected when you include all the “hidden” expenses like redecorating, furnishing, new internet connections and so on.
• Keep a contingency fund: It always seems to happen – no matter how carefully you plan your expenses, something unforeseen pops up. Or things cost more than you budgeted for. Or there’s a “black swan” emergency. Check that you have some ready cash to deal with these speedbumps.

Step 2: House hunting!

• Location, location, location: What area/s will you concentrate on? Where do you want to live? What sort of lifestyle are you after? Do you plan to work from home? Do you need to find a pet-friendly area? What amenities do you want close by? Are there good schools in the vicinity? Research the area – what are average selling prices in the suburb and is your budget up to it? Do houses in the area have a history of good value growth? What are crime levels like?
• What sort of house are you looking for? How many rooms do you need? Will your needs change in the future? Do you need a home office? A granny flat? A big garden? A pool? The list of questions to ask yourself here is endless, just be sure to think of the long term as well as of your immediate wants and needs. And do bear in mind that sooner or later you will want to re-sell, so think now about whether the features you are looking for now will also appeal to other buyers down the line.
• Searching: With your price range and target area identified, the “thrill of the hunt” is at last upon you! Online searches are increasingly popular but choose whichever channel you are comfortable with. Your lawyer will have valuable knowledge of the local housing market and may refer you to a trusted estate agency or two.
• If buying into a community scheme: Check what Rules and Regulations you are letting yourself in for – you will be held to them. Make sure that the Homeowners Association or Body Corporate’s finances are sound (ask for audited financials and management accounts). Ask about any special levies or other planned expenditure on the horizon (get it in writing). Take professional advice in any doubt.
• Plans, defects and the rest: Although the new Property Practitioner’s Act requires the seller to make disclosure of any defects or deficiencies (in a written document annexed to the sale document – study it carefully!), it is still advisable to do your own homework. Ask for copies of approved building plans (check for any unlawful structures or deviations from plan), look for and ask about defects like leaking roofs, problem foundations etc – consider getting a full professional report unless you are very sure of your own abilities in this regard.

Step 3: Putting in your offer

• Now that you’ve found your dream house it’s time to put your offer in. Excitement mounts – will the seller accept, or perhaps counter-offer? You can’t wait to find out. You are presented with an Offer to Purchase (sometimes titled as a Deed of Sale), a pen and a cheerful “just sign here, we’ll do the rest”.
• Take no chances here! Have the paperwork professionally checked before you commit to anything. Ask also for Deeds Office and other searches for anything that may affect your decision-making – restrictive title deed conditions, servitudes (giving other people rights over your property), alterations carried out without municipal plans and approval, zoning conditions and so on.
• Make sure that any verbal undertakings or disclosures given to you are properly recorded in the agreement – what counts is what’s in writing!

© LawDotNews

How the Property Practitioners Act Affects You as a Property Seller, Buyer, Landlord or Tenant from 1 February

“… a property is an asset to enhance economic activity, growth and development…” (extract from preamble to the Property Practitioners Act)

The Property Practitioners Act (“PPA”) finally comes into effect on 1 February 2022. It has major ramifications for everyone involved in the property industry, but in this article we’ll concentrate only on aspects of particular importance to property sellers and buyers, and to landlords and tenants.

The PPA’s full definition of “property practitioner” is long and complex with some grey areas still to be clarified, but for our purposes let’s just note that estate agents and agencies, property auctioneers, property managers, bond originators and the like all fall into the definition.

We turn now to some of the more important changes which will impact on you from a practical perspective from 1 February –

New mandatory disclosures by sellers and landlords

It has always been best practice for sellers and landlords to make full written disclosures of any property defects or deficiencies known to them to prospective buyers and tenants, and to attach a list to the agreement of sale/lease. As regards residential leases, the Rental Housing Act already provides for both incoming and outgoing joint inspections. Now for both sale and leasing the PPA provides that no PP can accept a mandate without a “mandatory disclosure form” which must be provided to any prospective buyer or tenant, signed by both parties and attached to the sale agreement/lease. The form published in the new Regulations refers to sellers only so it is unclear (at date of writing) what form landlords are supposed to use but the form requires sellers to answer a series of questions (and certify the answers as correct) relating to defects (structural and other), to disclose any boundary line disputes/encroachments/encumbrances, to certify that the necessary consents and permits were obtained for any additions/improvements etc, and to disclose any historical structure/heritage site issues. There is also a catch-all “Additional Information” section. The form specifically states that it is not a substitute for any inspections or warranties so buyers/tenants should still insist on these in their agreements, but it does provide proof of any disclosure or non-disclosure of defects or deficiencies (there is a presumption against disclosure if no form is supplied). Sellers and landlords will want to tread with care here and, importantly, they are not the only ones at risk of being sued here – a buyer/tenant can hold the PP liable for not complying with these requirements. 

When commission isn’t payable (and can be clawed back if already paid)

Commission is normally payable to a PP by the seller in a sale, or by the landlord in a letting arrangement. The PPA provides for two situations in which a PP cannot earn commission or any other payment, and in which you can claim repayment (on pain of prosecution for failure to repay) if you have already made payment –

• Estate agents have always had to hold a Fidelity Fund Certificate (FFC) in order to trade, and the PPA clarifies that in order to act as a PP, it is not enough for just the agency itself to hold an FFC – FFCs must also be held by all employed PPs and (if the agency is not a sole proprietorship) also all directors (if a company), members (if a close corporation), trustees (if a trust) and partners (if a partnership). Another safeguard is that the conveyancer handling the transfer is now obliged to obtain a certified copy of the PP’s FFC before making any commission or other payment.
• Another situation in which a PP cannot claim commission is if there is any breach of the requirement not to “enter into any arrangement, formally or informally, whereby a consumer is obliged or encouraged to use a particular service provider including an attorney to render any service or ancillary services in respect of any transaction of which that property practitioner was the effective cause.” This is presumably an attempt to curb the paying of referral fees to PPs for recommending or requiring use of a particular service provider, such as perhaps a particular transferring attorney, bond originator, compliance certification service etc, but at the end of the day as a seller or landlord your best interests are served if you insist on using your own professional advisors – the choice is yours and yours alone.

Other things to know about

• The Property Practitioners Regulatory Authority (“PPRA”) which replaces the Estate Agency Affairs Board, will enforce a Code of Conduct applicable to all PPs, and will provide mediation and adjudication services in the event of any disputes arising.
• As regards costs of documentation – sale agreements, leases and mandatory disclosure forms “must be drafted by the developer or seller, as the case may be, for his, her or its own account” (there is no specific mention of landlords).

As always with property transactions, there is just no substitute for specific professional advice and assistance here!

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

Can Your Tenant Claim a Lockdown Rental Remission?

“It would thus be prudent that a commercial lease agreement includes a clause dealing with the risk associated with vis maior, casus fortuitus and the impossibility of performance.” (Extract from judgment below)

The steakhouse closed by lockdown regulations

• The Greenpoint Butcher Shop and Grill, a “well-known premium steakhouse restaurant”, was forced to close during the “hard lockdown” period.
• Sued by its landlord for just under R3m in arrear rental, the tenant raised as one its defences that the lockdown regulations had closed its doors for the duration of the hard lockdown, with only reduced trading possible as restrictions thereafter eased. This had rendered it impossible for it to perform its obligations in terms of the lease, plus “a supervening event made performance impossible and thus there was thus no beneficial use of the leased premises for the purpose for which it was intended.” The landlord, it said, had been unable to give it “beneficial occupation” and it was entitled to a remission of rental accordingly.
• The landlord replied that in terms of the lease, all amounts due had to be paid “free of deduction and set-off”, the tenant’s problems arising from the lockdown regulations did not excuse it from paying rental, and the full amount was still due.
• Before we get to the eventual outcome of this case (spoiler alert – it doesn’t end well for our unhappy tenant) the Court’s analysis of our law on the matter provides some useful and practical advice for both landlords and tenants.

Firstly, let’s understand “the Latin bits”

• Vis maior (or vis major), means ‘superior force … some force, power or agency which cannot be resisted or controlled by the ordinary individual’.
• Casus fortuitus, or “inevitable accident”, is a type of vis major, which ‘imports something exceptional, extraordinary, or unforeseen, and which human foresight cannot be expected to anticipate, or which, if it can be foreseen, cannot be avoided by the exercise of reasonable care or caution’.

When is rental remission allowed?

• Our law is that “a lessor’s duty is to deliver the leased property in a proper condition and that the property is to be placed at the disposal of the lessee for its undisturbed use or enjoyment”.
• Thus the general rule is that, unless the lease specifically provides otherwise, a tenant can claim rental remission “where there is a deprivation of or lack of beneficial use or occupation …, partially or fully, of the leased premises, and where the interference is caused by vis maior or casus fortuitous, neither of which eventuality is the fault or cause of either the lessor or lessee”.
• Critically, the Court in this case held that “the COVID-19 regulations passed in terms of the Disaster Management Act would amount to vis maior or casus fortuitous” (emphasis supplied).
• A tenant can set off a rental remission against the landlord’s claim for non-payment of rental only “if it is capable of speedy and prompt ascertainment”.
• Each matter must be considered in light of all the facts – “the specific regulations applicable at the relevant time(s), the extent to which performance was not possible, the extent to which there was a lack of beneficial occupation (if any)” and the provisions of the lease. This last is a critical point – the tenant’s obligation to pay rental remains, even where the impossibility of performance is not due to his fault, “where the parties specifically provided in their agreement that the lessee would be responsible for and/or take the risk upon himself for the impossibility supervening” (emphasis supplied).

The sub-tenancy that sank this tenant’s defence

The Court’s advice to commercial landlords and tenants

© LawDotNews

Selling Your Home: How to be Lucky this Holiday Season

“Luck is what happens when preparation meets opportunity” (Lucius Annaeus Seneca the Younger, Roman philosopher)

History has not recorded whether Seneca himself was “lucky” in the property market of his time (Rome’s land registration records from two millennia ago have unfortunately not survived the ravages of time and Imperial collapse) but his wise words are as true today as they were then.

The two key elements of a “lucky” sale

To be “lucky” in finding the right buyer at the right price you need two key elements –

1. Opportunity: Our Holiday Season is always a prime time to find the perfect buyer, and with our current low interest rates, local and international travel opening up again, and reports of house prices soaring globally, December promises to provide plenty of opportunity to sellers; and
2. Preparation: We have some useful tips for you here, both from a legal standpoint and from a practical one…

How to prepare for a “lucky” house sale in 12 steps

First prize is of course a quick sale at a good price, followed by a smooth transfer process. Here are some thoughts on how to achieve exactly that –

1. The sale agreement – avoiding the legal pitfalls: Your house is probably one of your most important assets, so be aware of and prepare for the many legal pitfalls which may await you. Falling into any one of them could instantly convert your “lucky” sale into a disaster!Note firstly that as seller you have the right to choose your own conveyancing attorney. Do not fall into the trap of giving that right up! Pick someone you trust to carry out the transfer (the formal registration in the Deeds Office of the property into the buyer’s name) quickly and professionally.You will be bound by all the terms and conditions in the sale agreement you sign, and there are far too many potential pitfalls here to list in one article. So have your own attorney prepare the offer/sale agreement for you, and if you happen to be presented with an offer on someone else’s offer form, at least have your attorney check it for you before you sign anything.Every term and every condition, no matter how “standard” it may seem, must be scrutinised to confirm that it suits your particular sale and your particular needs. Common things to go wrong include badly worded “voetstoots” and “bond clauses”, uncertainty over payment provisions, confusion over the authority of company directors and trustees of trusts to sign agreements and so on.
2. Well in advance… Pick your attorney’s brain on a few preliminary (but deeply important) aspects like which estate agent/s to use, what sale prices are being achieved in your area and who is buying, and so on. Ask also for a list of what your costs are going to be, when you are likely to get paid the purchase price etc so you can prepare a cash flow forecast. Get a start with all your compliance certificates and provide for the cost of any remedial work needed (normally on the electrical and plumbing side). You may also have to give up to 90 days’ notice of cancellation of your home loan to your bondholder to avoid an early termination fee – check with your bank.
3. Time it right: If you are selling a house – “holiday home” or not – in a traditional “holiday” area, the Festive Season will likely be your prime selling time. Sunny weather, everyone relaxed and in the holiday spirit, an influx of holiday makers from other cities – they all set the scene for you to show off your home to best advantage and to the best audience. Which brings us to…
4. Describe and target your “perfect buyer”: Sit down with your family/friends/professional advisors and brainstorm who your “perfect buyer” is. Who will want your house the most? Who is going to pay you the most for it? Perhaps for example you come up with a spec like “Our perfect buyer is a young upwardly-mobile family looking for work-from-home-space, good schools in the area, and a separate flatlet for Granny.” Use that spec to inform your “market targeting” – how you plan to reach that target market, how you will tell it just how perfect your home is for them, and so on.
5. Set the right asking price! A very common mistake, and an easy one to make, is over-pricing. Maximise buyer interest and engagement by asking for a reasonable, market-related price. With of course a margin for negotiation. Get good independent advice here – we tend to be very emotionally invested in our own “home-sweet-home” and it’s not easy to be objective about its attractiveness and value to outsiders.
6. Advertising: Your first challenge is to get “feet through the front door” so unless you are very confident indeed of your own ability to find the right marketing channels and formats, professional advice and guidance is essential here! Remember that “a picture paints a thousand words” so bringing in a professional photographer is a no-brainer. You could seriously damage your home’s image in the public mind if you take a chance and get any of this wrong at the start.You want to highlight your property’s strengths, particularly those likely to appeal directly to your target market (identified above), so think of all the easily-overlooked things like borehole water, irrigation systems, solar power, inverters, fibre, special security features, herb garden space – the list is endless.
7. Prioritise kerb appeal: If you get the above steps right, sooner or later your perfect buyer will be arriving at your street address. Critical here is kerb appeal – the “attractiveness of a property and its surroundings when viewed from the street”. Don’t drop the ball on this one! “You never get a second chance to make a good first impression” said Will Rogers, and the same holds for your house. Ask some friends to drive down your street with a fresh pair of eyes – what jumps out to them as appealing? What could put a potential buyer off?
8. Now comes “front door appeal”: So your perfect buyer now stops the car, decides to give your property a look-over, and parks – great going! Into your front garden we go – is the lawn cut and lush, trees and shrubs tidy, flower beds bursting with colour? Is the house exterior attractive, the paint job and roof in good condition? Does your entrance/front door shout “come on in”?
9. Light, clean and airy sets the scene: We’re inside, now what’s the first thing your potential buyer will see? A bright, spacious, airy feel could seal the deal right there and then, whilst even the slightest trace of dim, musty airlessness could kill it stone dead. Whatever issues you identify, there is a treasure trove of advice on the internet about how to address them – lighter wall paint and curtains, more natural light from outside (a big seller!), sparkling windows, more interior lighting, a few mirrors to give a feeling of light and space, de-cluttering, re-arranging the furniture – your own house’s strong and weak points will be unique to it. Finish off with a really deep clean, calling in the professionals particularly if the house is old, if you have pets or have just got rid of old dust-gathering clutter.
10. Deal maker kitchens and bathrooms: Your kitchen and bathrooms could be deal-makers, or they could be deal-breakers. More than perhaps any other area of your house, they are worth spending money on if they haven’t got immediate appeal already.
11. Work-from-home office space: Depending on who you have identified as your “perfect buyer” in step 2 above, this could be critical. If you don’t have an office/study already set up, identify a space for one and be ready to answer questions like “do you have fast fibre?” and “how noisy are your neighbours?”
12. The DIY factor: Unless your plan is to sell a “fixer-upper with huge potential and in need of a little TLC”, have a good look around for all the “little things” that need fixing (we’re outside as well as inside the house now) – cracked tiles, broken fittings, leaking taps, a grubby swimming pool – anything really that a prospective buyer might notice and think “I wonder what else is wrong here?”

Bottom line – make your own luck!

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

Community Scheme Disputes and the Ombud’s Powers to Resolve Them

“[The Ombud} has been given wide inquisitorial powers whereby such disputes can be resolved as informally and cheaply as possible by means of qualified conciliators and adjudicators, without the need for legal representation, save in certain limited circumstances.” (Extract from first judgment below)

If you have a dispute with anyone in a “Community Scheme” – sectional title, Homeowners Association (HOA) or the like – remember that your first port of call should be the CSOS (Community Schemes Ombud Service).

What disputes can the Ombud resolve?

Disputes are inevitable in any community situation, with sources of conflict ranging from noise issues to problem pets, common area usage disagreements, parking space complaints and so on – the list is endless. Another perennial battleground is owners fighting with administrators (normally a body corporate or Homeowners Association) over levies, rules and regulations, and the like.

The Ombud’s mandate here is wide, with the CSOS promising “affordable, reliable justice” via its conciliation and alternate dispute resolution process for anyone party to, or “materially affected by” any of a wide range of disputes including levy disputes, nuisance complaints, repairs and maintenance disputes, complex meetings, financial, governance and management issues, exclusive use rights and the like – the list is long and widely-worded.

How does it work?

Costs are low and the process is straightforward, with legal representation restricted to cases where the adjudicator and all parties agree to it or where the adjudicator decides that a party cannot deal with the adjudication without it. There are media reports of the CSOS struggling in practice to provide the quick and reliable service promised on its website, but all in all, it should generally be your first port of call. In fact the High Court has now warned that you will almost always have no choice in the matter.

You must approach the Ombud before you go to court, unless…

The High Court has now stated categorically that, whenever the CSOS has the power to adjudicate a dispute, you have to go that route first and can only go direct to court in exceptional circumstances –

• The scene in this first case is an inner-city 10 storey mixed-use sectional title scheme. The parties are on the one hand a group of loft owners unhappy with a new biometric security/access control system and with a new conduct rule limiting their right to lease out their loft apartments on a short-term basis; on the other, the body corporate trying to resolve security issues in the building with the new rules.
• The loft owners asked the High Court to intervene as a matter of urgency and were soundly defeated, with the Court ordering them to pay costs on the punitive attorney-and-client scale after finding that “…this is not only a matter which should not have been brought before this Court and should have been taken to the Ombud, but is also one which constitutes an abuse of process…”.
• As the Court put it: “…the statutory powers which an adjudicator has in terms of the Act are extremely wide and go beyond the powers which a court has in relation to neighbourly disputes and associations in terms of common law, not only insofar as their reach is concerned, but also in relation to their ambit. In numerous instances an adjudicator has an equity i.e. fairness-based power, not only to decide what is ‘reasonable’ in relation to the conduct of, or the decisions which have been taken by an association such as a body corporate of a sectional title scheme … but also to direct what should ‘reasonably’ be done in place thereof. A High Court does not have such powers.”
• Thus: “…where disputes pertaining to community schemes such as sectional title schemes fall within the ambit and purview of the CSOS Act, they are in the first instance to be referred to the Ombud for resolution in accordance with the conciliative and adjudicatory processes established by the Act, and a court is not only entitled to decline to entertain such matters as a forum of first instance, but may in fact be obliged to do so, save in exceptional circumstances…” (emphasis supplied).
• Exceptions, said the Court, would include challenges to the “constitutionality or legal validity or status of a particular statutory power or a provision in the Act” plus “in certain instances it is conceivable that the High Court may be approached in the first instance, as a review court.”
• Each case will be different so take full advice before deciding whether to approach the Ombud or go straight to the High Court. 

Going direct to court when the Ombud has no jurisdiction

• Another recent High Court judgment concerned a sectional title scheme dispute in an industrial complex. After their unit was destroyed by fire, the unit’s owners claimed from the scheme’s insurers.
• The insurers repudiated the claim on the basis that they had, following a previous fire, suspended the scheme’s fire cover pending the filing of valid electrical and fire equipment certificates of compliance by all the owners of units in the scheme.
• The owners approached the Ombud, claiming some R480k from the body corporate for damage to the unit and lost rental on the basis that “the body corporate had negligently failed to comply with its statutory ‘duty of care’ to ensure that the buildings in the scheme were properly insured”.
• The CSOS adjudicator said he had no jurisdiction to hear such a matter, and the High Court agreed, holding that the claim was personal to the individual owner “and did not pertain to the scheme itself…”.
• Moreover “It was clearly not intended that the Ombud would have the power to adjudicate on delictual claims for damages, which involve weighty considerations pertaining to wrongfulness (which depend on prevailing societal norms and public policy) and fault, and the quantification and determination of the quantum of any damages which may have been sustained pursuant thereto, which are matters which are best left for judicial officers and Courts.”

Arrear levies – when can the Ombud help with collection?

Our courts have held that the Ombud can assist with the collection of arrear levies or contributions, but only where there is a dispute involved.

Thus (to quote from a 2017 High Court judgment): “If the claim for arrear levies or contributions is not disputed, for example if an owner simply ignores a demand for payment or simply refuses to pay, without disputing the amount of the claim or the proper determination of the levy, the Body Corporate can institute legal action in court to recover the arrear levies from the owner … If, on the other hand, the amount of the levy is disputed because it was not properly determined and this dispute is raised after the defaulter had received a demand, the appropriate forum for recovery of the levies would be the regional office of the Ombud service.”

The bottom line

To avoid any mis-steps here, seek professional advice before deciding when and how to take community scheme disputes to the Ombud.

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.

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Noisy Neighbours – Your Rights, and Buyers Beware!

“In common law, everyone is in general permitted to use their property for any purpose they choose, provided that the use of the property should not intrude unreasonably on the use and enjoyment by the neighbours of their properties” (extract from the “gym case” below)

What must you prove?

1. “A clear right”,
2. “An injury actually committed or reasonably apprehended”, and
3. “The absence of similar protection by any other ordinary remedy” (in other words, you must show that you have no adequate alternative remedy available to you – an important aspect, as we shall see below).

• A pastor, needing “a peaceful environment to write, research, study and counsel his congregants”, applied to the High Court for an interdict against his neighbours. The problem was their home business in the form of a puppy daycare centre, operating in their garden and offering supervision, structured playtime, potty training, basic training, socialisation and so on for up to 17 dogs at a time.
• The complaint centered on barking on the property, triggering “a cacophony of barking from all the dogs in the neighbourhood” – starting at 6.30 am (Monday to Saturday) until 6 pm. This, said the pastor, was “disturbing and disruptive to the peaceful enjoyment of his property and to his daily activities”, plus it had seriously affected the value of his property.
• Before buying the property he had viewed it over a weekend when there was no noise, and, because it was important to him, had specifically asked the previous owner about whether there was a barking problem in the neighbourhood.
• After fruitless discussions with the neighbours, he reported them to the municipal authorities (the City of Cape Town), lodging complaints for almost 4 years, resulting only in the issue of a compliance notice which the City failed to enforce, and a failed attempt at prosecution.
• In the High Court the complainant’s attack relied not only on common law “nuisance law” but also on alleged contraventions of the Western Cape Noise Control Regulations (all local authorities have power to make such regulations in terms of National Regulations), the City’s Development Management Scheme (with its restrictions on home business activities) and Animal By-Laws.
• The puppy daycare business raised a series of defences to these lines of attack, and disputed many of the complainant’s factual allegations, but in the end result the Court ordered the business to stop operating immediately. The business activity, said the Court, was “abnormal use” of a residential property, and “While such noise may be bearable in a busy City, where there is a lot of activity, such as large volumes of traffic, the constant movement of people and crowds and noise created by businesses, it would definitely disturb the peace and serenity of a quiet neighbourhood where such noises are not expected, and to which the applicant is entitled.” (Emphasis supplied).

• The owners of a property in a multi-storey building in the centre of Cape Town (a married couple living there and an attorney running a law practice in it) approached the High Court for an interdict against the neighbouring gym on the grounds of a substantial noise nuisance. The married couple’s bedroom window is just over a metre away from the window and balcony of the gym.
• The gym’s premises are zoned for commercial use, and there was no dispute that the area was subject to “substantial traffic noise”, but the complaints centered on allegations that the gym produced “loud techno/dance music with a strong beat” and microphone-amplified voice instructions to attendees at gym classes – at times ranging from 6 am to 6.45 pm.
• Many of the facts of the matter were, as is common in such bitterly fought matters, in dispute, and ultimately the Court declined to grant the interdict partially on the grounds of unresolved disputes of fact. Clearly the fact that the area was subject to considerable levels of “inner-city noise” anyway played a part, but the deciding factor seems to have been the Court’s finding that the complainants had declined the neighbour’s offer to follow the processes of the local Noise Control Regulations, which the Court held to provide an “adequate alternative remedy”.
• Moral of this story – don’t expect too much peace and quiet in a city centre, and exhaust all alternative remedies before asking for an interdict!

Property buyers – do your “noise risk” homework upfront!

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Eviction Refused – Landowners, Unlawful Occupiers and the “Just and Equitable” Test

“PIE recognises that in appropriate circumstances the right to full exercise of ownership must give way, in the interest of justice and equity, to the right of vulnerable persons to a home.” (Extract from judgment below)

The 84 year old grandmother who can live on in her childhood home

• A landowner bought on a liquidation auction a piece of land and a house occupied by an 84 year old widow and her disabled son.
• The widow had lived in the house since she was 11 years old, her father being employed by the farm owner at the time. She in due course married another farm employee and lived on in the house with him. Widowed, she was reassured by verbal undertakings from previous owners that she had a lifelong right to live on in the house.
• But when the new purchaser of the property (by now no longer farmland but an urban sub-division of the original farm) she was unable to produce any written agreement confirming her life right to occupation.
• The new owner then gave the widow and her son notice to vacate and when they refused to leave, he obtained an eviction order from the magistrate’s court.
• After a 12 year trek through the courts, the SCA finally confirmed the setting-aside of the eviction order, and the importance of this to landowners lies in the fact that the owner here had jumped through all the hoops required by PIE –
  • The verbal “lifelong right of occupation” granted by previous landowners was not enforceable against subsequent buyers,
  • The landowner had removed his consent to the occupants’ right of occupation, thereby terminating it,
  • The occupants were therefore “unlawful occupiers”,
  • The landowner had offered them suitable alternative accommodation.

A Court’s discretion to refuse eviction – the “just and equitable” test

• Our courts always retain a discretion to refuse eviction from residential property and “must be satisfied that the eviction is just and equitable”.
• The SCA held that in all the circumstances and facts of this particular case, eviction would not be just and equitable. Major factors were clearly the widow’s advanced age, her 73 year history of living in the house, her disabled son, and her reliance on verbal assurances from previous owners that she had a lifelong right of occupation (which she clearly if mistakenly believed would be enforceable against new owners).
• Had the land still been farmland the widow would have enjoyed the protection given to farmworkers by ESTA (the “Extension of Security of Tenure of Land Act”) and although the land had now changed to urban land, “her status as a vulnerable person, even in the context of PIE, has essentially remained unchanged.”
• Commenting that “No case in which an order of eviction from a residence is sought can ignore the visceral reality of what is sought, namely the ejectment of a person from their home in vindication of a superior right to property. Nor can the legal process by which the order is obtained be divorced from our fraught history of eviction and ejectment of vulnerable persons from their homes”, the Court held in all the circumstances that this was a case in which considerations of justice and equity “outweighed protection of the exercise of the right to property that an entitlement to an order of ejectment provides.”
• This despite the landowner’s offer to give the widow alternative accommodation in the form of ownership of a unit in a secure residential complex, an offer she turned down because “She was accustomed to life in the house she presently occupied and enjoyed not only the freedom and space it afforded her but also the environment around it.”
• The offer of alternative accommodation, although made in good faith by the landowner, did not tilt the scales in favour of eviction because “This was not a case in which the reasonableness or otherwise of an unlawful occupier’s refusal to vacate was a central issue … The true issue concerned the dignity of an elderly and vulnerable woman and a person with disabilities in the circumstances of the first respondent and her son. To hold that these weighty considerations are to give way merely because an alternative abode is offered would negate the first respondent’s dignity rather than protect it.”

The lesson for landowners and landlords

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