MC2Agent

Section 35A of the Income Tax Act places an obligation on a purchaser  who pays consideration in excess of R2 million to a non-resident seller (or to any other person on behalf of that seller) of any immovable property in South Africa, to withhold from that consideration, the following amounts:

1. 5% of the purchase price in the case where the seller is a natural person;
2. 7.5% of the purchase price in the case where the seller is a company; and
3. 10% of the purchase price in the case where the seller is a trust.

The amount withheld by the purchaser is an advance in respect of that non-resident seller’s liability for normal tax for the year of assessment. If a purchaser fails to pay the required amount to SARS within the period allowed for payment, that purchaser is liable for interest at a prescribed rate on any amount outstanding and must pay a penalty. In practice the conveyancer will usually withhold this amount and pay it to SARS. If the purchaser is a SA resident, they must pay it within 14 days from the date on which the amount was so withheld (date of registration of the transaction), and if the buyer is a non-resident, within 28 days.

The first persons who have a responsibility in a transaction involving a non-resident seller is the estate agent or conveyancer, if either or both are involved in a transaction and are being paid for performing this function. If they are, they BOTH have a duty to notify the purchaser in writing that the seller is non-resident, and that there may be a duty to withhold. If they do not do so, and they knew or should reasonably have known that the seller is non-resident, they can be held jointly and severally liable for payment of the tax, up to the amount of their respective fees from the transaction.

The seller may apply to SARS for a directive to waive or reduce the withholding tax payable, and, where SARS is satisfied that the seller has sufficient other assets or security in SA, it may issue such a directive.

Best regards,

The MC-Team

Offers to purchase usually contain either of the following clauses:

1. This offer is irrevocable until 1 June 2018 (date as stipulated by purchaser) OR
2. This offer lapses on 1 June 2018. There is a big difference in the effect this wording has on the date on which the offer lapses.

Should the estate agent present an irrevocable offer to the seller, it is open for acceptance by the seller and cannot be withdrawn by the purchaser within the specified irrevocable time period as provided for in the offer. The purchaser can only revoke the offer should the seller not have accepted it on the 1^st of June 2018 (in our example above). The irrevocable character of the offer simply falls away after the stated date and it becomes revocable at the instance of the purchaser.

Should the seller accept the offer to purchase made by the purchaser at any given time before 1 June, a binding contract comes into being. Should the purchaser fail or neglect to revoke the offer after the date on which it was stated to be irrevocable, the offer does not lapse and is open to the seller for acceptance until the purchaser revokes the offer. Until it is revoked, it remains open and is capable of acceptance by the seller.

Should the offer to purchase read that the offer lapses on 1 June 2018 the seller must accept it before midnight (or such other time as contractually specified) on the 1^st of June 2018. The offer lapses and will be of no force and effect on the morning of 2 June.

Our standard offer to purchase contains the irrevocable offer-clause. The advantage is that it provides flexibility where the seller may not be able to sign the offer on a specific date and the purchaser is willing to not revoke the offer before a specified date.

Best regards,

The MC-Team

The Law Society of the Northern Provinces has advised that the prescribed transfer and bond fees have increased with effect from 1 June 2018.

We have updated the MCostCalculator and our MCFeeSheet and it is available on our website.

The increased fees will be applicable on all new instructions received from 1 June 2018 onwards.

Please feel free to contact us with any queries in this regard.

Best regards,

The MC-Team

It is a common practice of developers to insert a reversionary right in a title deed, stipulating that on the happening of a prescribed event (usually the purchaser must build within a prescribed period), ownership of the property will revert back to a previous owner.  Failure on the purchaser’s side to comply with the clause, gives the developer the chance to repurchase the vacant stand, in most cases at the initial sale price.  The question arises whether this is a personal- or real right for the developer.  It is important to determine this since a personal right prescribes within three years if not exercised.

The recent case of Bondev Midrand (Pty) Ltd v Pulling and Another, dealt with this matter and the court found that a reversionary right is a personal right and that it prescribes after three years.

A section 68(1) application can therefore be done (after three years) for the removal of the reversionary right from the title deed.

This ruling is in the process of being taken on appeal by Bondev, and we will keep you updated.

Take a look at our MCSectionalTitleGuide

Best regards,

The MC-Team

Is rental set-off allowed?

In the recent case of Tudor Hotel Brasserie and Bar (Pty) Ltd v Hencetrade 15 (Pty) Ltd the court addressed the issue regarding set-off where the tenant argued that vacant occupation of the entire leased premises was not received.

In this case Hencetrade (hereinafter referred to as the landlord), was the landlord in a lease agreement concluded with Tudor Hotel. Tudor Hotel fell into arrears with the rental payments and failed to rectify the breach after the landlord’s notice and demand thereof.

In an appeal to the Supreme Court, Tudor Hotel admitted that they did not pay the outstanding rental and they claimed that no rental was due, due to the fact that the landlord did not provide them with vacant occupation as stipulated in the lease agreement. When occupation was given to Tudor Hotel the landlord retained a portion of the property as storage space.

Tudor Hotel based its argument on the exeptio non adimpleti contractus. This is a defence that can be raised in cases of a reciprocal contract. This remedy allows a party to withhold its own performance until the other party has duly performed under his obligations of the contract. The court found that the lease agreement altered the reciprocal nature of this agreement when the parties concluded that the rent was payable monthly in advance. Tudor Hotel’s obligation to pay the rental was accordingly not reciprocal to the obligation of the landlord to provide vacant occupation of the premises.

The lease agreement also stated that all payments shall be made without any deductions or set off whatsoever.

The court a quo found that when a tenant takes occupation of premises which are deficient in any way he is obliged to pay the full rental amount and the remedy available to him is to claim damages or compensation. The court further found that where set off was specifically excluded, the tenant needs to obtain a court order that allows the set off. The court found that Tudor Hotel was in arrears and that the landlord was entitled to evict Tudor Hotel. And thus the appeal against the order of the court a quo, failed.

Best regards,

The MC-Team

A tenant approaches the municipality in order to purchase prepaid electricity, only to find out that he/she is unable to do so, due to the fact that the landlord is in arrears with his property rates. What to do now?

In terms of the Municipal Property Rates Act, the owner of the property (being the landlord) is responsible for the payment of property rates to the municipality. The non-payment of rates will subsequently result in a disconnection of services, and inability of the tenant to purchase pre-paid. This will leave the tenant without electricity and rendering the landlord in breach of the lease agreement. This will also amount to an unfair practice in terms of Regulation 13 (Unfair Practice Regulations to the Rental Housing Act) in terms whereof a landlord is obliged to provide electricity without non-supply or interrupted supply. The tenant can do the following:

1. Settle the account of the landlord, but needless to say that it will cause possible financial strain, as well as leaving the tenant aggrieved.
2. The tenant can avail himself/herself to the remedies in terms of the lease agreement. These remedies are to claim specific performance, to cancel the agreement and to claim damages or her/his losses due to the breach of contract.

Take a look at our MCSellersGuide.

Best regards,

The MC-Team

Addendums to a sale agreement is an important instrument by which the terms and conditions of an agreement is amended. The most important amendments that are done by way of addendums is the amendment of the terms of suspensive conditions such as:

• The date by which the suspensive condition must be fulfilled
• The bond amount that must be obtained
• If a lower bond amount than stipulated in the sale agreement was obtained, the deposit now payable, and acceptance of the lower amount

It is crucial that any amendments to suspensive conditions must be done before the expiry date thereof in the sale agreement. Once the expiry date has passed, the agreement lapses and becomes null and void. According to Mia v Verimark Holdings (Pty) Ltd (522/08) ZASCA 99 (18 September 2009) the sale agreement lapses if a suspensive condition is not met and no claim for damages flows from its failure and further, the agreement can’t be revived by any addendum after expiry thereof.

It is therefore important that if there are any changes to the suspensive conditions of an agreement, that an addendum is drafted and signed by both the purchaser and seller before the expiry date in the sale agreement.

If you are using the standard MC van der Berg agreement of sale, we have provided that the seller may extend the timeframe for approval and the purchaser may accept a lower bond amount by written notice between the parties, without an addendum being signed by both parties.

Take a look at our MCPromotionalVideo.

Best regards,

The MC-Team

Journals are done on municipal accounts in the event of credits that must be transferred, to effect any corrections on accounts, and also to take into account any payments made after the billing period.  Due to the increase of the VAT tariff to 15%, from 1 April 2018, the system has generated journals on certain accounts that can’t be processed at this stage, as these figures are still on the 14% VAT tariff. To rectify this problem, a new code must be written to allow the system to process these journals. The writing of the code is in process, but unfortunately the Municipality can’t give us a timeframe of when the problem will be sorted out. The result is that on certain matters where journals are applicable, we can’t obtain any figures or certificates, until the system has been corrected to allow for the processing of the journals.

Take a look at our MCSellersGuide.

Best regards,

The MC-Team

When must an offer to purchase be subject to another sale/purchase transaction?

In many instances a purchaser first has to sell his property to fund his purchase of another property. It has become standard practice to make the purchaser’s purchase transaction subject to the sale of his property, but the purchaser’s sale transaction is not made subject to his purchase transaction. The implication of the aforementioned is that if the purchaser’s sale transaction proceeds, but his purchase transaction does not, he will find himself in a situation where he must vacate his property when his sale transaction is registered, but will have to find alternative accommodation as his purchase transaction is not proceeding. It is therefore very important that both the sale and the purchase transaction must be subject to the other to avoid a situation where the one transaction does not proceed, but the other transaction does.

Take a look at our MCSellersVideo.

Best regards,

The MC-Team

On which VAT rate will estate agency commission be paid?

There is a concern amid the Estate Agents whether Value Added Tax (VAT) will be short paid on property sales that were signed before the VAT rate increased, but are only registered after 1 April 2018.

The SARS Electronic Pocket Guide on the VAT Increase gives an outline of the different changes. The guide also makes it clear that this information must not be interpreted as legal advice. The guide stipulates:

“The applicable VAT rate depends on the time of supply rules. In simple terms, this is the date upon which the transaction is deemed to occur.”

The general time of supply rule is the earlier of either:

• When the invoice is issued;
• or when payment is received.”

Additionally, the Pocket Guide stipulates that:

 “VAT, at the rate of 14%, applies to services actually performed before 1 April 2018.”

An estate agents’ service has been provided and completed when the service causes a sale, reflected by an offer to purchase that has been accepted by the seller. If the date of sale was before 1 April 2018, then VAT on the commission should remain at 14%, because the service was supplied before the VAT rate increased.

Section 67A(1)(c)(ii) of the VAT Act, refers to services performed during a period, starting and ending before or after the increase date, which shall be determined at the rate applicable on the day preceding the said date. Interestingly, this section makes no mention of any invoice date, when payment is received or any registration of transfer. If the time of supply has not already been triggered, then this section may well provide that VAT remains at 14%.

Should an agent effectively cause a sale to occur before the date on which VAT is increased, then VAT on estate agents commission must remain at 14%, even if the registration of transfer takes place after 1 April 2018.

Take a look at our MCostCalculator.

Best regards,

The MC-Team

Sellers often think that there are no costs or disbursements payable by the seller when a property is sold. This is not the case.

The seller will be liable for the following costs or disbursements:

1. The cost of the cancellation of his or her existing bond (if the seller financed the property with a bank loan). The costs of the cancellation will amount to approximately R3500 (which amount will increase for each additional bond to be cancelled). This is the costs and disbursements payable to the bond cancellation attorney. Sellers should also ascertain the amount outstanding from the bank. We often see that sellers estimate the amount due to the bank for cancellation of the bond, without taking into account that there will also be a 90 day penalty levied by the bank where 90 days notice of intent to cancel is not given to the bank.
2. The transferring attorney must comply with FICA and may charge a fee to attend to the FICA-verification and risk assessment. This charge will vary depending on the attorney.
3. The clearance figures payable to the municipality. Remember that the seller has to pay an amount in advance (in the jurisdiction of Tshwane it will be for 4 months in advance). The seller will have to budget for approximately 4 months of the current rates and taxes amount and will have to ensure all utilities (water and electricity) are paid up. The same principle will apply to sectional title levies and home owners association levies, except for the amount in advance which is usually for 2-3 months. The amount payable to the municipality, body corporate or home owners association (should the property be a sectional title unit or in an estate) has to be paid before lodgement and registration of the transfer can take place as the transferring attorney has to lodge the clearance certificates as part of the batch of documents in the deeds office. It is thus not possible that the amounts can be deducted from the proceeds after registration. The seller can arrange bridging finance on strength of the proceeds that will become available on registration should he/she have a cash flow problem.
4. It needs no mention that the seller must keep in mind that he or she is liable for the payment of the agent’s commission, and must consider the commission when calculating the proceeds from the transaction.
5. The Seller will also be liable for the costs of the issuing of all compliance certificates such as the electrical compliance certificate, electric fence certificate and the gas certificate.

The MCcostCalculator and MCSellersGuide set out the fees and disbursements and also explain the additional disbursements and fees that may become payable and we encourage all agents to make use of these useful tools.

Best regards,

The MC-Team

A trustee is appointed to manage the trust and its assets in the best interests of the beneficiaries of the trust. Is there not then a conflict of interest when a trustee attempts to purchase a property from the trust?

There can be numerous risks involved when a trustee purchases trust property such as a claim that the benefit derived by the trustee is detrimental to the beneficiary,  allegations of potential mismanagement of the trust funds or breach of fiduciary duties.

The position currently is that it is possible for a trustee to purchase trust property, provided that caution is taken to ensure that the transaction is not detrimental to any other trustee or beneficiary.

In the matter of Kidbrooke Place Management Association v Walton 2015 (4) SA 112 (WCC) it was suggested that the following be taken into consideration before a trustee purchases trust property.

• Perusal of the trust deed to ascertain whether the powers and duties which are afforded to the trustees allow for such an action;
• Perusal of objectives of the trust in order to determine whether the purchase of the relevant trust property will not be contrary to the purpose for which the trust was created;
• Beneficiaries of the trust must be informed of the Trustee’s intention to purchase the trust property;
• As a last resort a declaratory order from the court can be sought, to grant leave for a trustee to purchase the property.

Best regards,

The MC-Team

It often occurs that while attending to a transfer it becomes evident that the Home Owners Association as reflected in the title deed has been deregistered. How can these conditions be removed from the title deed?

To complete the transfer, these Home Owners conditions must first be removed from the existing title deed. Unfortunately it is not merely a case of ignoring these conditions or erasing them from the title deed.

A court order must first be obtained confirming the deregistration and consenting to the removal of the conditions from the existing title deed. The importance of a court order lies in the fact that the services and maintenance of roads etc. now falls back to the Local Authority, which they should take note of.

To obtain a court order can be a lengthy process and ultimately delay transfer.

Best regards,

The MC-Team

What is the effect of the death of a tenant on the Lease Agreement?

In terms of the common law, a lease agreement does not automatically terminate upon the death of a party. The executor must make the decision to terminate the lease agreement and the required notice of termination must be given in accordance with the provisions of the lease agreement and the Consumer Protection Act 68 of 2008.

The estate of the deceased party will therefore remain bound by the terms and conditions of the lease agreement unless the lease agreement specifically provides that the lease is cancelled in the event of death either party. It is important to note whether such a provision is included in the lease agreement as it can have an impact on the deceased’s surviving family and their housing situation. It is therefore advisable to include a clause in the lease agreement addressing termination of the lease upon death of one of the parties in order to avoid confusion and provide clarity in such an event. 

Best regards,

The MC-Team

The Property Practitioner’s Bill, which will repeal the Estate Agency Affairs Act, will bring about a number of amendments to the profession. It will not only cover estate agents but also property brokers and providers of bridging finance. Consequently a new governing body will be implemented to replace the EAAB, namely the Property Practitioners Regulatory Authority. The Authority must ensure that regulatory mechanisms are in place in terms of the marketing, management, financing, letting, purchase and sale of properties. The Property Practitioner’s Ombud, which will be tasked with resolving disputes, will be established in order to provide more protection for consumers. Furthermore, all property practitioners must be, in addition to a Fidelity Fund Certificate, in possession of a valid tax clearance and BEE certificates. The Bill also stipulates that agents may only receive commission upon registration of the transaction.

Best regards,

The MC-Team

The landlord, on termination of the lease agreement, can claim from the tenant damages for any defects to the premises, and the repair cost can be deducted from the deposit.

In terms of the Rental Housing Act, the landlord is obliged to arrange a joint incoming as well as outgoing inspection with a tenant in order to determine whether any damage to the property was caused. Failure by the landlord to inspect the dwelling in the presence of the tenant is deemed to be an acknowledgement by the landlord that the dwelling is in a good and proper state of repair, and the landlord will have no further claim against the tenant who must then be refunded the full deposit plus interest by the landlord.

If tenants refuse to attend a joint inspection, they can be held liable for any and all damages to the premises.

Take a look at our MCPromotionalVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

It is important to distinguish between fair wear and tear and damage to a property. Fair wear and tear refers to the deterioration of the leased property caused by normal, everyday use. Any damage caused by natural elements will also be regarded as fair wear and tear. If the premises is not newly built the tenant and landlord need to agree on the current state of the leased premises, which will serve as reference point from which future wear and tear will be assessed.

Damage to a leased property is defined as any deterioration caused by negligent or accidental destruction or damage to a property. This includes stains which cannot be removed, torn carpets, nails hammered into walls and painting the walls a different colour without the landlords consent. In the abovementioned examples the tenant has to rectify the damage or forfeit a part of his deposit in order for the landlord to rectify the situation.

At the end of the lease period the tenant must hand over the leased premises in the same condition in which it was received, with the exception of fair wear and tear.

Take a look at our MCPromotionalVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In the recent court case of Mokone v Tassos Properties the tenant was granted a right of first refusal. A right of first refusal means that a landlord agrees to give the tenant first opportunity to make an offer to purchase the property, if the landlord decides to sell the property.

In this case Mokone was granted a right of first refusal in his original lease agreement with the landlord. This agreement was renewed and extended. When following precedent it was clear that the renewal of an agreement only includes the essential terms of the agreement. A right of first refusal is regarded as a collateral term, and for these terms to be included in the renewed agreement they have to be expressly mentioned. The landlord sold the property to a third party without the right of first refusal. The landlord relied on precedent and they claimed that the collateral terms were not renewed with the agreement.

The Constitutional Court held that lay persons would regard the renewal of such agreement to contain all the terms of the original agreement, and that a right of first refusal would form part of the renewed agreement. Therefore the court ruled that the sale to the third party is cancelled.

Landlords and tenants need to be aware of this judgment and that the renewal of the original agreement will contain all the essential as well as collateral terms of the agreement. If the parties wish to exclude some of the terms, a separate addendum will be required.

Take a look at our MCPromotionalVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

Prospective property buyers who wish to buy a property in the name of a company not yet formed or incorporated, can do so by way of acting as an agent for the specific company yet to be formed. Section 21 of the Companies Act 71 of 2008 provides that a person can enter into an agreement on behalf of an entity yet to be formed. This pre-incorporation contract needs to be in writing and state that it is on behalf of the company to be formed. After incorporation of a company, the directors will have three months in which they can fully, partially or conditionally ratify or reject the pre-incorporation contract and this will be done by way of a ratification. (See Annexure H of the MC van der Berg standard agreement of sale.) If the directors do not ratify or reject the agreement within the 3 month period, then it is deemed that agreement has been ratified. If the board of directors ratifies the pre-incorporation contract, the person acting on behalf of the company will be released from all legal liability. If the company is not incorporated or the pre-incorporation contract is rejected the person acting on behalf of the company will be held personally liable.

Please keep in mind that the agreement of sale can stipulate shorter or longer periods within which the company is to be incorporated and the agreement ratified.

Best regards,

The MC-Team

A special levy may only be raised for unforeseen expenses for which the body corporate has not made provision for in its annual budget. When informing the owners of the special levy, the trustees must indicate the amount of the special levy and for what purpose the special levy will be used. A special levy cannot be raised and used for expenses which have already been budgeted by the body corporate.

Before the Sectional Title Schemes Management Act (STSMA) became effective on the 7th of October 2016, the Sectional Titles Act prescribed that the owner of the unit on the date on which a resolution was passed for a special levy was held fully liable for the amount of the special levy. This position changed after the STSMA became effective and the STSMA stipulates that upon the change of ownership of a unit, the purchaser becomes liable for the pro-rata payment of the special levy from the date of change of ownership. Purchasers need to be made aware of any special levies or the chance of a special levy being raised while in the process of buying a new property.

Take a look at our MCPromotionalVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In terms of Regulation 17(3) of the Pressure Equipment Regulations a gas certificate of compliance must be issued when there is a modification or alteration of a gas appliance or a change of ownership of a property where there is a gas appliance installed. This certificate serves as proof that the gas installation is safe, up to standard and leak-free.

In all instances where an owner of a property has a built-in gas fireplace, -braai, -stove or -geyser a gas certificate of compliance must be issued, irrespective of the size of the gas bottle. The compliance certificate needs to be issued by an authorised person registered with the Liquefied Petroleum Gas Safety Association of Southern Africa. (The certificate needs to be issued even if the gas bottle is smaller than 9kg.)

In terms of gas installations, the following is important:

No more than 9 kg LPG is allowed inside an apartment, 19kg LPG inside a house or 100kg LPG outside a free standing property.

There is no requirement that gas bottles in a domestic installation be placed in a cage. Where public access to gas bottles is possible, it is a requirement that these bottles be placed in a cage.

Take a look at our MCSellersVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In a recent High Court Judgement of Abigak 1 General Trading & Investment CC v Gani and Another 2017 the transfer of a property took place in 2015. The occupants of this property refused to vacate the property and the new owner of the property applied for their eviction. The occupiers alleged that in 2007 they entered into a verbal agreement that the previous owner would enter into a formal agreement of sale to purchase the property.

The occupiers asked for the eviction as well as the transfer to the new owner to be set aside, and that the property be transferred to the occupiers.

The court held that an agreement to agree is valid only if it complies with all the formal requirements for validity of the contract that they had agreed to enter into. The contract that they agreed to enter into was that of the sale of immovable property which is required to be in writing and signed by both parties. Therefore the verbal contract between the parties was not valid and the occupants were given 15 days to leave the property.

Take a look at our MCSellersVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In recent weeks, at Mcademy, we discussed the matter of attorneys who unlawfully solicit conveyancing work and the possible ramifications for the estate agent and attorney.

In this regard take a look at this article (Conveyancing attorneys may not pay agents for referral business) published by HomeTimes or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In the case of Phepeng and Another v Estate late Ame Combrinck and Others (792/2017) the bond clause required the buyers to obtain a loan offer, quotation and pre-agreement within 30 days. The clause did not specify that these documents had to be provided to the seller. The buyers obtained a loan offer and told the seller about it. The buyers accepted the bank’s loan offer, but also requested an extension of time from the seller in order for them to try and find another offer at a better interest rate.

The seller refused the extension of time and argued that the bond clause had not been fulfilled in time because the necessary documents was not delivered to him, therefore the agreement was void. The seller then put the property back in the market and accepted another, better offer.

The buyers argued that they did obtain the bond within the necessary time period and the seller argued that there was no valid contract because the bank’s documentation was not provided to the seller within the 30 day period. It is clear that both parties interpreted the bond clause differently.

The court held that it was sufficient for the buyers to obtain a loan from a bank. They can accept the bank’s offer without providing the seller with the documents. And therefore the suspensive condition was fulfilled, the sale agreement was valid and enforceable.

The seller had to transfer the property to the buyers and suffer the consequences of the breach of the second offer that was accepted.

Take a look at our MCPruchasersVideo or contact us on012 660 6000 for further information.

Best regards,

The MC-Team

Often when a buyer has to sell his property first in order to buy a new property, problems arise.

Agents can ensure their transactions are successful by taking note of the following:

1.       Make the contract (main agreement) subject to the sale of the purchaser's property (removed agreement).

a.          It is important to note that "sale" is not just the signing and acceptance of an offer, all the suspensive conditions as set out in the removed agreement must also be met before the due date of the preceding sale condition in the main agreement.

b.          The sale of the property must be linked to a period/due date.

2.       Give the seller the option to continue marketing but make sure there are no uncertainties about   the terms upon which the seller can accept another offer. MC van der Berg Inc has an addendum to address both of these aspects. You are more than welcome to make use of this addendum.

What if the mortgage bond, but not the main agreement, contains a condition of a preceding sale?

If the purchaser has to obtain a mortgage bond, and the mortgage bond contains a condition that the purchaser must first sell his/her property, (which condition is not contained in the contract), the purchaser has only complied conditionally with the suspensive condition.

The preceding sale condition must then be incorporated into the main agreement by way of an addendum (which must be signed before the due date of the mortgage bond in the main agreement), before it can be argued that the purchaser has indeed complied with the mortgage bond condition. The date by which the purchaser’s property must be sold, among other things, must be stipulated in the addendum.

What is the position if the condition of the preceding sale is contained in the main agreement?

If the main agreement provides for the preceding sale of the purchaser’s property and the purchaser’s mortgage bond is also made subject to the sale of his property, it does not mean that the preceding sale clause in the main agreement is replaced. The purchaser must still sell his property within the time agreed to in the main agreement.

Can the seller and purchaser agree to remove the condition of the preceding sale?

The parties can always agree in an addendum, before the due date thereof, that the preceding sale condition is no longer a condition. However, if the preceding sale condition is also contained in the mortgage bond, the purchaser will have to persuade the bank to also remove the condition. These matters, and the timeframes within they must occur, must preferably be attended to by your transferring attorney by way of an addendum.

Can the purchaser unilaterally waive the condition of the preceding sale?

If the main agreement makes provision therefore, the purchaser can unilaterally waive the preceding sale condition.

However, if this condition is contained in the mortgage bond as well, the unilateral waiver of the condition by the purchaser will not mean anything, as the purchaser will then not have complied with the mortgage bond condition. The Seller can most certainly not be bound by a non-contractual condition. If the main agreement provides for the unilateral waiver of the preceding sale condition by the purchaser, the position regarding the removal of the condition from the mortgage bond must also be properly regulated in the main agreement.

Take a look at our MCSellersVideo or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

A servitude is a limited real right registered in the Deeds Office. It is registered in favour of another person or entity. The holder of the servitude is entitled to exercise a right on the part of the property where the servitude is registered over.

There are two types of servitudes: personal and praedial servitudes. A personal servitude is a right attached to one specific person. This personal servitude exists only for the lifetime of the specific person. Examples of personal servitudes are usufruct and the right to use. A praedial servitude is a right that attaches to the property itself and it is not affected by a change in ownership. Examples of praedial servitudes are right of way and servitudes with regard to electrical substations.

Personal servitudes are usually created in terms of a will, for example the surviving spouse is given the right to occupy the property during her lifetime. A praedial servitude is created by way of an agreement between the parties and it usually includes compensation to the owner of the property.

Personal and praedial servitudes need to be registered against the title deed by way of a notarial deed.

Take a look at our MCPromotional Video or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

With sadness we have to inform you that one of the directors at M.C. van der Berg, Sonja du Toit's father, died today.

Please think of her and her family in this difficult time.

Best regards,

The MC-Team

The changes and comments on the new regulations by FNB and Nedbank

FNB

According to FNB the minimum benefits that must be contained in the credit life insurance are:

1.            Death

2.            Permanent disability

3.            Temporary disability

4.            Occupational disability

5.            Inability to earn income

When credit life insurance is a requirement for a loan at FNB:

All home loans up to and including R 1 million:

•             Joint and individual first home loans

•             Further home loan applications

•             Substitution of a debtor

•             All new and further building loans

In the event of joint applicants, each applicant will be required to have credit life insurance cover.

When credit life insurance is not a requirement:

•             Multiple applicants (3 or more)

•             Juristic Entities

•             Wealth Simple Lending

•             Where a customer does not have a RSA ID

NEDBANK

To insure compliance to the regulations Nedbank has decided to make life insurance optional for loans below R 600 000 and they will not take cessions of clients’ external life policies. They will still implement internal life cover where is it is requested by the client.

Best regards,

The MC-Team

Support us at M.C. van der Berg Inc. in our Blood Drive campaign on Thursday, 28 September 2017, commencing at 12:00 to 15:00, cnr Saxby and Frederik Streets, Eldoraigne, Centurion. Participate in this vital community service which ultimately improves the quality of life for many.

A person can donate blood if they:

•             Weigh at least 50kg or more;

•             Is between the ages of 16 and 65

•             Is in good health;

•             Lead a sexually safe lifestyle, and

•             Consider their blood safe for transfusion.

What do I need to know about blood donation?

You cannot contract HIV/AIDS from donating blood.  All needles and finger prick lancets are new, sterile and used only once.  After use, each lancet and needle is placed in a special medical-waste container and incinerated.

Trained staff collects all blood donations and very strict protocols are followed to ensure that all blood donation procedures are safe an hygienic.

The South African National Blood service has various measures in place to protect the health and wellbeing of both blood donors and patients.

These measures ensure that our blood supply is among the safest in the world.

Best regards,

The MC-Team

Credit life insurance has been largely unregulated by the National Credit Act. On 9 February 2017 Credit Life Insurance Regulations were published by the minister of Trade and Industry in the Government Gazette. The aim of the regulations are to protect consumers from unnecessary and inappropriate insurance products and excessive insurance premiums. Credit providers are entitled to require a client to obtain life insurance as cover for the outstanding loan amount should something happen to the client.

The regulations stipulate that a life insurance policy must cover death, permanent and temporary disability and in certain circumstances unemployment.

According to the regulations the cost of life insurance will be calculated on the deferred amount under a client’s credit agreement. In the instance of a mortgage agreement the maximum cost will be R2 per R1000. The credit provider is now obliged to do a proper risk assessment for each client and cannot use a universal approach in determining the cost of credit.

Credit agreements entered into before the commencement date being 9 August 2017, is not affected by the new regulations.

Visit our webpage for more information on this subject.

Best regards,

The MC-Team

Capital gains tax (CGT) is a tax paid in the event of a disposal of certain assets, such as immovable property by the owner of the asset. The capital gain amount is calculated by considering the difference between the base cost (the initial cost the asset was purchased for) and the selling price. CGT is only payable on a portion of the taxable capital gain, calculated at different rates for different entities. This is called the ‘inclusionary rate’ and currently stands at 40% for natural persons and at 80% for companies, close corporations and trusts. That portion of the capital gain is then added to the owner’s income to the effect that tax is now paid on the higher income amount by the taxpayer.  This means that effectively tax will be paid at a rate of 18% for natural persons, 22, 4% for companies and 36% for trusts.

Visit our webpage for more information on this subject.

Best regards,

The MC-Team

The municipalities of Tshwane and Ekurhuleni appealed an earlier ruling by the High Court in the cases of Chantelle Jordaan and Others v City of Tshwane Metropolitan Municipality and Others; City of Tshwane Metropolitan Municipality and Others v Chantelle Jordaan and Others; Billie Ann Livanos v Ekurhuleni Metropolitan Municipality in which it was ruled that municipalities cannot hold new owners liable for old debt.

The court had to decide whether section 118 (3) of the Local Government: Municipal systems Act is constitutionally valid. The section provides that the amount due for municipal services is a charge against that property and enjoys preference over any mortgage bond registered against the property.

The matter first came before the High Court after the City of Tshwane and Ekurhuleni municipalities suspended the supply of municipal services to the applicants’ properties. This was on the basis that the applicants, who are the new owners of the properties, owe the municipalities for municipal services to these properties before transfer. In other words, the municipalities required these new owners to pay historical municipal debts.

The Court had to determine whether the provision, properly interpreted, in fact means that, when a new owner takes transfer of a property, the property remains burdened with the debts a previous owner incurred.

The municipalities argued that for municipalities to properly fulfil their constitutional duties of service delivery, in the greater good, they needed extra-ordinary debt collecting measures.

This meant burdening new owners with the responsibility for historical debts. The municipalities however conceded that nothing prevented them from enforcing their claims for historical debts against those who incurred them, namely the previous owners. The municipalities conceded further that their powers included interdicting any impending transfer to a new owner by obtaining an interdict against the old, indebted owner, until the debts were paid.

The Court held that to avoid unjustified arbitrariness in violation of 25(1) of the Bill of Rights, the Court held that section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner and granted the applicants a declaration that the charge does not survive transfer.

This brings a happy ending to the whole historical debt debacle. Estate agents can now inform prospective purchasers, with peace of mind, that they will not be held liable for the seller’s outstanding municipal debts.

To those who use the standard MC contract, we are busy effecting the necessary amendments to the contract.

Take a look at our MCPromotional Video or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

Section 5 of the Bill establishes a new regulatory body to replace the EAAB. The body will be called the Property Practitioners Regulatory Authority and will be headed by the Board of Authority (the Authority).

The Authority must create regulatory mechanisms relating to the marketing, management, financing, renting, buying and selling of property and must ensure compliance to the Act in general. The Authority will regulate the actions of property practitioners in dealing with consumers and will ensure that consumers are informed of their rights. They will also protect consumers from unwanted and punishable behaviour by property practitioners. Furthermore the Authority has been tasked with implementing measures to ensure the transformation of the property sector.

An Ombud has also been established which will handle all complaints which has been made in terms of this Act and to create dispute resolution mechanisms which will ensure that all complaints are dealt with in a fair, informal and economic manner.

This Bill was published for public comment on 31 March 2017. If it is written into law, it will have a drastic effect on the property sector as we know it. We are currently awaiting a revised version to be published in the Government Gazette.

Take a look at the Government Gazette published as on 31 March 2017 or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

To determine the correct procedure which must be followed when cancelling a lease, you must first determine which legislation applies to the specific situation.

The Consumer Protection Act (CPA) expressly defines residential accommodation as a service, meaning that residential leases are affected by this Act. The CPA will apply to all leases, except where the tenant is a juristic entity and such a tenant has an annual turnover of more than R 2 million or where the landlord is not leasing the property in the ordinary course of his business.

The cancellation of a lease agreement before the expiration of the lease period is commonly known as early termination. If the CPA is applicable the tenant can always cancel a fixed term agreement by giving 20 business days’ written notice to the landlord. Such cancellation will be subject to a reasonable cancellation penalty.

If the CPA does not apply, and the parties did not contemplate early termination in the lease agreement, the Rental Housing Act (RHA) does not create a way for either party to cancel the lease. In the case that the lease is not regulated by either the CPA or the RHA, the parties would be able to cancel the lease by giving notice which coincides with rental payment intervals.

When it is unclear whether or not a tenant can cancel a lease prior to its termination, as it often is, it is best to contact a property expert for an opinion on which procedure to follow.

Take a look at our MCPromotional Video or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

In the case of Phepeng v Estate Late AME Combrinck and Others the court had to consider at which moment the suspensive condition relating to bond financing had been fulfilled. According to the condition the purchasers had 30 days to obtain from a bank a loan offer, quotation and pre-agreement. Nowhere in the purchase contract was it stated that these documents had to be lodged with the seller.

The purchasers duly obtained a loan offer from ABSA Bank. Thereafter they accepted the bank’s offer in time and communicated this to the seller through the bond originator. Believing that they complied with the suspensive condition and that their purchase was secured, the purchasers then asked the seller for an extension to enable them to negotiate a better interest rate with another financier.  The seller denied this request, saying that the purchasers had not complied with their obligation under their contract by not providing her with the bank documentation and indicated that there was a better offer on the table which she had accepted.

The court disagreed with the seller, finding that on the particular wording of the bond clause in their purchase contract, the purchasers had in fact fully complied with the condition on accepting the loan offer from the bank. They did not need to provide the seller with any documents to this effect. The court ordered that the seller effect transfer of the property to the original purchasers and not to the subsequent purchasers.

This case illustrates how important it is to have a professionally drawn up purchase contract which eliminates situations such as these.

Best regards,

The MC-Team

We are often asked whether accreditation agreements as prescribed by estate managers are valid and enforceable. Our answer is that until the courts decide on the matter it will be difficult to prove otherwise. Soon we will have more clarity on the matter as on 20 July, an urgent application for an interdict against the Val de Vie Homeowners' Association was filed by Harcourts Wineland in the Western Cape High Court. The legal dispute between the agency and the management of the luxury estate just outside Paarl turns on an accreditation agreement between the parties. The agency's accreditation was cancelled in early July after one of the agents refused to share a portion of its commission with the homeowners' association.

One of the issues that will come before the court is the legality of the accreditation that allows only certain agents to work in a security estate. The Estate Agency Affairs Board issued a notice in 2014 addressed to homeowners' associations that prohibits this use. The Estate Agency Affairs Act also makes it illegal for estate agents to share their commission with parties who are not in possession of a Fidelity Fund certificate. Furthermore, the prescription to use only certain agents can be seen as an infringement of a seller's right to choose his suppliers as set out in the Consumer Protection Act.

Take a look at our MCPromotional Video or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

Common law marriages are not recognised in South African law. The amount of time a couple has been living together does not translate into a “default marriage”. As such, the laws that protect individuals in a marital relationship will not apply to couples who live together.  In the case of a break-up, the law as it stands provides that all assets will simply be divided according to who owns each asset and maintenance is not payable to  either of the partners.

Where one partner has bought immovable property during the subsistence of the relationship and it is registered solely in his name, the partner who does not have official ownership will not be entitled to a part of the profit or the value of the property upon breaking-up. The only option available is for this partner to prove the existence of a universal partnership.

It is always advisable for couples who live together to formally regulate their relationship with a co-habitation agreement. This agreement will secure each partner’s assets and provide ease of mind when the relationship comes to an end.

Best regards,

The MC-Team

In order to provide you with the best service, we are proud to present our MC van der Berg App which can be downloaded from the Google Play Store. This app replaces the mobi-site which we have been using. On our app, you can easily access our MCost Calculator, the monthly newsletter and weekly MC2Agents as well as the other features you are used to accessing from our website.

We are currently in the process of making this app available on the Apple App Store and will keep you updated on this front. Please download our app on your cell phone or tablet to make use of our services while you are on-the-go.

Best regards,

The MC-Team

Occupation refers to the date that the purchaser is placed in a position to take control of the property purchased. It does not refer to the date of actually moving into the property. Thus if the contract stipulates that occupation is on 1 July and the purchaser moves in on 3 July occupational rent will be charged from 1 July.  On the occupation date the purchaser becomes an occupant and not a tenant as defined under the Rental Housing Act. The agent must guide the parties in coming to an agreement which protects both sides and doesn’t expose the seller to unnecessary risk. It is important to always agree on the specifics of the occupation date and the occupational rent when signing the contract and never to leave it to be decided at a later date. When the circumstances change, it can always be amended by way of an addendum drafted by the conveyancer.

For more information on this topic, please see our MCPurchasersGuide.

Best regards,

The MC-Team

In the case of Nelson Mandela Bay Municipality v Amber Mountains the Supreme Court of Appeal (SCA) had to consider whether a seller is responsible for the payment of rates up to the end of the municipality’s financial year or only up to date of transfer. In this case, the municipality required payment of the rates until the end of their financial year before it would issue a rates clearance certificate. In the trial court it was decided that a seller can only be held liable for the payment of rates up until the date of transfer and the SCA agreed.

It was found that the relevant provisions of the legislation that governs municipal rates and the issuing of certificates had to be read in conjunction with one another. It is clear from such a reading that the property rates only become due from the start of the financial year and not on the start of the financial year. The Municipal Systems Act, which specifically relates to the issuing of clearance certificates, only refers to municipal debts which have become due in the two years before transfer and does not relate to future municipal debts.  As such a municipality is not entitled to withhold the issuing of a rates clearance certificate until the rates for the entire financial year has been paid.

Best regards,

The MC-Team

The role of a witness is to be able to attest to the authenticity of a signature. A witness does not need to be familiar with the content of the document which they are witnessing, but must be able to identify and confirm the authenticity of a party’s signature in the case of a dispute.

In ABSA’s recent “Minimum Supporting Documentation” communication, the bank requires that a witness on a deed of sale provide their full names and surname, their identity number and attach their full signature on the document. All deeds of sale must contain the full details of the witnesses as of 1 May 2017. Estate agents must ensure that the full details of all witnesses and other relevant parties are included in the deed of sale before sending it on to the bond originator to prevent future delays in the purchaser’s application for bond finance.

Best regards,

The MC-Team

In the recent case of Body Corporate of Empire Gardens v Sithole, the body corporate applied for the sequestration of an owner in the sectional scheme to recover their arrears levies after they had exhausted all other remedies. The benefit of a sequestration order is that arrears levies would be considered a cost of realisation of the property and would be paid before any of the claims of other creditors were considered. Nedbank opposed the sequestration proceedings, as their monthly bond repayments were paid up to date. The bank argued that if the owner were to be sequestrated, the only creditor who would derive any benefit would be the body corporate. The court refused the application for sequestration.

The provisions of the Insolvency Act require that the sequestration of a person must be to the benefit of his creditors as a whole. Since the only creditor to derive any benefit was the body corporate, the court could not provide the body corporate with immunity from the operation of the Insolvency Act. This judgement leaves body corporates in a sticky situation. By law it is requires to collect levies, but cannot always rely on the strongest fall-back position in the case of non-payment, which is the sale of the sectional title unit itself. In such a case prevention is better than cure - until the legislature changes the Insolvency Act to provide protection to body corporates in this situation, levy collection procedures need to be monitored closely to prevent any arrears situations.

Best regards,

The MC-Team

In the case of Argent Industrial Investment (Pty) Ltd v Ekhuruleni Metropolitan Muncipality the seller had received and paid his utility bills for 5 and a half years on estimated readings. When the municipality eventually took an actual reading, it was discovered that the actual consumption and the estimate differed with R 1, 1 million. The seller was billed for this amount. The court had to consider whether the charges older than three years prescribed or had prescription only started running once the seller was billed for the actual readings?

The court held that the municipality had been aware of all the facts giving rise to the debt i.e.: the identity of the seller; that it was paying an account based on estimates and that they had not taken an actual reading in almost 6 years. The municipality’s failure to read the meter for that amount of time was not reasonable and cannot be imputed to the seller. As such the court declared debts older than three years to have been prescribed and the seller could not be held liable for them.

Best regards,

The MC-Team

In the case of Attorneys Fidelity Fund Board of Control v Intibane Mediates the agent inflated the purchase price, by making an arrangement with the seller to pay a “secret” commission. The agreement was that the seller wanted a bottom line amount of R32 million for his property, and any amount in excess of R32 million, the agent could take as commission. The property was then sold for R37,5 million. The court found that there was a legal duty on the seller to disclose this “secret” commission to the purchaser, and the omission to do so is wrongful. The seller can be liable for damages as a negligent misrepresentation gives rise to delictual liability. The seller has a duty to inform the purchaser if there is an inflated purchase price.

Best regards,

The MC-Team

The Minister for Rural Development and Land Reform published the Regulation of Agricultural Land Holdings Bill on the 17^th of March 2017. The period for public comments closed on the 16^th of April. The aim of this Bill is to reverse the legacy of colonialism and apartheid and to ensure a fair distribution of agricultural land to South Africans. It further aims to promote food security and to provide certainty regarding ownership of agricultural land.

The Bill places a ceiling on land ownership at approximately 12 000 hectares and prohibits the ownership of agricultural land by foreign persons. Any person owning agricultural land, who is not a citizen or ordinarily resident in the country, when deciding to sell must offer their land to the Minister who will have a right of first refusal to acquire ownership.  Foreigners will still be eligible for long leases of land. Any land which has been set aside as redistribution agricultural land as descried in the Bill, must first be offered to a black person as defined in the Employment Equity Act.

A Commission will also be set up to establish a land register which will disclose the present ownership, any acquisition of ownership after commencement of the Act and all administrative details relating to the land.

Best regards,

The MC-Team

When a seller’s home has been successfully sold, his existing bond must be cancelled in the Deeds Office on transfer of his property. Many sellers are unaware of the fact that it is their responsibility to inform the bank of their intention to sell their property and cancel their bond.

The National Credit Act allows financial institutions to charge the seller a 90-day early termination charge if the seller wants to cancel his bond before the expiration of the bond term. The penalty is equal to three months of the monthly bond payment amount. It is possible to avoid the cancellation penalty if the seller gives the bank 90 days’ written notice of his intent to cancel the bond.

Sellers wrongly feel that their agents should advise them of the duty to give notice, and in the past few weeks we had a few sellers who demanded the transfer to be delayed until the 90 days’ notice period expires. If the sale agreement does not provide that we may delay the registration, we find ourselves in a difficult situation.

Our advice to agents is to remind the seller to give notice when the property is listed if he or she has not given notice at that stage.

For more information on this topic, please see our MCSellersGuide.

Best regards,

The MC-Team

The short answer is yes. The contract of sale requires agreement on three essential elements to be valid: the parties, the purchase price and the property being purchased. As long as the property can be clearly identified, by means of a sketch or a pointing out of the boundaries of the property a valid contract can be concluded.

However, a bond cannot be registered over the portion sold while it has not been subdivided. The bank will require the precise description of the property and an approved Surveyor-General diagram before a bond will be approved. 

Transfer of the property to the purchaser likewise cannot take place until the sub-divisional plans are approved by the Surveyor-General. In light of the above, the agreement of sale should include terms to the effect that the sale is subject to the successful subdivision of the property and must state which party will carry the costs of subdividing the property.

Take a look at our MCSellersGuide or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

The Deeds Office has published their fees for the registration of transactions that take place from 1 April 2017.  The average increase from last year is about R 57, 50. Some quotations that have been sent to clients will still refer to the old Deeds Office fee, but all new quotations sent out from today will refer to the increased deeds office fee, as set out below.

Please refer to our MCostCalculator which has already been updated with the new fees.

Best regards,

The MC-Team

When purchasing a home and registering a bond, a purchaser must be prepared to pay not only the bond registration attorneys’ fees, but a few incidental costs as well. The attorneys’ fees are calculated on an upward sliding scale directly proportional to the amount of the bond.  Other costs include:

1. The bank’s initiation fee

This is an amount charged by the bank for the administration involved in granting the loan. In the past, valuation fees were also charged, but with the introduction of the National Credit Act, all valuation fees are included in the initiation fee. Until recently the initiation fee payable was R 5 700,00, but this amount has been increased to R 5 985,00. The purchaser has a choice whether to have this amount capitalised to his bond or to pay the fee upfront on registration of the bond.

2. Sectional title insurance certificate fee

This is an amount payable to the insurer of the sectional title scheme for the issuing of an insurance certificate. The amount varies from scheme to scheme, as it is determined by the specific scheme’s insurer. At MC van der Berg Inc. we make provision for an amount of R 900,00 which is indicated on the purchaser’s statement of account. Should this amount be more than required for the certificate, the purchaser will be refunded.

Take a look at our MCBondGuide or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

As from 1 March 2017 (sale agreements entered into from 1 March 2017), the purchaser will be liable for transfer duty according to the new scale.

We have therefore already updated our MCostcalculator and our new fee sheet.  We will start distributing the printed versions of the new fee sheets during the course of this week. You are also welcome to visit our office from Friday to collect copies.

Best regards,

The MC-Team

Obtaining the clearance certificate from the city council is one of the aspects that could delay a property transfer.

Currently, the transferring attorney not only needs to lodge an application form, but also the following documents:

1. A rates and taxes account not older than 3 months;
2. Water and Electricity account.  Should another provider be responsible for the provision of electricity, proof of such agency / statement of account must be supplied.
3. Should your electricity be prepaid, a photo of the meter is required
4. A photo of your water and electricity meter:  This request is very important. It often happens that the city council estimates consumption instead of using the actual readings. Should the Municipality only be in possession of estimated readings on their system, the photo with the actual reading will be used to correct the account and the figures before they can issue the clearance figures.

We request this documentation from the sellers in our first letter to them, but sometimes the sellers delay in providing us with the necessary documentation and if the agent can raise awareness about this at signature of the contract, it would be of great assistance.

Take a look at our latest video that deals with M.C. van der Berg Incorporated

Best regards,

The MC-Team

The Taxation Laws Amendment Act was promulgated on 19 January 2017 and introduces a new section which provides measures to prevent the evasion of estate duty and donations tax through advancing interest free loans to trusts. The amendments will come into effect on the 1st of March 2017.

The new Section 7C will apply to situations where a loan is advanced to a trust by a connected natural person, or at his/her instance a company to which he/she is a connected person and interest is charged at less that the official interest rate (currently 8% for Rand denominated loans).

The difference between the interest actually charged and interest at the official rate will be deemed to be a donation at the end of the relevant year of assessment and taxed at 20% (rate of donation tax)

For the full article on this topic read the upcoming MC Monthly.

Best regards,

The MC-Team

Occupational rent is the financial compensation when the purchaser of a property occupies the house he or she has bought before it is registered in his or her name.  There are two schools of thought when it comes to utilities.

For instance where an offer to purchase stipulates that occupation will take place on the 1^st of February 2017 and the occupational interest will be R10 000 per month, but is silent regarding the payment of water and electricity (utilities) it is often unclear whether the purchaser will pay those amounts over and above the occupational rent.

The first school of thought argues that the occupational rent as agreed on in the contract of sale does not include utilities. If the parties agreed on R 10 000 occupational rent, the utility account must be paid by the purchaser over and above the R10 000 occupational rent due to the seller.

The second school of thought argues that when the contract does not specifically address the issue, the utilities are deemed to be included in the occupational rent. The R10 000 must then be used to settle the water and electricity accounts at the municipality and the remainder will be payable to the seller as occupational rent.

To avoid unpleasantries between the parties the agent should ensure that the contract provides for the payment of utility accounts in addition to the occupational rent during the occupational period.

Best regards,

The MC-Team

Originally section 40 of the National Credit Act required a person to register as a credit provider if the total principal debt owed to that credit provider under all outstanding credit agreements, other than incidental credit agreements, exceeded the threshold determined by the Minister of Trade and Industry. A person had to register as credit provider if it was an at arm’s length transaction and he was the lender under at least 100 credit agreements or the principal debt owed to him in terms of all current credit agreements was more than R 500 000.

When the National Credit Amendment Act came into operation, the registration requirement was changed to the effect that a person was only required to register as a credit provider if the total amount owed to him or her in terms of all current credit agreements exceeded R 500 000, regardless of the amount of credit agreements concluded. On 11 May 2016, however, a new threshold of R 0 (nil) was published and as of 6 November 2016 all lenders should register as credit providers with the National Credit Regulator. This means that private individuals who make interest bearing loans must also be registered as such. Failure to register as a credit provider could result, amongst others, in the credit agreement between the lender and borrower being declared void as an unlawful agreement.

This can affect property transactions where, for example, the purchaser makes payment of a balance purchase price to the seller in instalments, after registration has taken place.

Best regards,

The MC-Team

At the beginning of a new year the directors and MC-team would like to wish all our agents a prosperous 2017! A wise man once said: On the road to success, the rule is to always to look ahead. May you reach your destination, and may your journey be wonderful!

As we start the year with renewed vigour it is important to spend time in attending to the admin which we are not all very fond of. In the case of agents and agencies this entails Fidelity Fund Certificates (FFC’s). The importance of both the agent and agency having a valid FFC at the stage when a mandate is given by the seller to the agent was once again highlighted in the Supreme Court ruling in Brodsky Trading 224CC v Cronimet Chrome Mining SA.

The facts of the case are that FFC’s were in place for Brodsky Trading 224 (PTY) LTD (the company) and its director when the mandate was entered into in 2007. However, at that stage the company was already converted to a close corporation in 2005. The director did not notify the EAAB of this conversion.

The question was whether there was not “substantial compliance” with the provisions of the Estate Agency Affairs Act.

The court did not agree and as a result the agent could not claim commission as there were no valid FFC’s.

The moral of the story is that it is vitally important to comply with the statutory requirements of your profession or run the risk of not being able to successfully claim commission.

Best regards,

The MC-Team

The Sectional Titles Schemes Management Act 8 of 2011 contains a new set of Regulations and thus also a few new definitions within the rules.

Important definitions are the following:

“Primary section” is defined as a section to be used for human occupation as a residence, office, shop, factory or for any other type of use allowed in terms of local municipal by-laws, not being a utility section.

“Utility section” is defined as a section which, in terms of local municipal by-laws, is designed to be used as an accessory to a primary section, such as a bathroom, toilet, storeroom, workshop, shed, servant’s quarters, parking garage, parking bay or other utility areas.

The distinction is important for the reasons below:

1.       If a body corporate consists of less than 4 members who are owners of primary sections, each member is considered to be a trustee without election to office.

2.       If a body corporate consists of more than 4 members who are owners of primary sections, they must from time to time determine the number of trustees to be elected in terms of these rules.

Best regards,

The MC-Team

The Sectional Titles Schemes Management Act 8 of 2011 defines unanimous resolutions taken at general meetings.

In the past the notice of a general meeting, where a unanimous resolution is proposed, could only be sent in terms of pre-paid registered post. The STSM revised the requirement to also send notices by fax or email. If a unanimous resolution would have an unfairly adverse effect on any member, it will not be effective unless that member consents in writing within seven days from the date of the resolution. The Ombud may be approached if the owner or body corporate is unable to obtain a unanimous resolution.

Best regards,

The MC-Team

The Sectional Titles Schemes Management (STSM) Act 8 of 2011 repealed the standard management rules and conduct rules as prescribed by Annexure 8 and 9 of the Sectional Titles Regulations and the standard rules are now contained in Annexure 1 and 2 of the STSM Regulations.  A new scheme who wished to adopt a standard set of rules can thus adopt the rules in Annexure 1 and 2. All rules already adopted remain in place as long as it is not in contravention of the Act and regulations.

Previously the body corporate rules were filed in the deeds office, and was available to the public through the deeds office. The STSM act requires that the rules must be lodged and approved by the Chief Ombud where after the Chief Ombud will issue a certificate to confirm the approval of the rules. The rules and amendments thereto will be available to the public on application to the Ombud’s office. There are currently three offices of the ombud namely in Sandton, Durban and Cape Town

The STSM Act further sets out a specific obligation on the body corporate to deliver copies of the rules to each person who becomes an owner or occupier of a unit in the sectional title scheme.

Best regards,

The MC-Team

The Sectional Titles Schemes Management Act 8 of 2011 requires that every sectional title scheme shall establish an administrative fund as well as a reserve fund.

The monthly levies will partly be allocated to the administrative fund and is to be utilised by the body corporate for the daily operating expenses of the scheme.

The remainder of the levies must be allocated to the reserve fund. The reserve funds purpose is to provide for future expenditure as set out in the maintenance, repair and replacement plan that each scheme has to draft. The plan should provide for the replacement of major capital items on the common property within a timeframe of 10 years

The trustees are only allowed to raise special levies if the repairs could not be reasonably foreseen when the plan was drafted or urgent repairs are required to prevent damage to the property or to ensure peoples safety.

Best regards,

The MC-Team

It seems like sanity prevailed in the latest ruling of the North Gauteng High Court in Pretoria.

The court ruled that the practice by the City of Tshwane and Ekurhuleni, in holding new owners liable for the payment of historical debt amassed by a previous owner, is constitutionally invalid.

The matter includes five separate applications, where transfer of properties occurred following receipt of a clearance certificate under section 118 (1) of the Municipal Systems Act.

The municipalities where the properties purchased are situated certified that all amounts due (including water, electricity, rates and taxes) two years’ prior to the application for clearance figures, were paid.

All the properties, in fact, had historical debt to them.

In some cases, the municipality then refused to supply municipal services – such as electricity, water, and waste removal – to properties until the historical debt was settled by the new owner.

However, Judge Fourie ruled that section 118 (3) is constitutionally invalid regarding the security provision, as the new owner “is not a debtor of the municipality with regard to municipal debts incurred prior to such transfer [of the property].”

Fourie’s judgement, which did consider the constitutionality of section 118(3), will be sent to the Constitutional Court for confirmation.

It’s not clear whether the municipalities will appeal the judgement.

Best regards,

The MC-Team

The Sectional Titles Scheme Management Act and The Community Schemes Ombud Service Act as well as the regulations came into effect on 7 October 2016.

This does not imply that the Sectional Titles Act is obsolete. Section 37 to 48 of the Sectional Titles Act is repealed and replaced by the Sectional Titles Scheme Management Act which governs how a body corporate must manage a scheme and conduct its affairs. The Sectional Titles Act will continue to be applicable to the establishment of a scheme and the registration actions in the deeds office.

The Sectional Title Scheme Management Act’s purpose is to assist body corporates to manage and regulate sectional title schemes. This includes the application of the rules and to establish a sectional title scheme management advisory council.

However, the Community Schemes Ombud Services Acts aim is to provide for the establishment of a community schemes ombud service and a dispute resolution mechanism in community schemes. The ombud will be the custodian of all the founding documentation of the sectional title schemes and home owners associations.

In the coming editions we will highlight what the practical implications of the acts are.

Best regards,

The MC-Team

For most of us FICA is a painful word.

Unfortunately, agents are all responsible institutions and must comply with the FIC legislation.

Remember that the act requires the following:

1. There must be internal rules (a manual) that staff can follow.
2. The compliance officer shall ensure that the rules are followed and clients are properly identified, cash receipts of R25 000 and above or suspicious transactions are reported.
3. The agents need ongoing training regarding FICA provisions and the FIC can, during inspections, even request that the training material and attendance register is shown.

It is very important to comply with the FICA provisions seeing that a fine of up to R50 000 000 and imprisonment of 15 years may be imposed.

Best regards,

The MC-Team

What is the difference between an option and a pre-emptive right?

An option is when the seller gives the purchaser the "right" to purchase the property within a specific period of time. The option should contain all the essential elements of a deed of sale. We advise that the option should be accompanied by a complete deed of sale as an annexure to the option, setting out all the conditions once the option is exercised by the purchaser.

A pre-emptive is given to a person to purchase a property should the seller decide to sell the property in future.  The seller is not obliged to sell, it is only when he decides to sell that he grants the purchaser first right of refusal or a pre-emptive right to purchase the property. The seller can only proceed to sell the property to a third party once the holder of the pre-emptive right has indicated that he does not wish to purchase the property.

The option and pre-emptive right should indicate in what manner it is to be exercised, for example in writing and sent to the sellers' domicile address.

Take a look at our MCQuickGuide or contact us on 012 660 6000 for further information.

Best regards,

The MC-Team

Question: May the holder of an exclusive use right use the area for something else than initially intended?

Answer: Exclusive use in a sectional title context is intended for a certain type of use and that use is formally specified. Owners need to be aware that the use specification must be strictly applied.

The rights of exclusive use over the area, are held either as a real right or as a right to use the area in terms of allocation in the rules in accordance with Section 27A of the Sectional Titles Act

If the member wants to use the area for a use it was not intended for initially section 44(1)(g) of the act does, however, provide a mechanism for changing the use of a section or exclusive use area. It requires the written consent of all the owners in the scheme. But the provision goes on to say that an owner applying for a change of use may apply to court for relief if he or she considers the refusal of another member to provide written consent to be unfair or otherwise prejudicial.

Take a look at our MCSellersVideo.

Best regards,

The MC-Team

We proudly see ourselves at MC van der Berg Attorneys as market leaders!

It is thus important for us to practice law independently and purposefully so we want to remove any misconception and confirm, to all our clients, that neither our firm nor our directors or employees own shares in any estate agency, rental agency, mortgage originator or development company.

Best regards,

The MC-Team

In the case of Stand 278 Strydom Park v Ekurhuleni Metropolitan Municipality the municipality threatened to terminate the supply of services to the property as a result of unpaid historical debt incurred by the previous owners. The Municipality conceded in court that the correct legal position is that municipality is not entitled to disconnect for unpaid debts of prior owners and the judge noted that the municipality was correct in their concession. This creates persuasive authority for future litigants facing the same issue. The court further held that the Municipality can only approach a court for an order to attach a property, and sell it at auction, after obtaining judgement against the prior owners who incurred the debts.

In the case of Gladwin v Ekurhuleni Metropolitan Municipality a similar situation occurred and the municipality was ordered to reconnect the electrical supply. The municipality withdrew their opposition to the owners application, thus by implication conceding that they acted wrongfully in terminating the electrical supply.

Best regards,

The MC-Team

In terms of Section 54 of the Income Tax Act, when property is disposed of for no value or for  less than the fair value, it is regarded as a donation.

Donation tax is levied at a rate of 20% on the donation.

Donation tax is payable by the donor and is in addition to Capital Gains Tax also payable by the seller / donor and Transfer duty payable by the purchaser / beneficiary.

The annual exemptions which apply to donation tax with regards to natural persons are R100 000.00.

Best regards,

The MC-Team

As discussed in last week’s MC2Agents, there are additional requirements when transfer and bond documents are signed by sellers/purchasers who are not able to sign in South Africa. The options are to either give a power of attorney to somebody in South Africa or to go through the authentication process as discussed below.

Authentication refers to the verification of any signature on the documents.

Any documents must be signed by the Seller/Purchaser and then their signature must be authenticated by the one of the following officials:

1. The head of a South African diplomatic Service or a person in the administrative division serving at a South African diplomatic office,
2. A consul-general, consul, vice-consul or consular agent of the United Kingdom or any person acting in any of the aforementioned capacities of the United Kingdom;
3. Any person in a foreign country who is duly authorised to authenticate such document
4. A notary public in the United Kingdom of Great Britain and Northern Ireland or in Zimbabwe, Lesotho, Botswana or Swaziland;
5. A commissioned officer of the South African Defence Force, if the signatory is in active service.

Alternatively, if the seller/ purchaser is in a country which a part of the Den Hague Convention, an Apostille can be affixed to the document.

Feel free to contact us for more information in this regard.

Best regards,

The MC-Team

When a client wants to sell or buy property in South Africa but is currently not in South Africa there are two options to follow:

• The seller/purchaser can give power of attorney to a person in South Africa

OR

• The documents can be sent overseas for signature, but this entails further certification which we will discuss in the next MC2Agents.

The power of attorney can be either a special power of attorney or a general power of attorney.

A special power of attorney (POA) only gives the agent (the person nominated in the POA) authority to attend to one action, for example signing the documents for this specific transfer.

A general power of attorney on the other hand enables the agent to act and sign a number things, for example open bank accounts, sign agreements, enter into leases, transact etc. The general power of attorney should specifically state that the agent may sign when immovable property is sold or purchased.

The format of the power of attorney is very important as the deeds office has certain requirements. Full names, identity numbers and marital status of the person giving the POA is required. A preparation clause must be inserted and 2 witnesses must sign. Only signatures in black ink is acceptable. The original must be lodged in the deeds office. It is always advisable that an attorney drafts the POA as they are aware of the requirements.

Keep in mind that FICA documents and certain bond cannot be signed by the agent and will have to be sent to the seller/purchaser.

Best regards,

The MC-Team

When a seller signs a mandate with an agency, in breach of a sole mandate or exclusive mandate signed with another agency, the claim the agency (with whom the sole/exclusive mandate was signed) has against the seller is one for damages and not commission. The reason that the claim is for damages is because the seller prevented the agency from performing in accordance with their mandate, thus they could not earn their commission, but suffered damages to the amount usually equal to the commission amount.

Correction to MC2Agent-119 - EFFECTIVE CAUSE AND ESTATES AGENT’S COMMISSION

The last sentence in last weeks MC2Agents erroneously refers to the purchasers and should read sellers.  The correct sentence should read as follows:

• Avoid the situation by educating your clients about possible conflict if more than one agent markets the property, and advise the sellers to contact the agent immediately if the same client views the property through different agents.

 We apologize for any inconvenience caused.

Best regards,

The MC-Team

As per our previous MC2Agents one of the factors when determining who is entitled to commission is the question: Who is the effective cause?

This is a still grey area and no specific action can be singled out as the effective cause but the following factors can be taken into account to determine the effective cause.

1. The nature and effect of the estate agent’s efforts must be considered, not the amount thereof. Proof that his/her actions constituted to the causa of the sale is required.
2. The introduction of the purchaser to the property must lead to the successful conclusion of the transaction.
3. The attendance of negotiations between a buyer and seller does not necessarily make him or her the effective cause of a sale agreement concluded.
4. If there is more than one competing agent, there is no rule of law that the closing agent is necessarily the effective cause of the sale.
5. The terms of the sale and the terms of the sellers mandate must be viewed against each other, discrepancies can indicate that the introducing agent is not the effective cause.
6. An estate agent who reduces his commission in order to close a deal is not necessarily the effective cause of the transaction.
7. If a buyer introduced by an estate agent decides not to buy but to rent and later buys the property in a private deal, the initial introduction can be the effective cause of the sale.

As is clearly shown from the above determining effective cause is not easy. Avoid the situation by educating your clients about possible conflict if more than one agent markets the possibility, and advise purchasers to contact the agent immediately if the same client views the property through different agents.

Best regards,

The MC-Team

In general an estate agent has earned his/ her commission when:

1. The agent was mandated by the seller and has a valid Fidelity Fund Certificate;
2. The agent introduced a willing and able purchaser the property;
3. The seller and purchaser there after entered into a binding offer to purchase;
4. The agent was the effective cause of the sale and
5. All the suspensive conditions in the offer to purchase have been met.

The above mentioned points may appear straight forward, but often problems arise in practice. Especially if the purchaser was introduced to the property by another agent or the purchaser decided to buy the property after the expiry of the agent’s mandate.  In the upcoming MC2Agents we will address each of these point separately.

Best regards,

The MC-Team

We still experience that building plans (or the lack of updated plans) cause most of the problems we experience in the transfer process.

All the banks increasingly require plans as a pre-registration condition.

Our advice is that the issue of plans must be discussed when listing the property. The agent can then at least warn the seller that the bank may require the plans, or the purchaser may ask for the plans. It is then up to the seller to get the ball rolling whilst the property is being marketed.

On becoming aware that there are no plans the purchaser has to either agree to buy the property without updated plans, or the plans have to be addressed in the deed of sale. The options are:

1. The seller must provide updated, approved building plans before registration. This will definitely delay the transfer with 6 months or more. If the bank requires the plans, the second option will not be available.
2. The seller will provide updated, approved building plans in due course and the transfer of the property into the name of the purchaser may proceed. A retention amount can be agreed on to set the purchasers mind at ease. The risk involved with this option is that there may be structures built over servitudes in which case the plans will not be approved until the structure that encroaches on the servitude is removed.

Be aware that your agency’s pro forma contract may contain a clause that is not in line with the expectation of the seller or purchaser, for example the clause may read that the seller warrants that the plans are in order whilst they are not.

Best regards,

The MC-Team

In the matter of Mackati v Larry and Others the purchaser was placed on terms for the overdue payment of the balance of the purchase price.  The purchaser made payment of the purchase price, only after the expiry of the notice period. The Seller had however already entered into a new agreement with another purchaser. The court had to consider whether the Seller was obliged to formally cancel the first agreement, in writing, before proceeding to enter into a new agreement. The court handed down judgement that the Seller is not obliged to formally cancel the agreement after the expiry of the notice period. The Seller is still entitled to cancel the agreement any time after expiry and tardy performance by the Purchaser does not nullify the Seller’s right to cancel.

Best regards,

The MC-Team

A general power of attorney will lapse involuntary whenever the mandatory of the power of attorney has a change of capacity to act during the subsistence of the power of attorney. Thus when a person is declared insane, any power of attorney that he gave to a person to manage his affairs will involuntarily lapse. This position originates from common law, and was confirmed in the case of Tucker’s Fresh Meat Supply (Pty) Ltd v Echakowitz.

Best regards,

The MC-Team

The recent High Court case of Cooper v Clark shows how vital it is to ensure that any amendments have actually been agreed to by both seller and purchaser.

The facts of the case were

A purchaser offered R6.3m for a property. The seller signed the Offer to Purchase in “acceptance”, but conditionally, with changes to clauses relating to inspection of the property by a building inspector.

The purchaser, seeing these alterations only after paying a 10% deposit, rejected the amendments and demanded her deposit back.

The Court held that the seller had to prove that the purchaser had agreed to the written contract "in its final form".

Conditional acceptance of an offer amounts to either –

• A rejection of the offer, or
• A counter–offer

On the facts of this case, the seller’s alterations were material and amounted to a counter-offer which was never accepted by the purchaser. There was therefore no sale.

The lesson to be learned is to make sure that any changes to sale documents correctly reflect your agreement, and that both parties sign or initial when changes are made.

Best regards,

The MC-Team

Support us at M.C. van der Berg Inc. in our Blood Drive campaign on Monday, 06 June 2016, commencing at 12:00 to 15:00, cnr Saxby and Frederik Streets, Eldoraigne, Centurion.Click here for more information on our Blood Drive campaign.

Participate in this vital community service which ultimately improves the quality of life for many.

A person can donate blood if they:

• Weigh at least 50kg or more;
• Is between the ages of 16 and 65
• Is in good health;
• Lead a sexually safe lifestyle, and
• Consider their blood safe for transfusion.

What do I need to know about blood donation?

You cannot contract HIV/AIDS from donating blood.  All needles and finger prick lancets are new, sterile and used only once.  After use, each lancet and needle is placed in a special medical-waste container and incinerated.

Trained staff collects all blood donations and very strict protocols are followed to ensure that all blood donation procedures are safe and hygienic.

The South African National Blood service has various measures in place to protect the health and wellbeing of both blood donors and patients. These measures ensure that our blood supply is among the safest in the world.

Best regards,

The MC-Team

The Act came into operation on 5 November 2014, and in terms of this act a lease agreement must be in writing and must comply with the requirements of the act.

In short the act requires:

1. The deposit must be deposited into an interest bearing account and a receipt be issued for the deposit as well as all rental payments. The tenant must be provided with written proof of interest earned on request
2. The tenant and landlord must inspect the property on occupation and vacating of the property to determine defects, and these must be added as an annexure to the contract
3. The tenant may sublet with consent of the landlord, which consent may not be unreasonably withheld
4. The property must be in a habitable condition and the act defines habitable
5. All lease agreements must contain:

• the names and addresses of the parties for the purposes of formal communication;
• a description of the dwelling;
• the amount of rental;
• reasonable escalation;
• the frequency of payment;
• the amount of deposits if any;
• the lease or notice period;
• information relating to the rights and obligations of the tenant and landlord
• information on the amount of any charges payable in addition to rental.

Failure to comply with the above is punishable with imprisonment of 2 years or a fine or both and thus rental agents should ensure that their contracts comply with the above.

Best regards,

The MC-Team

As previously communicated there has been changes to the transfer duty, deeds office fees and attorneys professional fee for registering the transfer and bond.

IN SUMMARY:

The transfer duty remained unchanged for all properties except those with a purchase price or value of over R10 000 000 for all contracts entered into after 1 March 2016

The deeds office fees increased for all transactions registering after 1 April 2016

The attorney fee increased for all contracts dated 1 April and later.

Our MCostCalculator is updated as well as the fee sheets, which will be distributed in the coming week. Click on the link to the fee sheet.

BLOOD DRIVE CAMPAIGN

Support us at M.C. van der Berg Inc. in our Blood Drive campaign on Tuesday, 11 April 2015, commencing at 12:00 to 15:00, cnr Saxby and Frederik Streets, Eldoraigne, Centurion.

Click here for more information pertaining to this vitally important campaign.

A person can donate blood if he/she:

• Weighs at least 50kg or more;
• Is between the ages of 16 and 65
• Is in good health;
• Leads a sexually safe lifestyle, and
• Considers his/her blood safe for transfusion.

Best regards,

The MC-Team

The Law Society of the Northern Provinces has advised that the prescribed transfer and bond fees have increased with effect from 1 April 2016.  On average transfer fees increased by between 8 and 10%.  Previously the bond fees were lower than transfer fees, but now the fees will be similar, thus if the transfer fee is R10 000 the bond fee on the bond will also be R10 000 (if the bond amount and purchase price is similar).

We are attending to the updates of the MCostCalculator and our fee sheets and it will be available during the course of next week.

The increased fees will be applicable on all new instructions received from 1 April 2016 onwards.

Whilst the MCostCalculator and fee sheets are being updated please feel free to contact us for a correct cost quotation.

Best regards,

The MC-Team

Agents should ask certain questions when determining firstly what country’s matrimonial legislation will be applicable to the marriage and secondly what the effect will be on the signatures or consents required from the spouse if the parties are indeed married according to foreign law.

1.  If parties got married in London does is mean that they are married according to British law?

The answer is NO. The domicile of the husband at conclusion of the marriage determines which matrimonial system will be applicable to the marriage. If the husband and wife got married in London because it was their dream to get married in a British castle, their marital regime will be regulated by South African law as the husband deems his permanent place of residence to be South Africa. If they did not enter into an ante nuptial contract their marriage is in community of property.

2.  If a person’s marriage is indeed governed by foreign law, the parties must assist each other when selling or bonding the property. They will thus jointly sign the contract (or the spouse can give a separate consent to sell) and they will jointly sign the bond documentation.

No assistance is required where one of the parties are purchasing a property and it is a cash transaction.

Best regards,

The MC-Team

The Spatial Planning and Land Use Management Act (SPLUMA) were promulgated on 1 July 2015. Thereafter we awaited the By-laws of Tshwane to be amended and adopted to reflect the requirements as set out in SPLUMA. The City of Tshwane Land use Management By-laws were passed on 2 March 2016.

This entails that all new developments, consolidation, rezoning and town planning is now subject to the process as set out in the by-laws.

The advantage of SPLUMA is that there is now one piece of coherent spatial planning legislation applicable on a national level.

The by-laws provide for an application to be approved either by a designated official on the Municipal Planning Tribunal. Should the application be rejected the application may be referred to the Municipal Appeal Tribunal.

On 6 May 2016 we are hosting an information session for developers where the act and processes will be explained. Should you have a developer as client who would like to attend please contact Liza at our offices at liza@mcvdberg.co.za.

Best regards,

The MC-Team

Please be advised that the Deeds Office is increasing their fees for all registrations registered on or after 1 April 2016.  Pro forma statements of account will accordingly reflect the increased fees as the transaction will probably register after 1 April 2016.

It may also be that there will be a small difference between the initial quote or pro forma statement and final statements of account for clients who have already received pro forma statements or quotes due to the increased fees (the fees increased with between R100 and R500 depending on the value of the property).

We will be amending our fee sheets and MCostcalculator accordingly.

Best regards,

The MC-Team

In the past week several news articles were published, including reports on social media concerning the new court ruling pertaining to municipalities who are allowed to claim historical debt including that of previous owners from current owners. 

As this severely impacts on the property industry we believe every agent should be duly informed about this issue. We therefore link an article written by M.C. (Tiaan) van der Berg, published online by Home Times Newsletter. 

We advise that you take cognisance of this matter and read the article by clicking on the following link

Best regards,

The MC-Team

The Rouwkoop clause in a contract of sale provides for the purchaser to pay a deposit to the seller that is not refundable should the purchaser withdraw from the contract. The clause usually reads as follows:

“if the purchaser is in breach, keep any deposit, less agent’s commission, transfer and bond attorney fees as well as all other amounts paid by the purchaser as “rouwkoop” as limited by the Conventional Penalties Act 15.”

What happens when the purchaser pays the deposit into the attorneys trust account?

In the case of Royal Anthem Investments v Yuen Fan Lau (941/2012) [2014] ZASCA 19 (26 March 2014) the Supreme Court of Appeal gave an interpretation of how the Rouwkoop clause should be dealt with.

The court ruled that the words “keep” refers to an amount received and held by the seller and does not include the deposit paid to the conveyancing attorney. The court went further and stated that transfer duty is not “the other amounts” as envisaged by the Rouwkoop clause.

Agents should thus ensure that the Rouwkoop clause in their contracts refers to amounts kept in attorneys trust account as well. The MC van der Berg standard contract has been amended to include the aforesaid.

Best regards,

The MC-Team

As a general rule all estate agencies and any person who is employed as an agent by an estate agency should have a valid Fidelity Fund Certificate. Should you fail to obtain a Fidelity Fund Certificate no remuneration is payable to you or the estate agency.

In the court case of Erasmus N.O and Another v Verna van Den Blink Properties CC(A270/2014)[2015] ZAFSHC 198( 22 October 2015)  the question arose whether a close corporation that trades as an Estate Agency must have a Fidelity Fund Certificate issued in the name of the close corporation.

The court referred to the Estate Agency Affairs Act 112 of 1976; section 9 (1) – (3).  Close corporations must apply for a Fidelity Fund Certificate in its own name. The Certificate must be displayed on the premises of the close corporation.

"9(1) Any company or close corporation operating as an estate agent is hereby exempted from the payment of the levy and the contribution … provided a fidelity fund certificate has been issued to each of its directors, or members contemplated in paragraph (b) of the definition of estate agent

(2) Notwithstanding the provisions of sub regulation (1), such company or close corporation shall in its own name apply in terms of these regulations for the issue to it of a fidelity fund certificate.

(3) A fidelity fund certificate referred to in sub regulation (2) shall be issued free of charge and shall to the satisfaction of the board be displayed in a prominent position on the premises of the company or close corporation concerned.”

It is very clear that a Fidelity Fund Certificate has to be issued in the name of the entity (close corporation or company) and not only in the names of the Members of the Close Corporation.

Best regards,

The MC-Team

Where a purchaser obtains a loan from a source other than a bank to finance the purchase of a property, a private bond can be registered in favor of such third party (for example, a family member).  In these cases, the lender will want some form of security for the purchaser’s obligations, and this security will be provided by way of registration of a private bond in favor of the lender. 

The National Credit Act determines that where such a loan is (1) at arm’s length and (2) in excess of R500 000.00, the lender must register as credit provider with the National Credit Regulator, which process takes between 6-8 weeks.  The definition of a transaction “at arm’s length” is as follows:  “An agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other.”  In other words, should the transaction for example be between father and son and / or the loan amount is less than R500 000.00, the National Credit Act will not be applicable, and the lender will not have to register as credit provider.

The private bond can be registered in the Deeds Office while the application to register as a credit provider is ongoing.

Best regards,

The MC-Team

What can the owner of a property do about branches of a neighbouring property hanging over the fence?  Our courts have held that a neighbour may remove the branches himself should the owner of the tree fail to do so, despite numerous requests, as the overhanging branches constitute an encroachment of the airspace of the affected neighbour’s land.  The affected neighbour may however only retain the cut-off branches if the owner of the tree consents thereto.

On the other hand, the owner on whose land overhanging fruit falls, becomes the owner of the fruit through collection thereof and has no obligation to return the fruit to the owner of the tree.

Best regards,

The MC-Team

A sale agreement for a property has been concluded.  The purchaser gives you a call to confirm that the seller will not remove the air conditioner and satellite dish when he vacates the property.  You realise that none of these items were properly addressed in the deed of sale! How do you know whether they are permanent fixtures and fittings? The three factors usually considered are:

• the nature and purpose of the item;
• the manner and degree of attachment; and
• the intention of the owner.

Unfortunately, these factors do not always provide a conclusive answer. The only way to avoid a dispute between a seller and purchaser is to include a comprehensive list of what is and is not included in the deed of sale.

Best regards,

The MC-Team

Sale agreements typically have clauses requiring the parties thereto to complete certain actions by certain due dates.  The consequences of non-compliance are also clearly determined by such clauses.

Often, the phrases ”business/working days” or “calendar days” are used, but in many cases the parties just refer to “days”.

Business/working days are calculated by counting the days from Monday to Friday, excluding weekends and public holidays. Calendar days are calculated by counting the days from Monday to Sunday.

Section 4 of the Interpretation Act states in calculation the due date the following will apply: The days are reckoned exclusively of the first day and inclusively of the last day, unless the last day falls on a Sunday or a public holiday, in which case the time shall be reckoned exclusively of the first day and exclusively also of the Sunday and public holiday.

Best regards,

The MC-Team

It is important for agents to know what exclusive use areas (EUAs) are and how they are dealt with. When a person buys property in a sectional title scheme he buys a section together with an undivided share in the common property.  The use and enjoyment of common property can be restricted by the allocation of an EUA on parts of the common property of the complex.  An owner always has an undivided share in the common property but not necessarily the right to an EUA. It is therefore important for an agent to establish whether a purchaser will be entitled to an EUA or not, as this can form part of the essential elements of the agreement of sale.  If an agent wrongly indicates in the agreement that the purchaser will be obtaining an EUA where in fact the parking or garden does not constitute an EUA, this may lead to the purchaser rightfully cancelling the agreement at a later stage when it comes to light that he will not have the right to an EUA.

Best regards,

The MC-Team

Contracts govern the relationship between parties entering into any legal transaction and exist to achieve certainty and avoid disputes which may arise in the future. A non-variation clause, in essence, means that variation to the agreement will be of no effect unless it is reduced to writing and signed by both parties.

To determine whether the verbally amended agreement has the potential to disregard the non-variation clause, one must look to an established principle in our law which determines that when parties contractually establish formalities such as requirements that any consensual variation of their agreement must be in writing and signed by both the parties to be of any force or effect, the parties then bind themselves by such a contract. In other words, if the parties elected to have a non-variation clause in the lease agreement, they accordingly barred themselves from verbally amending their lease agreement.

Ultimately, to answer any question as to whether an oral variation to a contract is valid, you must revert back to the provisions of the contract. Unless the contract does not expressly make provision for any variations to be reduced to writing and signed by both parties, verbal variations may be valid and enforceable, although it will be necessary for the parties to be able to prove the existence of such a verbal variation – something which could prove to be quite difficult. It is therefore always safer to play it smart and ensure your variations are recorded in writing and signed by both parties.

Best regards,

The MC-Team

We are confronted daily with transactions that are either delayed by months or do not proceed due to additions and alterations to sectional title units that are not indicated on the necessary plans.

When an owner wants to extend his living room for example the following procedure should be followed:

1. Obtain written consent from the body corporate for the extension.
2. Approach an architect to assist in drafting building plans and to assist with the local municipality’s approval of the building plans.
3. Employ the services of a land surveyor to draft sectional title plans and to get the plans approved by the Surveyor General. This is the step that is mostly ignored by owners, and causes delays and cancellations.
4. The sectional title plans must now be given to a conveyancing attorney to lodge an application at the deeds office for extension of the sectional title unit.

All agents should, when listing a sectional title property, ask the following:

1. Have you made alterations / additions to your unit?
2. Please show me the approved building plans and sectional title plans for the additions / alterations?

Best regards,

The MC-Team

It is important that every potential purchaser of farm property ascertains the existence of land claims on the property.

A clause of the utmost importance in the purchase agreement is the “guarantees and warranties” clause. It is important that the seller provides the following guarantees in writing (particularly regarding land claims), either voluntarily or upon request:

1. That no portion of the property has been expropriated.
2. That no land claim in respect of the property has been made.
3. That the Regional Land Claims Commissioner has not issued any notice in respect of a land claim under the Restitution of Land Rights Act 22 of 1994.

The warranty relating to the Regional Land Claims Commissioner is very important as a sale or development of the property can take place if written notice in the required format is provided to the Regional Land Claims Commissioner one month before such intention is realized. After such notice to the Regional Land Claims Commissioner the seller can continue to sell the property legally.

Accordingly, it is vitally important that you as an estate agent take the necessary precautions to ensure that sufficient guarantees and warranties are provided by the seller in terms of the purchase agreement.

Best regards,

The MC-Team

The trustees of the sectional title scheme implemented a rule without proper consultation with the owners in the scheme:  “Alcohol consumption is prohibited on the common property of the scheme”.  The question is whether the trustees are indeed permitted to make such a rule?

Trustees can’t just make and break rules.  Conduct rules can only be made by special resolution of the body corporate, and in order to be enforceable it has to be correctly lodged in the scheme’s register in the Deeds Office.

If the trustees propose this rule at a meeting, they have to give thirty days’ notice and include the text of the rule in the notice of the meeting.  An owner in a sectional title scheme, who does not agree with the rule, should gather support from other owners and approve the rule at the meeting.

Best regards,

The MC-Team

A question which often arises is whether the seller of property is obliged to complete and sign a property condition report:

1. If the seller sells properties in the normal course of business to  natural persons / legal persons with an annual turnover of less than R2000 000.00 (in other words, he is a Developer / Speculator), the Consumer Protection Act applies, the voetstoots clause falls away, and the seller will be required to complete such a report;
2. If the seller does not sell properties in the normal course of business, the Consumer Protection Act does not apply.  The voetstoots clause then applies, and there is no obligation that the seller must complete such a report;
3. Should your sale agreement however place an obligation on the seller to complete such a report, you, as estate agent, will have to see to the completion of such report by the seller, regardless of whether the Consumer Protection Act is applicable or not.

If such a report needs to be completed, we advise that it be attended to when you are listing the property.  The report will then be available for all potential purchasers.

Best regards,

The MC-Team

Where a purchaser obtains a loan from a source other than a bank to finance the purchase of a property, a private bond can be registered in favor of such third party (for example, a family member).  In these cases, the lender will want some form of security for the purchaser’s obligations, and this security will be provided by way of registration of a private bond in favor of the lender. 

The National Credit Act determines that where such a loan is (1) at arm’s length and (2) in excess of R500 000.00, the lender must register as credit provider with the National Credit Regulator, which process takes between 6-8 weeks.  The definition of a transaction “at arm’s length” is as follows:  “An agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other.”  In other words, should the transaction for example be between father and son and / or the loan amount is less than R500 000.00, the National Credit Act will not be applicable, and the lender will not have to register as credit provider.

The private bond can be registered in the Deeds Office while the application to register as a credit provider is ongoing.

Best regards,

The MC-Team

Previously, the rights of foreigners residing in South Africa were limited by the Control of Foreigners Act.  These limitations were uplifted by the new Immigrations Act of 2003.  The new Immigrations Act defines which persons living in South Africa qualify as legal foreigners.  In principle, a landlord or seller can legally sell or lease immovable property to a foreigner who, under the law, qualifies as a legal foreigner residing in South Africa with the necessary permits.

It is important to note that if a foreigner does not reside in South Africa, and needs to obtain finance for the purchase of an immovable property in South Africa, only 50% of the total purchase price will be financed by a South African financial institution.

Where foreigners are employed in South Africa with a valid work permit, the South African Reserve Bank deems them to be “residents” for the duration of the work permit, and they will not be restricted to a loan of only 50% of the purchase price from a South African financial institution.

The new act makes provision for various temporary residency permits which may be issued to a foreigner to live in South Africa, including the following:

1. A visitor’s permit
2. A work and entrepreneurial permit
3. A retired person’s permit 

A foreigner residing in South Africa may buy or rent immovable property in South Africa provided that he / she is the holder of a valid temporary / permanent residence permit that has been issued by The Department of the Home Affairs.

Best regards,

The MC-Team

Where property is registered in both spouses' names (married in or out of community of property) and the parties get divorced, the settlement agreement will determine what should happen to the property.

What is the position where the agreement states that the property should be transferred to one spouse, but before transfer is effected, one of the parties' estates is sequestrated?  Since the property is at this time still registered in the names of both parties', the question arises whether the property will go to the spouse entitled thereto in terms of the settlement agreement, or to the curator, who is appointed to administer the estate?

In the case of Corporate Liquidators (Pty) Ltd v MA Wiggill it was held that if a party, on the date of the divorce order being granted, is entitled to asset(s) as set out in the settlement agreement, even if the property has not been transferred into the said party's name, the curator of the other party’s estate can be obligated to effect the transfer and the property will not vest in the insolvent estate.

Best regards,

The MC-Team

All companies and close corporations are required by law to submit their annual returns with the Companies and Intellectual Properties Commission (“CIPC”) within 30 days of the anniversary date of its incorporation.  Failure to do so will result in the CIPC assuming that such entity is no longer doing business or is not intent on doing business in the near future, which will lead to the deregistration of such entity. 

A deregistered entity has no legal capacity to transact and therefore any agreements concluded with or by such an entity may be negatively affected.  Fortunately the Act makes provision for “any interested person” to apply to the CIPC to re-instate the registration of the entity.  As re-instatement is a lengthy and expensive procedure which will handicap the transferring process, it is important to verify the status of an entity prior to entering into a sale agreement with such an entity with regards to immovable property. 

Best regards,

The MC-Team

The current legal position is that a conveyancer does not need to ensure that there are current approved building plans for a property before they register a property in the name of the purchaser.

Building plans can however be a requirement due to the contractual agreement between the seller and purchaser or a requirement of the bank which approved the purchasers’ loan.

Often the seller will indicate that they do not have updated plans for the property when completing the immovable property condition report. If this is indeed the case the agent must ensure that the purchaser is provided with a copy of the report.

On becoming aware that there are no plans the purchaser has to either agree to buy the property without updated plans, or the plans have to be addressed in the deed of sale. The options are:

1. The seller must provide updated, approved building plans before registration. This will definitely delay the transfer with 6 months or more
2. The seller will provide updated, approved building plans in due course and the transfer of the property into the name of the purchaser may proceed. A retention amount can be agreed on to set the purchasers mind at ease. The risk involved with this option is that there may be structures built over servitudes in which case the plans will not be approved until the structure that encroaches on the servitude is removed.

Be aware that your agency’s pro forma contract may contain a clause that is not in line with the expectation of the seller or purchaser, for example the clause may read that the seller warrants that the plans are in order whilst they are not.

Best regards,

The MC-Team

Should the sale agreement determine that the purchaser must obtain a bond for the amount of R1 000 000.00, but the bank only approves a bond for the amount of R800 000.00, this means that the suspensive condition as per the sale agreement has not been complied with. 

1. Should the purchaser have funds available for a deposit for the balance of the purchase price, an addendum should be drafted to the sale agreement PRIOR to the expiration date for bond approval as per the sale agreement, to ensure that the agreement remains valid. 
2. Such an addendum must amend the agreement to the following extent:

1. The agreement is now subject to the approval of a bond in the amount of only R800 000.00, which bond is already in place;  and
2. The purchaser will pay a deposit in the amount of R200 000.00 into the trust account of the transfer attorneys on a specific date.

You, as agent, are entitled thereto to expect that MC van der Berg Inc will see to the timeous and correct drafting of this, as well as any other addendums, on your behalf. 

***It is very important to take note of the following:  It will not be necessary to draft an addendum if the sale agreement already makes provision for the purchaser to accept a lower bond amount.  Such clause should however specifically state that it is not subject to the non-variation clause in the sale agreement.  The non-variation clause will typically state that no amendments to the agreement will be valid, except if put in writing and signed by both parties.

Best regards,

The MC-Team

Selling a property which is currently being leased does not automatically cancel such a lease agreement. The common law rule of “huur gaat voor koop” is applicable which stipulates that a lease agreement takes precedence over a sale agreement.  This means that even though ownership may pass to the purchaser, the tenant may occupy the property until expiry of the lease agreement.

Our advice is that the purchaser be informed of the lease agreement and a copy thereof be provided to him. It is a misconception that the purchaser can renegotiate the lease, all rights and obligations in terms of the existing lease are ceded to the purchaser. It is also advisable to insert a clause in the deed of sale referring to the lease agreement, but even if there is no reference thereto the “huur gaat voor koop” rule will still be applicable.

You are welcome to contact our offices to assist you to insert such a clause.

Best regards,

The MC-Team

Where a duet / other sectional title unit has been extended, not only must building plans be approved by the Municipality, but the sectional title plans also need to be updated.  A second set of plans are therefore involved when dealing with a duet / other sectional title unit.

Once the building plans have been approved by the Municipality, a Surveyor must be appointed to attend to the necessary measurements at the property.  He will then draft amended sectional title plans, to reflect the new size of the property.  These plans need to be approved by the Surveyor-General at the Deeds Office, and can be registered simultaneously with the transfer of the property. 

When you’ve received a mandate to sell a duet / other sectional title unit, it is advisable to:

1. Ask the seller whether additions or alterations were made to the unit;
2. If additions or alterations were made, make sure whether the building plans have been approved and request a copy thereof;
3. Make sure whether the sectional title plans have been approved and request a copy thereof;
4. Should the building plans or sectional title plans not be updated advise the seller to start the process to obtain the plans immediately.

Best regards,

The MC-Team

A sale agreement with regards to immovable property can be terminated / will expire in the following 3 ways:

1. The seller and purchaser agree to cancel the sale agreement, by way of a cancellation agreement signed by both parties;
2. One of the parties commits breach of contract, and fails to rectify such breach within the terms period.  The aggrieved party then has the right to cancel the agreement;
3. The suspensive conditions are not met.  Example:  The sale agreement is subject to the purchaser obtaining a bond for the amount of R1000 000.00 on / before 21 June 2014.  This condition will not have been met if:  (a) the bond is granted on 22 June 2014, or (b) the bond is granted only for the amount of R800 000.00.  Should the parties require this condition to be amended; an addendum needs to be signed by both parties before the expiration date, failure of which will cause the contract to lapse.

Best regards,

The MC-Team

In cases where a purchaser is married in community of property, but divorce proceedings have been instituted, such purchaser cannot enter into a sale agreement with regards to immovable property on his / her own prior to the divorce order being issued by the Court.  A sale agreement signed by such a purchaser whilst still married (in community of property), will be null and void from the start, and is not rectifiable once the divorce order has been issued.  The sale agreement therefore needs to be dated after the issuing of the divorce order. 

Best regards,

The MC-Team

The South African Reserve Bank Governor Lesetja Kganyago announced a hike in the prime lending rate to 9. 5%, effective 23 July 2015.  

Best regards,

The MC-Team

On the one hand it might be a good idea to enter a specific date of registration into the sale agreement.  This enables us, as the Transferring Attorneys, to plan the process to a certain extent.

On the other hand, we cannot guarantee that registration will take place on such date, since certain elements within the transfer process are out of our control, for example clearances, transfer duty, compliance certificates and building plans. 

Inform the purchaser and seller that such date is a target, not a definite registration date.

Best regards,

The MC-Team

To avoid any misunderstandings, it is very important to enter a date of occupation, as well as the amount payable for occupational rent into the sale agreement.  In many instances the parties initially agree that the occupation date will be on date of registration of the property, but come to another agreement along the way.  It may be sensible to indicate the amount for occupational rent even though occupation will take place on registration.  Should the occupation date change at a later stage, at least the occupational rent has been determined.  We, as transferring attorneys, need to be informed of any such agreements.  We will then draft an addendum to alter the initial agreement, since no verbal agreements between the parties will be enforceable.  Should we not be informed of any alternative arrangements, we are not in a position to collect the occupational rent from the party involved. 

Best regards,

The MC-Team

If the Body Corporate decides to charge a special levy, the person who is the registered owner of the property at the time the special resolution is taken by the Body Corporate, will be liable for the payment of the special levies, whether the payment thereof has been postponed or not.

If the special resolution was taken before the property has been transferred onto the name of the purchaser, the seller will be liable for the payment of the special levies.  The only exception would be if the Body Corporate, the seller and the purchaser have entered into a so called tri partite agreement.  Such an agreement will determine that the purchaser will be liable for payment of the levies, as well as any special levies, from date of registration.

Best regards,

The MC-Team

A Special Power of Attorney will grant the power to perform a special (in other words one) duty or task in favor and on behalf of the granter.  This duty or task must be specified.  An example of a Special Power of Attorney would be where the seller authorizes a person to sell a specific property on his behalf. 

A General Power of Attorney will grant the power to perform a variety (thus more than one) of duties or tasks in favor and on behalf of the granter.  The General Power of Attorney must be registered in the Deeds Office since it may be usefully applied to a series of multiple transactions.  A general power of attorney will for example be granted to a person, if the granter thereof has immigrated and needs someone to take care of his business in SA.

You are welcome to contact us if you need advice regarding the type of power of attorney a client might need, and we will gladly assist you in drafting the document.

Best regards,

The MC-Team

In some cases the sale agreement contains a condition that the purchaser must be supplied with approved building plans prior to registration.  In some cases the purchaser’s bank requires the plans.

We then need to ascertain whether there are updated approved building plans.  We depend on the parties and the estate agent to confirm whether the plans have been updated.

Should the plans not have been updated, it needs to be updated and approved.

It may be that some of the structures have been erected over servitudes and building lines.  It will then have to be dismantled or application will have to be made for the encroachment of building lines.

When listing the property ascertain whether the building plans are up to date, and if not advice the seller to start the process immediately.

This can of course delay the registration of the property and may be expensive. 

Best regards,

The MC-Team

It might happen that an owner in a complex experiences problems which should be addressed by the Home Owners Association / Body Corporate.  What should you do if your requests are being ignored?  The owner can approach the trustees and insist on an urgent meeting in terms of the rules.  The rules of the entity should specifically indicate that should the trustees not call the meeting within a specific time frame, the owner will be entitled to call such a meeting.  The rules will furthermore determine the quorum for such a meeting.  Upon the conclusion of the meeting a decision will be made, and an enforceable resolution will be signed.

Another option would be to approach the court and obtain an order to oblige the entity to abide by the rules – unfortunately this might take some time and can be quite expensive.

Best regards,

The MC-Team

When a lightning conductor is installed on a property (usually thatch roof properties), the installer must issue a compliance certificate confirming that the installation complies with the South African National Standards (SANS 10313). 

If the property is insured, the insurance company will require such certificate.  Alternatively, the insurer can insist that the roof be treated with a chemical layer, for which a certificate with exactly the same legal power as first mentioned certificate must be issued.

It may also be that the purchaser of a property contractually requires the certificate to be delivered to him/her prior to registration.  The owner will then be obliged to deliver the certificate to the transferring attorney.  Take note that unlike electricity certificates, this is not a legal requirement

Such certificate will be valid for the period as specified in the insurance policy, but an annual inspection is recommended.  A new certificate should however be issued if there is an amendment / addition to the installation. 

Best regards,

The MC-Team

Be very careful when inserting special conditions into the sale agreement.  The following scenario will cause the agreement to become unenforceable, and therefore invalid:

The following special condition was inserted into the agreement by the purchaser:  “The transaction is subject to the extent of the property being 500 m²” (this is a suspensive condition, meaning that if it should be found that the extent of the property is not 500 m², the transaction will automatically lapse).  Furthermore the agreement contains the following condition: “The purchaser will have no claim against the seller should the property be found to be smaller than indicated, and there will be no financial benefit for the seller should the property be found to be bigger than indicated.”  It is clear that these two conditions are in direct conflict with each other.

In the light of the above it is of the utmost importance to ensure that there are no contradictory clauses in your sale agreement, as this will cause immense difficulty to execute the contract.

Best regards,

The MC-Team

Should an addendum be drafted to the sale agreement in terms whereof the date of occupation is moved from date of registration to an earlier date, the keys to the property should not be handed to the purchaser prior to the signing of the addendum by both parties.  The reason for this is that it is important to firstly reach an agreement regarding the terms of occupation, for example the specific date of occupation, the amount of the occupational rent, whether the occupational rent is payable directly to the seller or the Transferring Attorneys etc.  The keys can therefore not be handed to the purchaser prior to the signature of the addendum, since the purchaser is considered to have occupation of the property from the date on which the keys are handed over.  This may cause ructions between the parties, especially with regards to the calculation of the pro rata occupational rent.  Once the addendum has been signed, the Transferring Attorneys must firstly confirm whether the occupational rent has been paid, where after the keys may be handed to the purchaser.

Best regards,

The MC-Team

A new schedule of Deeds Office registration fees was approved (under Regulation R269) and published in Government Gazette of 31 March 2015 with an effective date of 1 May 2015.  This means that all transactions registered on or after 1 May 2015 will be liable for the amended fee regardless of when the agreement was concluded. 

We are happy to announce that our MCostCalculator on our website as well as our mobisite has already been updated and we attach hereto a copy of our updated fee sheet.

Our fee sheets will go into printing in the next few days and we will be able to supply our clients with hard copies soon.

We would furthermore like to thank our clients for their patience after the theft at our offices and we are happy to announce that we are fully operational again.

Best regards,

The MC-Team

When the purchaser applies for a bond, and qualifies for a bond, the bank, on grounds of his financial position will firstly issue an approval in principle.  The final grant is issued by the bank once a valuation of the property has been conducted by one of the bank’s valuers.  Once the valuation has been done, the bank will issue a final grant.  This however, does not yet mean that the purchaser has complied with the condition relating to the obtaining of a bond.  This suspensive condition will only be complied with when the purchaser accepts the bank’s quotation.  It is therefore important to remember this, taking into consideration the date for bond grant in the sale agreement.  If necessary, an addendum should be drafted in terms whereof the purchaser is granted an extension of time to obtain a bond, therefore ensuring that the transaction does not lapse.  

REPO RATE

The South African Reserve Bank Governor Lesetja Kganyago announced that the repo rate will remain unchanged at 9.25%.

Best regards,

The MC-Team

With effect from 1 March 2015 the Minister of Finances amended the rates against which natural persons (individuals) pay income tax. (Apart from the transfer duty).

Students of MCademy who specifically attended the lecture regarding tax will remember that the income tax rate plays a role in the calculation of capital gains tax.

A portion of the capital gains tax, the so called inclusionary rate (33.3% in the case of natural persons), is added to a person’s income and he / she pays income tax thereon. Consequently the amendment of the income tax rate will result in an amendment to the effective capital gains tax rate.

Since the maximum marginal rate against which individuals can pay income tax has been increased from 40% to 41%, it has the effect that the maximum rate against which individuals can pay capital gains tax has subsequently been increased from 13.2% to 13.653%.

FEE SHEET – 01 MARCH 2015

As per our previous communication, the Transfer Duty Fees changed, effective 01 March 2015.

Our new fee sheets is now available and you are welcome to visit our office to collect copies.

We are in the process of updating our MCostCalculator on our Website and our MC-Mobisite and will inform you once it is adjusted.

Best regards,

The MC-Team

Two or more persons can purchase a property jointly.  Should the purchasers take out a mortgage bond; the bank will require that the liability of the purchasers towards the bank must be jointly and severally.

The bank will then be entitled to claim any outstanding amounts from the parties jointly, or from only one of the parties severally, despite the shares such party may have in and to the property.  The parties will then have to sort out their individual obligations and proportional payments among each other.

As an estate agent, it is important for you to make provision for joint and several liability in the clause relating to agent’s commission / the commission agreement, in the case of breach of contract.

Best regards,

The MC-Team

Finance minister Nhlanhla Nene presented his first budget speech and one of the big announcements was the change in the transfer duty rates.

The rates applicable to all properties acquired (the contract signature date) on or after 1 March 2015 are:

We are amending our fee sheets and MCostcalculator accordingly and will inform all our clients as soon as it is operational.

Best regards,

The MC-Team

The introduction of the Continuing Professional Development (CPD) program for estate agents will establish and maintain the highest standards of service and competence, integrity and credibility of the real estate sector.

The Continuing Professional Development requires of every agent to complete 60 CPD points over a rolling period of 3 years (20 points for each year). The 20 points per year consist of 15 points (Compulsory – verifiable) provided through the EAAB and 5 points (Elective – non variable) which is divided into different categories from which the agent can choose.

MCademy is proud to announce that the lectures/training we supply to the agents forms part of the 5 point (elective –non verifiable) category. 

At MCademy we strive to provide agents with the necessary knowledge to assist them in maintaining their credibility and integrity.

Our training dates can be found on our website – please visit us at www.mcvdberg.co.za and book a time and venue that suits you best.

MCademy training is free of charge, however we request that you bear in mind that we carry the cost and would highly appreciate your commitment in making your reservation and cancelling same at least 24hrs prior to the training should you not be able to attend. 

Unfortunately we have a limited number of seats available for each session and bookings are essential, and compulsory.   Once you have booked your seat, either by phone or by e-mail, you will receive an e-mail confirmation confirming your booking, 48 - 72hrs prior to the training session.  If you did not receive an e-mail or a phone call, your booking is not confirmed.  In this case please urgently contact Liza at 012 660 6109. 

You can book your seat at mcademybookings@mcvdberg.co.za or contact Liza Louw at 012 660 6109.

Best regards,

The MC-Team

When a trust is purchasing property, the transferring attorney should check whether the trustees have authority to purchase, and vice versa, when trust property is sold, whether the trustees have the authority to sell.

Trustees may enter into a sale agreement for the purpose of buying or selling property on behalf of a Trust only once they have been duly appointed by the Master of the High Court. The trustee must first obtain the Letter of Authority or Master’s certificate before he may enter into a purchase or sale agreement on behalf of the trust.

Furthermore, the powers of the Trustees are set out in the Deed of Trust or, in the case of a testamentary trust, the will of the deceased. The Trustee may only act according to his/her scope of powers as set out in the aforementioned documents. For instance if the trust deed dictates that at least 3 of the 4 trustees must authorize the transaction, non-adherence will have the effect that the signatory to the agreement was not duly authorized. The contract can be declared null and void.

Your assistance to obtain the following documents upon signature of a sale agreement will be greatly appreciated: 

• a copy of the deed of trust;
• a copy  of the letter of authority appointing the trustees;
• a resolution (if one trustee is acting on behalf of the other trustees).

Best regards,

The MC-Team

Happy New Year!

Herewith feedback regarding the latest communication received from City of Tshwane with regards to applications for clearance figures:

City of Tshwane requires a prescribed application form which form is completed by ourselves and sent to the municipality when we apply for the clearance figures.  This form should be accompanied by the following documents:

1. A rates and taxes account not older than 3 months;
2. Water and Electricity account.  Should another provider be responsible for the provision of electricity, proof of such agency / company must be supplied, for example Midstream Electrical Supplies;
3. A photo of your water and electricity meter (latest request from Tshwane):  This request is very important.  Should the Municipality only be in possession of estimated values on their system, the photo with the actual reading will be used to correct the account and the figures before they can issue the clearance figures; 
4. Should your electricity be prepaid, a photo of the meter is required (latest request from Tshwane).

Your assistance, as estate agent, to obtain these documents and provide same to us during the early stages of the process to expedite the matter will be greatly appreciated. 

Best regards,

The MC-Team

Regardless of the duration of a relationship where parties live together (cohabitation), such a relationship will never gain the legal consequences of a marriage.  Often a break-up of such relationships results in disputes regarding shares in assets, including immovable property.  Cohabiting couples need to be aware that courts will not assume equal ownership in a property registered in only one of the parties’ name.  Such couples are best advised to protect their interests by concluding a cohabitation agreement.  It should be noted that such an agreement will only be effective between the cohabiting partners, and will not have any effect on third parties.

Take a look at our MCSellerVideo.

Best regards,

The MC-Team

This is a contract entered into by two parties wishing to enter into a marriage out of community of property.  The goals of such contract are as follows:

• To allow the parties to enjoy the same legal freedom with regards to their individual estates as they did prior to marriage; 
• To protect each other from the potential sequestration of the other party’s estate; 
• To protect both parties should one of them pass away / in the case of divorce proceedings; 
• The assets and liabilities of both parties held before, as well as acquired during, the marriage, remain separate.

An ante nuptial contract needs to be registered at the Deeds Office within 3 months from date of marriage.  Should this not have been done, a court order must be obtained to amend the marital property system.

*For purposes of the sale of immovable property it is very important to confirm the marital status of parties, as a party married out of community of property is permitted to act in his / her own capacity, whereas a party married in community of property may not enter into a sale agreement on his / her own – such contract will be null and void.

Take a look at our MCPurchasersVideo.

Best regards,

The MC-Team

When it comes to the payment / financing of the purchase price, it is very important to take note of the fact that the payment of a deposit / delivery of guarantees do not constitute suspensive conditions.

Should the sale agreement for example state that the purchaser must pay a deposit in the amount of R100 000.00 on / before 1 December 2014, and he neglects to do so, the agreement will not lapse automatically.  In such a case, one must fall back on the breach of contract clause in the sale agreement, and the purchase must firstly be placed on terms in terms of such clause, for payment of the deposit.

If the payment has still not been made by the time the notice period lapses, the seller will have the right to exercise his remedies in terms of such clause, which will include the cancellation or enforcement of the sale agreement, as well as a possible claim for damages.

*KINDLY TAKE NOTE THAT OUR COST MCCOSTCALCULATOR HAS BEEN UPDATED AND IS ONCE AGAIN IN FULL OPERATION ON BOTH OUR WEBSITE, AS WELL AS OUR MOBISITE

Best regards,

The MC-Team

Imagine the following scenario:  You are the letting agent renting out a property on behalf of the owner.  The tenant cannot afford the rent, and doesn’t respond to any letters / threats.  He also refuses to vacate the property. 

What must the owner do?  In terms of the Prevention of Illegal Eviction from Unlawful Occupation of Land Act (PIE), the following steps need to be taken: 

1. Cancellation of the lease agreement due to non-payment, as per the notice period in the agreement, or with one calendar months’ notice as per the common law;
2. An Ex parte application (an application without notice to any party) must be brought before the appropriate court to obtain permission to initiate PIE procedures. 
3. The sheriff of the court then serves notices, advising of the intention to institute action, on the local municipality, the unlawful occupier and on all those holding title under him (14 days’ notice of this hearing should be given).
4. On the day of the hearing, the unlawful occupier will be given the opportunity to show good cause as to why an eviction order should not be granted.  After considering the relevant circumstances as well as what is deemed as just and equitable, the court will grant the eviction order, indicating the date on which the occupant is to vacate the property.

In general, the procedures in terms of the PIE act are lengthy, and it often takes a long time before the unlawful occupier actually vacates the property. During this time the property owner does not receive an income from his property whilst still being required to pay the bond.  If you are a rental agent acting on behalf of a landlord, please advise him / her to start with the above process, rather sooner than later, to avoid any further loss of income.

Best regards,

The MC-Team

Eventually sanity prevailed! On 8 September 2014 in the case of PJ Mitchell v City of Tshwane Metropolitan Authority the court decided that a new owner cannot be held liable for the municipal historical debt of the previous owners.

The Court did not agree with the ruling in the Mathabathe case and contended that the hypothec is extinguished by the sale in execution and the new owner is granted a clean title.

Further the court ruled that the council also cannot refuse to provide services (for example electricity) to the new owner on the grounds that there is historical debt.

Best regards,

The MC-Team

On the 1st of October 2014 Regulation 29(3) of the Alien and Invasive Species Regulations 2014 came into effect.  This Regulation places an obligation on the seller of immovable property to notify the purchaser of the presence of any of the listed invasive species in his / her garden, prior to signature of the deed of sale.  A list of the so called invasive species can be found on the following website:  www.invasives.org.za/legislation

On this website, specific reference is made to the following:

1. Plants that are specifically considered as being invasive in a certain province.  A plant considered being invasive in Gauteng, might not be considered as such in the Western Cape;
2. Plant species for which the owner requires a permit, as opposed to species which are required to the managed or destroyed.

The purpose of the introduction of the regulations is to prevent the intrusion and spread of alien species of fauna and flora in our country.

It is advisable to insert a clause into your sale agreements entered into from 1 October 2014:

• in terms of which the purchaser declares that he has acquainted himself with the extent and nature of the property and that he accepts it as such, including the vegetation on the property;
• in terms of which seller declares whether he is aware of any alien invasive species on his property or whether he is in possession of permits for the species for which same are required.

Best regards,

The MC-Team

If a sale agreement is subject to the sale of the purchaser’s existing property, the following is important:

• Since this is a suspensive condition, a specific date for compliance thereof must be entered into the sale agreement.
• One of the following scenarios will be applicable to the purchaser’s existing property:

1. The property is still in the market, and the purchaser has not received any offers yet; 
2. The purchaser received an offer to purchase, but his purchaser must still comply with certain suspensive conditions (it is of the utmost importance to note that such property will only be considered sold successfully once all suspensive conditions (if applicable) have been met).
3. The property has been sold successfully (in other words, all suspensive conditions in such contract have been met / such contract is not subject to any suspensive conditions).

It is very important to take the above into consideration, since the dates in your sale agreement and the contract relating to the removed transaction should correspond with one another to ensure that both transactions remain valid.

Best regards,

The MC-Team

When inserting special conditions into a sale agreement, it is important to take the following into account: 

• The condition must reflect the correct and exact intention of the parties. 
• Clearly indicate what is expected of whom.
• Clearly indicate what the consequences will be should the party concerned fail to comply with the condition.  Should the seller for example be obliged to repair an item and fail to do so, will the purchaser be entitled to attend to such repairs and claim the costs from the seller?
• By when should the condition be fulfilled?  Preferably a date on which a specific act must be performed should be entered, thereby placing the transferring attorney in a position to manage the process efficiently.
•  “Prior to registration”:  Can registration take place if the condition has not yet been adhered to?  Can the transferring attorney proceed with registration and keep an amount on retention, pending the fulfilment of the condition?
• Be very careful to make the condition suspensive!  If such a condition is not adhered to timeously, the agreement will LAPSE immediately.

It is very important to be very precise when agreeing upon special conditions.  You are welcome to contact us to assist you with the wording of such special conditions, to ensure that any future problems are avoided.

MCOSTCALCULATOR

We are in the process of updating the MCostcalculator on our website and our Mobisite and will inform you once it is adjusted.  Please contact our offices on 012 660 6000 should you require a quotation or make use of our fee sheet designed for ease of reference.

Best regards,

The MC-Team

The fees that we as conveyancers charge buyers and sellers are based on guidelines provided by the law society.

From time to time the law society increases these fees in order to keep it in line with inflation.

Effective 15 September 2014, there is such an adjustment. All contracts concluded after the aforementioned date will be levied at the increased tariffs. Please make sure that your customers are informed accordingly.

We are in the process of updating the MCostcalculator on our website and our mobi site and will inform you once it is adjusted.

We will start distributing the printed versions of the new fee sheets during the course of this week. You are also welcome to visit our office from Thursday to collect copies.

Best regards,

The MC-Team

In some instances the need may arise to alter an agreement after it has been concluded.  There is absolutely no problem to do so, but the way in which such amendment is done can cause problems.  The general rule is that agreements can be amended orally.  The parties can however contractually agree that amendments should be handled in a specific way.  The clause regulating this is called the “non variation clause”.  The object of this clause is to create legal certainty.

Any amendment which is done in conflict with the prescribed process in such clause will not be valid and enforceable.  Such a clause will typically determine that any amendments should be in writing and signed / initialled by both the seller and the purchaser.  Should the parties then amend the agreement orally; the amendment will not be enforceable if the other party refuses to act according to such oral amendment.  Should the sale agreement for instance determine that occupation will be on registration, and after signature of the agreement the parties agree that occupation of the property will be given to the purchaser on 1 November 2014; such amendment must be put in writing to be enforceable and to avoid any confusion which may arise in the future. 

Since you, as the estate agent, are often involved with negotiations between the parties, it is important that you advise us of any amendments which need to be effected.  We will then ensure that the correct procedure is followed.

For more information take a look at our MCPurchasersVideo.

Best regards,

The MC-Team

A question which often arises is whether the seller of property is obliged to complete and sign a property condition report:

1. If the seller sells properties in the normal course of business to  natural persons / legal persons with an annual turnover of less than R2000 000.00 (in other words, he is a Developer / Speculator), the Consumer Protection Act applies, the voetstoots clause falls away, and the seller will be required to complete such a report;
2. If the seller does not sell properties in the normal course of business, the Consumer Protection Act does not apply.  The voetstoots clause then applies, and there is no obligation that the seller must complete such a report;
3. Should your sale agreement however place an obligation on the seller to complete such a report, you, as estate agent, will have to see to the completion of such report by the seller, regardless of whether the Consumer Protection Act is applicable or not.

If such a report needs to be completed, we advise that it be attended to when you are listing the property.  The report will then be available for all potential purchasers.

For more information take a look at our MCSellersVideo.

Best regards,

The MC-Team

Over the past few weeks we have presented a legal update at MCademy which included the court case which formed part of the documentary that was aired by Carte Blanche on 24 August 2014.

In the relevant case (Mathabathe vs Municipality of Tshwane) the court gave judgement on the apparent correct interpretation of section 118(1) of The Municipal Systems Act. The court ruled that if there is a debt older than 2 years (historical debt) but the two years immediately preceding the application for the clearance certificate is paid, the municipality must issue the clearance certificate. The property can then be transferred to the purchaser although the seller is still indebted to the Municipality for historical debt older than 2 years.

The court also confirmed that the Municipality has a lien over the property in terms of section 118(3) of the said act. The court further implied that the municipality can subsequently perfect this lien and sell the purchasers property for the seller’s historical debt.

In law we do not think this can be correct and we are certain that the matter will be taken on appeal to the Constitutional court to be tested against sec 25 of the Constitution, which protects private property rights. It is absurd, to say the least, that the relevant act is interpreted to the extent that the Municipalities now have a second bite at the proverbial cherry after their own incompetence are the very reason why the historical debt exists in the first place.

We suggest that pro forma agreements must be amended to protect prospective purchasers as follows:

“the transfer attorney must  obtain a clearance certificate for the full outstanding debt (including the historical debt) and not only an abridged certificate for two years. The seller indemnifies the purchaser against any outstanding Municipal debt.”

The agents who use the standard MC-contract will be supplied with a new version in a few days.

We do not think that we should spread fear amongst purchasers in this regard. We are sure that common sense will prevail in the end.

Keep calm and keep on selling.

NS! If you want to know more about this and other cases, kindly look on our website for the next MCademy date were we will be presenting the “legal update”

Best regards,

The MC-Team

Where an extension has been done to a duet / other sectional title unit, not only must building plans be approved by the Municipality, but the sectional title plans also need to be updated.  A second set of plans are therefore involved when dealing with a duet / other sectional title unit.

Once the building plans have been approved by the Municipality, a Surveyor must be appointed to attend to the necessary measurements at the property.  He will then draft amended sectional title plans, to reflect the new size of the property.  These plans need to be approved by the Surveyor-General at the Deeds Office, and can be registered simultaneously with the transfer of the property. 

When you’ve received a mandate to sell a duet / other sectional title unit, it is advisable to:

1. Ask the seller whether additions or alterations were made to the unit
2. If additions or alterations were made, request a copy of the approved building plans
3. Also request a copy of the approved sectional title plans
4. Should the building plans or sectional title plans not be updated advice the seller to start the process to obtain the plans immediately.

If you would like to know more about us, please take a look at our MCPromotionalVideo.

Best regards,

The MC-Team

Should you receive a mandate to sell a property of which the owner has passed away, you must ensure that the person granting the mandate and signing the contract on behalf of the deceased person is indeed authorised to do so.

Section 13(1) of the Administration of Estates Act provides that no person shall liquidate or distribute the estate of any deceased person, except under letters of executorship granted by the Master.  It is thus clear that no person can act as an executor before being granted letters of executorship by the Master.

Any sale agreement dated prior to the date, on which the letters of executorship are issued by the Master, will be null and void. 

When preparing a sale agreement, it is therefore of the utmost importance that, as estate agent, you ensure that the agreement is entered into by the parties after the date on which the letters of executorship have been issued by the Master.

Best regards,

The MC-Team

Should the sale agreement determine that the purchaser must obtain a bond for the amount of R1 000 000.00, but the bank only approves a bond for the amount of R800 000.00, this means that the suspensive condition as per the sale agreement has not been complied with.

1.  Should the purchaser have funds available for a deposit for the balance of the purchase price, an addendum should be drafted to the sale agreement PRIOR to the expiration date for bond approval as per the sale agreement, to ensure that the agreement remains valid. 

2.  Such an addendum must amend the agreement to the following extent:

1. The agreement is now subject to the approval of a bond in the amount of only R800 000.00, which bond is already in place;  and
2. The purchaser will pay a deposit in the amount of R200 000.00 into the trust account of the transfer attorneys on a specific date.

You, as agent, are entitled thereto to expect that MC van der Berg Inc. will see to the timeous and correct drafting of this, as well as any other addendums, on your behalf. 

Best regards,

The MC-Team

In terms of the judgement in the recent court case of JDH Eiendomstrust vs Ringwood a resolution in terms whereof a specific person is authorised to act on behalf of the trust, should be signed by all the trustees before the date of the sale agreement.  Should the resolution be dated after the date on which the sale agreement was entered into, the sale agreement will be invalid.

Best regards,

The MC-Team

Agents must take note of the requirements of the EAAB’s code of ethics with regards to sole and exclusive mandates.

The sole or exclusive mandate must be in writing and signed by the parties.  Although there are no rules prohibiting a spouse / owner from signing a sole mandate on his own behalf as well as on behalf of the other spouse / owner in terms of an oral proxy, the mandate should preferably be signed by al the owners.

The mandate should further contain a marketing plan.

Protect your own interest by ensuring that you sole / exclusive mandate is indeed valid and enforceable.

Best regards,

The MC-Team

It is important to distinguish between cases where a condition in a contract is a suspensive condition, and cases where it is not – the consequences of noncompliance differ.

Should a transaction be subject to a suspensive condition, for example:

1. the purchaser must obtain a bond;  or
2. the purchaser must sell his existing property,

the contract will merely not come into effect if the condition has not been fulfilled on the expiry date (as determined in the contract).  This will mean the end of such an agreement.

Should the condition not constitute a suspensive condition, where the contract merely states that the purchaser must, for example:

1. pay a deposit on a specific date;  or
2. deliver guarantees on a specific date,

the contract will remain valid if the deposit / guarantees are not paid / delivered on the specified date (since it is not a suspensive condition to the contract).  In such cases the seller will have to rely on the breach of contract clause, and the purchaser will therefore have to be placed on terms before the seller will be in a position to cancel the agreement (or to exercise his / her other remedies in terms of the breach of contract clause).

You are welcome to contact us if you are unsure whether the wording of your pro-forma agreement is correct.

Best regards,

The MC-Team

Should an addendum be drafted to the sale agreement in terms whereof the date of occupation is moved from date of registration to an earlier date, the keys to the property should not be handed to the purchaser prior to the signing of the addendum by both parties. 

The reason for this is that it is important to firstly reach an agreement regarding the terms of occupation, for example the specific date of occupation, the amount of the occupational rent, whether the occupational rent is payable directly to the seller or the Transferring Attorneys etc.  The keys can therefore not be handed to the purchaser prior to the signature of the addendum, since the purchaser is considered to have occupation of the property from the date on which the keys are handed over.  This may cause unhappiness between the parties, especially with regards to the calculation of the pro rata occupational rent.  Once the addendum has been signed, the Transferring Attorneys must firstly confirm whether the occupational rent has been paid, where after the keys may be handed to the purchaser.

Best regards,

The MC-Team

When a lightning conductor is installed on a property (usually thatch roof properties), the installer will issue a compliance certificate confirming that the installation complies with the South African National standards (SANS 10313).  The insurance company will require such certificate for purposes of structural insurance.  Die insurer can also insist that the roof be treated with a chemical layer, for which a certificate will also be issued.

The user / owner of the property will be liable to obtain the certificate.  Such certificate will be valid for the period as specified in the insurance policy, but an annual inspection is recommended.  A new certificate should however be issued if there is an amendment / addition to the installation. 

The seller of a property is not obliged to obtain such certificate except if it is specified in the sale agreement.

Best regards,

The MC-Team

Be very careful when inserting special conditions into the sale agreement.  The following scenario will cause the agreement to become unenforceable, and therefore invalid:

The following special condition was inserted into the agreement by the purchaser:  “The transaction is subject to the extent of the property being 500 m²” (this is a suspensive condition, meaning that if it should be found that the extent of the property is not 500 m², the transaction will automatically lapse).  Furthermore the agreement contains the following condition: “The purchaser will have no claim against the seller should the property be found to be smaller than indicated, and there will be no financial benefit for the seller should the property be found to be bigger than indicated.”  It is clear that these two conditions are in direct conflict with each other.

In the light of the above it is of the utmost importance to ensure that there are no contradictory clauses in your sale agreement, as this will cause immense difficulty to execute the contract.

Best regards,

The MC-Team

A sale agreement with regards to immovable property can be terminated / will expire in the following 3 ways:

The seller and purchaser agree to cancel the sale agreement, by way of a cancellation agreement signed by both parties. In this case, the sale agreement usually determines who will be held liable for commission but most often the deed of sale determines that parties may be held liable for the agent's commission jointly;

One of the parties commits breach of contract, and fails to rectify such breach within the terms period.  The aggrieved party then has the right to cancel the agreement. The party in breach of contract may be held liable for the agent's commission;

The suspensive conditions are not met.  In this instance, none of the parties can be held liable for the agent's commission, since the contract does not come into existence if these conditions are not fulfilled. Example:  The sale agreement is subject to the purchaser obtaining a bond for the amount of R1000 000.00 on / before 21/06/ 2014.  This condition will not have been met if:  (a) the bond is granted on 22/06, or (b) the bond is granted for a lesser amount.  Should the parties require this condition to be amended; an addendum needs to be signed by both parties before the expiration date, failure of which will cause the contract to lapse.

Best regards,

The MC-Team

The article published by our firm on 6 June 2014, as well as the recent article published by Property24, refers.

To avoid any uncertainty, we herewith wish to confirm that we are of the opinion that it is merely advisable that you, as estate agent, acquaint yourself with any restrictive conditions contained in title deeds, therefore placing you in a position where you know the product you are marketing (immovable property), and are able to provide prospective purchasers with sufficient advice regarding all aspects of the relevant property.

In the end, the obligation to check the title conditions remains with the purchaser.  The common law principle “Caveat Emptor” (purchaser, beware!) will also apply to title conditions.

Strictly speaking, there is no legal obligation on you, as estate agent, to gather this information and disclose same to the purchaser. 

In the light of the provisions of the Consumer Protection Act it will suffice to inform the purchaser of the title conditions (preferably in the sale agreement), to ensure that he / she acquaints himself / herself therewith.

Best regards,

The MC-Team

Title deeds of properties often contain restrictive conditions relating mostly to the size, location / placement and extra buildings which may be erected.  The effect of such conditions is that the owner’s rights with regards to the use and enjoyment of the property are limited.  Should the owner not acquaint himself with such conditions, it could cause him to suffer a great loss.  If, for example, a new building should be erected over a building line, which action is prohibited by the title deed, he could be forced to remove such portion of the structure which encroaches the building line.

We advise that agents obtain information about the restrictive conditions applicable to a property when they list the property to enable them to correctly advise the purchaser.

Best regards,

The MC-Team

Two or more persons can decide to purchase a property jointly.  Should the purchase price be secured by way of a mortgage bond, the liability of the purchasers towards the bank will be jointly and severally.  The bank will therefore be entitled to claim any outstanding amounts from the parties jointly, or from only one of the parties severally, despite the shares such party may have in and to the property.  The parties will then have to sort out their individual obligations and proportional payments among each other.

As an estate agent, it is important for you to make provision for joint and several liability in the clause relating to agent’s commission / the commission agreement, in the case of breach of contract on the part of one of the parties.

Best regards,

The MC-Team

An offer to purchase will only become binding and enforceable once it has been signed by both the seller and the purchaser.  A verbal agreement will not be enforceable, since an agreement with regards to immovable property must be in writing.

The marital status of the parties (purchaser and seller) plays a huge role when it comes to the validity of the agreement.  Should the sellers or purchasers be married in community of property, the agreement needs to be signed by both spouses.  The effect of a marriage in community of property is that the immovable property forms part of the joint estate, and that the spouses own the property in undivided half shares.  Should only one of the spouses sign the agreement, the contract will be invalid from the start.

Best regards,

The MC-Team

Estate Agents must take a careful look at the wording of the sale agreement’s occupational rent clause.  Often the situation arises that the seller is under the impression that the purchaser will be billed separately for water- and electricity consumption on occupation prior to registration.  If the clause does not specifically state that the purchaser is liable to pay the water and electricity consumption, the occupational rent amount is then, so to speak, all inclusive.  Amend the clause accordingly or keep the consumption in mind during the negotiating process with regards to the amount occupational rent payable.

Best regards,

The MC-Team

The Municipality requires that the following documents be lodged together with the application for clearance figures: 

1. A copy of the rates and taxes account (for full title and sectional title properties);
2. A copy of the water and electricity account (for full title and sectional title properties);
3. Should there be no water and electricity account, as the property is equipped with a prepaid meter for example; the Municipality requires proof of same, for example the meter number and / or proof of the last purchase of electricity.

We will appreciate it if you could inform sellers that we will require the above documents, since this will expedite the process to obtain clearance figures.

Best regards,

The MC-Team

In cases where a unit in a sectional title complex has been enlarged, for example by adding a room, it is very important to firstly ascertain whether the owner of such unit is in possession of building plans approved by the Municipality.  Secondly, amended sectional plans needed to be drafted by a Surveyor, which plans should then have been approved by the Surveyor-General and registered at the Deeds Office.  The registration of the amended sectional plans can be done simultaneously with the transfer of the property to a purchaser, but it will cause a huge delay in the transferring process if the building and sectional plans have not yet been approved.  The bank in favour of which the purchaser’s bond is to be registered, often requires the updated building and sectional plans prior to the registration of the bond.  This matter should therefore be discussed with the seller when the property is placed on the market.

Best regards,

The MC-Team

The ‘credit amnesty’ came into effect on 1 April 2014 and requires that all unfavourable consumer credit information relating to paid-up judgements be removed from credit bureau records.

The credit bureau will also be prohibited from displaying or providing such information to anyone else. Once the relevant information has been removed, no credit provider will be allowed to use the information again in respect of a consumer applying for credit.

The legislation clearly provides, however, that the consumer remains liable to meet his or her obligations in respect of any credit agreement that is not settled with the creditor. The new legislation thus does not take away the obligation to pay off debts.

It is suggested that more time is spent on assessing the financial situation of your clients, and remember, the new act only applies to ‘paid up’ debt, so all judgments not paid up on the consumer’s name will still be available to see. This will have a negative impact when the client should apply for a loan at a financial institution, for example.

Best regards,

The MC-Team

A question which often arises is at what moment it can be confirmed that the purchaser’s bond has been approved. Many sale agreements determine that the bond is deemed to be approved and the suspensive condition therefore fulfilled once the bank involved has issued a bond quotation to the purchaser. This is not correct. In terms of section 92 of the National Credit Act (read together with regulations 28 and 29) the bank must firstly provide the purchaser with a quotation and pre-agreement. This quotation is valid for 5 working days. The effect hereof is that the purchaser must accept the quotation (within this period) before it can be said that the bond has been approved and the suspensive condition has therefore been fulfilled.

Best regards,

The MC-Team

All companies and close corporations are required by law to submit their annual returns with the Companies and Intellectual Property Commission (“CIPC”) within 30 days of the anniversary date of its incorporation. Failure to do so will result in the CIPC assuming that such entity is no longer doing business or is not intending to do business in the near future, which will lead to the deregistration of such entity.

A deregistered entity has no legal capacity to transact and therefore any agreements concluded with or by such an entity may be negatively affected. Fortunately the Act makes provision for “any interested person” to apply to the CIPC to re-instate the registration of the entity. As re-instatement is a lengthy and expensive procedure which will handicap the transferring process, it is important to verify the status of an entity prior to entering into a sale agreement with such an entity with regards to immovable property.

Best regards,

The MC-Team

Where a purchaser is married in community of property, but divorce proceedings have been instituted, the purchaser cannot enter into a sale agreement with regards to immovable property on his / her own prior to the divorce order being issued by the Court. A sale agreement signed by one of the spouses as purchaser whilst still married (in community of property), will be null and void and is not rectifiable once the divorce order has been issued. The sale agreement therefore needs to be dated after the issuing of the divorce order.

Best regards,

The MC-Team

Should one of the parties to a sale agreement be a trust, usually it will be a condition to the trust deed that the trustees act jointly. If they decide that only one of the trustees will sign the sale agreement (and transfer documents), such trustee should be duly authorised thereto by the other trustees. Such authorisation / resolution should already be in place at the time the sale agreement is entered into, since an unauthorised sale will be invalid from the start. Even if same is accepted by the trustees at a later stage, it will remain invalid. You are welcome to contact us to assist you in the drafting of the resolution, so the resolution and the sale agreement can be signed simultaneously.

Best regards,

The MC-Team

The Government Gazette has increased the maximum initiation fee and service fee that the bank is allowed to charge on deals that fall within the ambit of the National Credit Act (NCA).

 What is the change?

• The monthly service fee will increase from R 57.00 to R 68.40 (incl. VAT).
• The once-off initiation fee will increase from R5700.00 to R5985.00 (incl. VAT).

The new prices will only apply to new loan applications captured on or after 6 May 2016. The maximum fees only apply to natural customers on deals that fall within the NCA.  Deals for juristic customers that fall outside the NCA can continue to be charged any initiation and service fee, as per current process. The new initiation and service fee will also be applicable to Usury accounts who take up further advances.

Best regards,

The MC-Team