Stopforths

06/12/2018

Can a “private” person enforce a loan for property?

The National Credit Act (NCA) was designed to protect “credit consumers” against “credit providers”. But is it also applicable on private loans to friends and families and is it applicable on property transactions?
Our Courts made various and opposing judgements on this matter, but this changed with the recent Supreme Court of Appeal case of De Bruyn NO vs Karsten. In this case the business man sold his business to a friend for R 2 million, agreeing to receive R 500 000 and thereafter monthly payments of R 30 000 per month. As security for the outstanding amount, a mortgage bond was registered in favour of the businessman over the property of the friend. The business man registered as a credit provider in terms of the NCA to be able to register the mortgage bond.
At one stage the friend could not pay the instalments and the business man sued him for R 1,13 million. The friend opposed the claim stating that the credit agreement for the loan contravened the NCA and is therefore null and void. The court agreed as the business man only registered as accredit provider after the loan agreement was signed.
Always seek legal advice before entering into credit agreements with friends or family.

Joe van Rooyen
0832657200
[email protected]

08/11/2018

Is a lease agreement invalid if the building does not have building plans?

In the case of Wierda Road West Properties vs Sizwe Ntsabula Goboda Inc 2018 (SCA), Wierda owned a building which was leased to Sizwe. Wierda institute action against Sizwe for outstanding rent of R 7,8 million. Sizwe opposed the action stating that there was no valid building plans and no occupancy certificate and therefore Wierda failed to comply with sections 49(1) and 14(1)(a) of the National Building Regulations and Building Standards Act 103 of 1977.
The High Court dismissed the action with costs and held that the lease was valid, but unenforceable. Wierda appealed to the Supreme Court of Appeal. The Appeal Court found that the relevant sections were not applicable to this matter as Wierda did not erect the building and hence did not have to comply with the Building Regulations Act. The court also found that even if the sections were applicable, the absence of building plans and an occupational certificate, did not invalidate the contract.
It was not the intention of the legislature to invalidate private agreements due to transgressions in the Act. The Penalty clauses in the Act makes provisions for fines if the Act is not complied with. The Appeal Court set the High court’s order aside and ordered that the outstanding rent must be paid.

Joe van Rooyen
0832657200
[email protected]

26/10/2018

What is the CSOS levy that I am paying with my sectional title levies?

The CSOS was established in terms of the Community Schemes Ombud Service Act to regulate the conduct of parties within community schemes and to ensure good governance. The Act is not only applicable to Sectional Title properties but also on all community schemes, including housing estates. The Act established the office of the Community Services Ombudsman and the obligations and duties of the Ombudsman. The office of the Ombudsman needs finances to be able to act in terms of the Act and unfortunately this must be paid by all members in Community Schemes, hence the CSOS levy on your monthly statement.

The Act also prescribed that practice directives must be provided to establish how the Act will be implemented. Most of the practice directives issued during 2017 and 2018 are administrative, including the establishment of fees payable. CSOS Practice Directive no 2 of 2018 has just been issued which deals with the process of dispute resolution in a community scheme. It sets out the procedures and format of such actions and that it can be used by any member of a community scheme.

The practice directives of the Community Schemes Act can be found here:
http://csos.org.za/practiceDirectives.html

Joe van Rooyen
0832657200
[email protected]

Documents Practice Directives 2018CSOS Practice Directive No 2 of 2018: Dispute Resolution CSOS Practice Directive No 1 of 2018: Amendment of the Practice Directive on Paymemt of Levies and Fees CSOS Circular No 2 of 2018: Procedure for the Application of Unanimous and Special Resolutions in terms o...

28/09/2018

Heritage properties: How does it influence me?

We celebrated Heritage Day last month and enjoyed a day of embracing our heritage. But, we as citizens of South Africa, also have the responsibility to protect our heritage and that is also applicable on property.
There is no doubt that properties like the Castle and St Georges Cathedral must be protected, but what about normal residential homes? The National Heritage Resources Act of 1999 prescribes that all properties older than 60 years are protected in terms of the Act and any changes or demolishing of the properties may not take place unless a permit was issued by the relevant provincial heritage resources authority.
The Act also prescribes the different grades of property types and the authorisation needed for the various types if demolition or changes are to be made. Depending on the age or historical significance of the building, you might be entitled to apply for a grant for the upkeep of the property.
The relevant heritage resource authorities were more information can be found are:
National: http://www.sahra.org.za/
Western Cape: http://www.hwc.org.za/

Joe van Rooyen
0832657200
[email protected]

31/08/2018

What effect do the water restrictions have on my lease agreement?
The current strict water restrictions imposed by the City of Cape Town might be in contravention to terms of a lease agreement. It might also place certain obligations on the tenant and landlord, which was not contemplated when the lease agreement was signed.
A standard term in most lease agreements determines that there is a duty on tenants to look after the garden, which could include watering the plants and lawn and ensuring that the pool is filled up and looked after. The water restrictions prohibit such actions. Is the tenant in breach of the agreement if they don’t adhere to the lease terms? Any contractual agreement is subject to the laws of the country where the agreement takes place, which includes municipal laws and regulations. Such terms in a lease agreement is therefore null and void and the tenant is not in breach, if they don’t adhere to it.
The municipality could also reduce the water supply to a property during water restrictions. A tenant can not cancel a lease agreement because of it, as the municipal laws take preference.
If a municipality charges a minimum availability water charge, the lease agreement will determine whether the landlord or the tenant is liable for it. If the lease determines that all consumables are payable by the tenant, then the tenant will be liable for it.
Joe van Rooyen
0832657200
[email protected]

05/08/2018

A giant leap into the future: Electronic signed property transfer documentation.

The future has arrived in the very regulated Deeds Offices in South Africa with the first electronically signed property transfer. The property of Zelda Lendon (68) was registered in the Bloemfontein Deeds Office in July where the documentation was signed electronically by both Ms Lendon as well as the conveyancer. The documentation had to be lodged manually as the deeds offices are not ready for electronic lodgement of documentation yet. With nine deeds offices in South Africa, the use of electronic signatures could help in solving the efficiency, costs and logistical challenges in the conveyancing industry.
This process was made possible by the implementation of the Electronic Communications and Transactions (ECT) Act. The Act gives legal recognition to electronic signatures and recognises the electronic signatures as equivalent to their paper-based counterparts. A special type of signature called an Advanced Electronic Signature (AES) is also prescribed in the Act. This signature must be used when a specific secure signature is needed (as is in the case of the Deeds Registry Act).
The software used to enable this transaction was the Lexis Nexis Sign platform of the Lexis Nexis company.

Joe van Rooyen
0832657200
[email protected]

02/08/2018

Is the road in our estate a public road or a private road?
It is important to distinguish between a public and a private road. Public roads are governed by the National Road Traffic Act 93 of 1996 as well as various provincial and municipal legislation. These laws determine that there is a duty on the State to look after the roads as well as to ensure the safety of the users on the roads. Accidents happening on public roads are furthermore covered by the Road Accident Fund. That is not the case on private roads and these obligations rests on the private owner.

Our courts have over the years struggled with this question. In S v Christodoulou 1967 the court laid down a test to determine whether a road is a public road or a private road. This was contradicted in S v Rabe 1973 as the judge determined that the meaning of “use by the public” was not considered properly in the previous case. This was confirmed in S v Dillion 1983.

In Gregory and Midstream Estate Home Owners Association, the Community Schemes Ombud Service Adjudicator made a finding that the roads in the estate were public roads. The reason for his findings is not that clear and it seems that he was influenced by the Administrative Adjudication of Road Traffic Offences Act 46 of 1998.

An opportunity arose to get clarity in this matter in the KZN High Court in the matter of Singh and Another v Mount Edgecombe Country Club Estate Management Association Two. In this case the Association argued that owners in the estate contracted with each other to manage the roads according to their own rules and therefore operate as a parallel system on the statutory laws provided by the Act. The court rejected the argument and said that such a parallel system does not exist. Unfortunately, the court but did not make a finding whether the roads are public or private as the Association, in their rules, determines the roads to be public roads.

It seems that certainty about public and private roads will have to wait for the future to be determined.

Joe van Rooyen
0832657200
[email protected]

20/07/2018

Rent to buy? Is it too good to be true?
The South African economy has been stagnant for a while which affected the property market. Buyers are struggling to qualify for home loans and are renting for longer times, especially first-time buyers. Various articles in property related publications preached the benefits of rent to buy transactions to curb this problem. Although it is a workable solution in some cases, it is not necessarily always the case.
How does it work?
A tenant signs an offer to lease with an option to buy the property at a later stage. An extra amount is paid to the owner above the normal rental to add towards a deposit. At the end of the lease period, the tenant applies for finance to purchase the property and will have a better rate of success due to the deposit that has been paid.
What are the pitfalls?
The nature of the deposit: In normal property transactions, deposits are paid into an attorney’s trust account, to be invested into an interest-bearing account, interest to the benefit of the purchaser. If the suspensive conditions, for example bond finance, has not been met, the deposit plus interest is paid back to the purchaser. That is not always the case in rent to buy transactions. A tenant might lose the deposit if they do not qualify for finance at the end of the period, depending on the terms of the agreement.
The nature of an option: An option contracts the landlord to sell the property to the tenant at a specified price at a specified future time. The terms of the agreement are agreed when the contract is signed and cannot be changed at the future date (unless the parties consent). It might be that the circumstances of the landlord and/or the tenant have changed in the meantime.
Transfer duty: The transfer duty act determines that transfer duty must be paid within 6 months after buying a property, irrespective of whether the suspensive conditions have been met. SARS also considers an option contract as a sales agreement. If the transfer duty is not paid within 6 months, a penalty of 10% of the transfer duty is levied together with interest until date of payment.
To ensure that your rent to buy agreement covers these pitfalls, make sure that you consult your attorney beforehand.
It is therefore important not only to look at the terms of your lease agreement but also the terms of the Consumer Protection Act.

Joe van Rooyen
0832657200
[email protected]

22/06/2018

Can my tenant cancel the lease before the end of the lease period?
What happens if my tenant signed a year lease and after 6 months decides that he/she does not want to live there anymore? Are they entitled to cancel the lease?
To answer that question, you must read the terms of your lease agreement. The agreement will determine when a lease can be cancelled and what happens in the case of early cancellation.
However, the Consumer Protection act determines that in any “fixed term agreement”, as is the case in lease agreements, the “consumer” (tenant) may give 20 business days’ notice to the “supplier” (Landlord) to cancel the fixed term agreement.
The supplier may then charge all outstanding money as well as a reasonable cancellation penalty. The penalty will not be the rent for the remainder of the lease period but the costs for finding a new tenant and the loss of income for the period that the property was empty. It is important that such a penalty must be reasonable otherwise it could contravene not only the Consumer Protection Act, but also the Conventional Penalties Act.
The Consumer Protection Act determines that a supplier must supply the service or product “in its ordinary course of business”. In respect of residential lease agreements, this has not been tested in the High Court to determine whether a natural person renting out a flat or house, whilst earning an income from another source (for example salary), falls in this category. It seems, however that the Magistrate’s Courts interpret that the act is applicable and until it has been tested they will enforce it.
It is therefore important not only to look at the terms of your lease agreement but also the terms of the Consumer Protection Act.

Joe van Rooyen
0832657200
[email protected]

18/05/2018

I have upgraded my sectional title unit. How does it affect the body corporate’s insurance?
One of the prescribed management rules of the regulations of the Sectional Title Schemes Management Act, no 8 of 2011 prescribes that a body corporate must obtain replacement values of all insured buildings and improvements every 3 years and present it at the annual general meeting. The body corporate is not responsible for insuring any improvements that the owner has made on the unit, whether it is done internally or externally.
The duty to insure an upgraded unit rests therefore with the owner. In some instances, the owner can add the improvements to the insurance of their personal belongings, for example, the insurance of an air conditioning unit. In other cases, it will not be possible, for example when an owner has renovated the unit with expensive wooden floors or tiles instead of the carpets which the other units might have. In such a case, the owner must inform the body corporate of the higher insurance value of the specific unit. The higher valuation can be obtained by making use of the services of a professional valuer. The body corporate might request the owner to pay for the increase in insurance.
Joe van Rooyen
0832657200
[email protected]

04/05/2018

Landlords vs Tenant: How can disputes be resolved?
It happens often that Landlords and Tenants have disputes that they cannot resolve. To consult an attorney every time could be a costly exercise.
The Rental Housing Tribunals can assist in resolving such disputes. They are mandated by the Rental Housing Act to speedily resolve issues and protect both from unfair practises and exploitation. It is however only applicable on residential lease agreements.
The further bonus is that the service is free and a mediator is appointed to settle the matter. If the mediator can’t settle the matter, it is referred for a formal hearing. Most disputes, except eviction, can easily be resolved by these processes.
Further information and documentation for the Western Cape can be found on the tribunals’ website: https://www.westerncape.gov.za/public-entity/rental-housing-tribunal

Joe van Rooyen
0832657200
[email protected]

The tribunal function is to settle disputes between tenants and landlords. It comprises of five members (including a chair and vice chairperson) appointed by the Provincial Minister of Human Settlements, who each have expertise in property management, housing development and consumer matters pertain...

29/03/2018

What extra costs (above the normal transfer costs) are payable by the seller and buyer when purchasing
a sectional title unit?
When a sectional title unit is sold, the cost that the purchaser must pay and the costs for the account
of the seller, are the same as the transfer costs of own title properties. There are, however, certain
extra costs payable when a sectional tile property is transferred:
1) Levies:
Sectional title properties attract monthly levies, which is payable in advance. When a property
is sold, and the attorney asks for a levy clearance certificate, to enable them to proceed with
the transfer, the body corporate (or managing agents on behalf of the body corporate) will
insist that the full outstanding levies to date must be paid in full. This will be for the account
of the seller. The body corporate will also insist that the levy for at least one month is payable
in advance after date of registration. This will be for the account for the purchaser. Certain
body corporates may insist that the full levy for the remainder of the tax year must be paid in
full. The period from after the date of registration until the end of the tax year, will be for the
account of the purchaser.
2) Special levies:
In some cases, the body corporate may have instituted a special levy for certain expenses
which cannot be covered from the body corporate’s normal budget. An example will be a
special levy to repaint the whole complex. In these cases, the body corporate will insist that
the full special levy is payable before they issue a levy clearance certificate.
The deed of sale must determine who will be liable for the special levy and the attorney will
allocate the payments accordingly.
3) Levy clearance certificate fees:
The body corporate (or managing agents on behalf of the body corporate) charges a fee for
the issuing of the levy clearance certificate. This fee is payable by the purchaser. The body
corporate (or managing agents) determines the fee and it could be between R500 and R2
500.
4) Home owner’s levies (if applicable):
If the property is situated in a complex managed by a home owner’s association, the seller
shall be liable for all outstanding levies (if applicable) but the purchaser shall be liable for the
certificate fee as well as one month’s levy in advance.
5) Session of exclusive use area:
Certain sectional title properties might have exclusive use areas which must be ceded by way
of a notarial session. Examples of these are parking bays, gardens or terraces. The fees for
notarial cessions are not included in the normal transfer costs. The fee for a notarial cession is
R 2 280 plus VAT per cession. The deeds office fee for the cession is R 305. The purchaser is
liable for the costs of cessions.
6) Additional sectional title units:
Certain sectional title properties might have extra units linked to the property, for example
garages which might have an extra unit number. In these cases, the transfer fees increase
with 15%. The purchaser is liable for the costs.
Joe van Rooyen
0832657200
[email protected]