General Interests & News Flashes – Page 2

29 Jul 2022

Website of the Month: Solar Power and the Insurance Risk

With our loadshedding woes unlikely to go anywhere soon, more and more property owners are looking to solar power as an alternative to relying on Eskom.

Just be careful that you don’t fall foul of your insurers in the process. “Rules homeowners should know before installing solar power” on MyBroadband lists four technical regulations to be particularly aware of.

For some practical advice on deciding whether or not to go the solar route in the first place, and if so how, read another MyBroadband article “What you should know before installing solar panels and batteries at your home” here. Keep an eye also on the developing story around proposed new Eskom tariffs and “feed-in” tariffs.

29 Jul 2022

12 Questions to Ask Before You Sign That Deed of Sale

Buying or selling property puts a lot of your money at stake, so it’s no time to take chances.

It’s too late to ask questions after you have signed the deed of sale, so let’s have a look at 12 questions you should be asking before you commit yourself to anything.

Some of these questions you only need to ask as a seller, others only as a buyer. But most of them apply to both of you, and not asking them means blinding yourself to possible risks and problems just when you should be treading most carefully.

“Knowledge is power” and it comes from asking the right questions at the right time!

“Knowledge is power” (old proverb)

Whether you are buying or selling property, remember that it is too late to ask questions after you sign the Deed of Sale (often called a “Sale Agreement” or “Offer to Purchase”).

“Knowledge is power” rings particularly true when it comes to any form of process with significant legal consequences, so here are some of the important questions you should ask upfront, before you commit to anything –

What do all the terms and conditions (particularly the legal-speak bits) in the Deed of Sale mean in practice?
Are my rights adequately protected and my risks minimised by the terms and conditions?
What costs will I have to pay, and when?
Is there anything in the Title Deed or local municipal laws and zoning restrictions that may impact me (as a buyer)?
Do I (as buyer) have a copy of the plans, and have all extensions and alterations been authorised by the local authority?
What defects have been disclosed in the Mandatory Disclosure Form, is a home inspection report worthwhile (and permitted by the deed of sale), what is the legal position around voetstoots clauses and patent and latent defects, and does the Consumer Protection Act apply to this sale?
As a buyer, have I checked for practical issues like local fibre availability, crime levels, security, school feeder zones, fixtures and fittings to remain, work-from-home practicality, buy-to-let possibilities etc?
Are there tenants (or other occupants) in the property, and if so what is their status and what does the deed of sale say about when they will vacate?
When does the buyer take possession and occupation? (Careful here, possession and occupation are two different concepts in law).
What arrangements have been made for date of transfer and payment of occupational interest, rates and taxes, levies, municipal service charges and the like?
In a residential complex: As a buyer, what Rules and Regulations will I be bound to, is there a danger of a special levy being levied, and do the latest financial statements for the Body Corporate or Homeowners Association show a healthy financial situation?
Have I as seller appointed my choice of conveyancer (transferring attorney)?

A final but vital thought here – whether you are buying or selling property, a lot of your money will be at stake here. Get professional advice before committing yourself to anything!

29 Jul 2022

Bodies Corporate: Forcing Access to Units, and Round Robin Resolutions

What happens when a body corporate, in trying to trace a leak while carrying out its duty to properly manage the sectional title scheme, is refused access by a “recalcitrant” owner?

We address that question with reference to a High Court decision which saw the unit owner in question concede access to the body corporate only at the very last minute, and then try to dodge liability for costs by attacking the validity of the body corporate’s “round robin” resolutions.

We end off with a strong warning from the Court to approach the Community Schemes Ombud with such disputes rather than the High Court wherever possible.

Owning your own property comes with a raft of benefits, including a general right to privacy and control over who can access your property and who can’t.

But of course there are exceptions. And apart from the obvious ones, a recent High Court judgment highlights one that is particular to sectional title schemes. It involved a unit owner whose “recalcitrant actions” prevented a body corporate from entering his unit to check for a water leak.

A recalcitrant unit owner blocks access to his unit for a leak test

A unit in a sectional title scheme had a damp problem and the neighbouring unit owner initially allowed the body corporate access to his unit to conduct a leak test. No leaks were found.
However three months later the damp problem was still unresolved, and this time the neighbour flat out refused access to his unit for a second leak detection test. Requests for access through the managing agents, loss adjusters, leak detection agents and the body corporate’s attorneys all fell on deaf ears.
The body corporate applied to the High Court for an urgent order compelling access within 48 hours.
Although the neighbour had initially taken the stance that there was no reason why a second inspection should be conducted, he had a last-minute change of mind (after taking legal advice) and accepted that the body corporate is entitled to conduct reasonable inspections from time to time in order to properly manage the common property. He made a settlement offer to this effect to the body corporate, which rejected the offer as it still wanted its costs.
Ultimately the Court rejected the neighbour’s attacks on the body corporate’s standing to bring the court application and held the neighbour liable to the body corporate for both the leak detection costs and the legal costs (only on the Ombud’s tariff – more on that below).

Were the body corporate’s round robin resolutions valid?

At issue was the validity of two body corporate resolutions. The full details of the various legal challenges mounted against the resolutions will be of great interest to industry professionals, but for most bodies corporate and unit owners perhaps the most important practical aspect is the attack on the first resolution because it was signed only by two of the five trustees on a round robin basis.

The Court was unimpressed by the neighbour’s argument that the resolution was defective because it was not signed by a majority of trustees and did not record date, place, and time.

“It is common practise” said the Court “what with the onslaught and the lagging effects of [Covid 19] that trustees, shareholders, governing bodies and directors meet virtually and sign documents via round robin.”

“It is … not uncommon for [trustees] to manage the affairs of the body corporate as they deem fit and in the best interests of the owners. Ad hoc and informal meetings are often held in order to deal with incidents without having to call or convene a formal meeting of the trustees.”

Each case will be different

The particular facts in this case clearly played a significant role in the Court’s ultimate decision, and there is no substitute for legal advice specific to each unique set of circumstances.

For example, one of this scheme’s Management Rules specifically caters for a trustee meeting by ‘any other method’ which, said the Court “in my view would encompass and encapsulate the extension of the method of signing resolutions. It would be absurd to consider or apply anything to the contrary.”

Important also was the Court’s finding that “throughout the entire process all the trustees were aware of and informed of what was transpiring”.

Finally, a warning from the Court to always approach the Ombud first

The Court once again confirmed the principle that in a matter such as this the parties should in the first instance approach the CSOS (Community Schemes Ombud Service) rather than the High Court.

Commenting that “I am of the view that this matter should never have been brought before this court as first instance” and “There are no exceptional circumstances pertaining to this matter, but rather issues that fall squarely within the ambit of the Ombud that can and would have been expeditiously dealt with at no cost as the employ of legal representatives is not permitted” the Court awarded legal costs to the body corporate only “on the tariff applicable in respect of proceedings under the ambit of the Ombud”.

Reading between the lines, the body corporate was possibly fortunate that the High Court agreed to hear its application at all. It may well have been saved only by the Court’s expressed displeasure with the neighbour’s “recalcitrant actions” and by his conduct in opposing the application in the first place.

29 Jul 2022

Trusts on Divorce: Are You Stuck with an Ex-Spouse as Trustee?

Divorce can be a costly and traumatic process, and if you and your ex-spouse are still co-trustees of your family trusts afterwards, you may well find the situation untenable.

A recent High Court fight over a “not the Titanic” divorce saw ex-spouses both applying for the removal of the other as trustee. In deciding the case, the Court addressed questions of a trustee’s duties, whether a trustee must be impartial, and the grounds on which it will remove a trustee.

We’ll close with a piece of advice on how to avoid the situation these ex-spouses found themselves in.

“Love is grand. Divorce is a hundred grand.” (Anon)

Trusts may be formed for a variety of reasons, and the purpose and structure of each trust will inform the choice of trustees. When it comes to families aiming to preserve and protect family assets for future generations, often both spouses are appointed not only as beneficiaries, but also as trustees.

That’s a great scenario whilst the marriage prospers, but what happens on divorce? A recent High Court decision addressed one such scenario –

‘Not the Titanic’ – this marriage took six years to sink

In 2014, whilst a marriage was (as the Court put it in a judgment rich in nautical imagery) “still in calm waters”, the spouses formed four trusts. Two were called business trusts, one a property trust, and the fourth a family trust. Naming choices aside, the critical issue is that both spouses had been appointed as trustees.

Regrettably in 2015 the couple “drifted” apart and their marriage “ran aground and settled on the rocky shores of the divorce courts door” with the institution of divorce proceedings. “Unlike the Titanic” observed the Court, the relationship took six years more to be finally laid to rest – the divorce was only granted in 2021.

The ex-spouses apply for each other’s removal as trustee

The ex-husband then applied to the High Court for removal of his ex-wife as trustee of all four trusts on the grounds that she had breached her duties as trustee. Most significantly, he said, she had failed to attend trustee meetings for some five years despite being invited to them.

Her main defence was that, in the context of the ongoing divorce proceedings, her ex-husband’s conduct made it impossible for her to attend to her duties as trustee. The Court was unconvinced by her various allegations in this regard, and two aspects in particular bear mention –
She complained that being in the minority her decisions were overruled – not an excuse for failing to attend meetings held the Court.
Her ex-husband failed to provide a vehicle to enable her to attend meetings – again no excuse, said the Court, there being a provision in the trust deed for virtual meetings.
Also counting against her was the fact that she was living in a trust-owned property “but fails to maintain such and pays no rent at all despite receiving the amount of R10 000,00 per month towards property expenses incurred.”
Finding that she had not been involved in the trust’s affairs and did nothing to safeguard them, the Court ordered her removal as trustee.

The Court then rejected as being without merit her counterclaim for her ex-husband’s removal as trustee on the grounds of a breach of his duty of trust towards her and a conflict of duty between his private interests and his duties as trustee.

Let’s have a look at the law behind those decisions –

What are a trustee’s duties?

Per the Trust Property Control Act: “A trustee shall in the performance of his/her duties and the exercise of his/her powers, act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another”.

Must a trustee be impartial?

The Court: “It is not required of a trustee to be total[ly] impartial or [to have] no connection with the beneficiaries, but rather that he or she is capable of bringing the necessary independent mind to bear [to] the business of the trust and of deciding what is in the interests of the trust.”

When will a court remove a trustee?

The court has a discretion which it must exercise “with circumspection”.

Per the Court: “The court has to be satisfied that the requested removal will be in the best interest of the trust and the beneficiaries … a mere conflict of interest between trustees and beneficiaries or amongst the trustees [is] insufficient for the removal of a trustee … the overriding question is always whether or not the conduct of the trustee imperils the trust property or its administration”.

There is no requirement to prove bad faith or misconduct, rather “the essential test is whether such disharmony, as in the present matter, imperils the trust estate or its proper administration … It is therefore clear that the court may remove a trustee from office in the event that such removal will be in the interest of the trust and its beneficiaries.” (Emphasis supplied)

In closing…

If you are faced with a divorce scenario, avoid a situation such as the ex-spouses in this matter faced by making sure that all questions around any trusts involved – such as who is to remain as trustee, who is to remain as beneficiary and so on – are resolved as part of the divorce process, and not left for future resolution.

Even better, take professional advice upfront when setting up trusts on how to avoid any future disputes that may arise should your marriage ever sail into stormy waters.

06 Jun 2022

New Ruling on Divorce Assets: How Does it Affect You?

Whether you are about to tie the knot or about to divorce, you should know about an important new ruling from the High Court, declaring a section of the Divorce Act to be constitutionally invalid.

We start off with a recap of the 3 choices of “marital regime” available to you on marriage, then we discuss whether or not this new ruling will apply to your own marriage situation.

For those of you to whom it does apply, we analyse the practical effect of the Court’s judgment on your financial rights and prospects in divorce.

“…the inequality at hand is caused when, after the conclusion of the marriage, a distortion is caused by the fact that one spouse contributes directly or indirectly to the other’s maintenance or the increase of the other’s estate without any quid pro quo.” (Extract from judgment below)

You may have read of the recent High Court decision declaring a section of the Divorce Act invalid.

To understand the importance of this new ruling for many couples about to divorce (and for all couples about to marry), let’s start at the beginning –

A recap – your 3 choices of “marital regime” on marriage

You can marry in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This by the way is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry.
You can marry out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC (ante-nuptial contract) specifically excludes it.
You can marry out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.

Before we move on to the altogether less happy subject of divorce – if you are about to marry, take full advice on which of these options is best for you before you tie the knot!

Does this new ruling apply to your marriage?

This ruling does not apply to you if your marriage was terminated by death or divorce prior to the judgment (which was handed down on 11 May 2022).

It does apply to you if –

Your marriage is still in existence, and
You chose Option 2 above, in other words if you are married out of community of property without accrual, and
Your marriage was concluded after 1 November 1984. Why that 1984 cut-off date? Well, what this High Court case was really all about was the fact that where a marriage was concluded before 1 November 1984 (that’s when the new “Matrimonial Property Act” took effect), courts had a discretion to make a “redistribution order” transferring assets between the divorcing spouses. But (until now) courts have had no such discretion for marriages concluded after the cut-off date.

The constitutional invalidity

That time bar – the 1 November 1984 cut-off – is set by a section of the Divorce Act. And that, held the Court, is unconstitutional because it discriminates between couples based solely on the date of their marriage.

It deprives couples married after the cut-off date of the opportunity to ask a court for a share of benefits acquired during the marriage, based on their respective contributions (direct and indirect) “to the other’s maintenance and estate growth during the subsistence of the marriage”. In practice (until now), a spouse could be left destitute after spending decades contributing to a marriage and to the other spouse’s wealth.

The Court’s declaration of constitutional invalidity, whilst it must still be confirmed by the Constitutional Court, changes all that.

The practical effect of the ruling

Courts now have a very wide discretion to order a “redistribution” of assets between you and your spouse, ordering a transfer of assets and money from one spouse to another, regardless of what your ANC provides.
That gives you the right to claim compensation for your contributions to the marriage, in other words to claim a fair share of wealth accrued during the marriage (assets brought into the marriage aren’t affected). You will have to prove your case, show what you contributed, and convince the court that a redistribution in your favour is warranted.
The practical effect of such a redistribution order “is that the party who contributed to the other’s gain is compensated for its contribution to the extent that a court finds just and equitable. To this end, the court is cloaked with a wide discretion taking into account an infinite variety of factors.” Factors likely to be considered are each spouse’s respective contributions of time, services, savings of expenses, their current financial positions, what was agreed in the ANC, and the like – each case will be different.
Note that this is not the same as accrual (Option 3 above). With accrual, the spouse with less asset growth (accrual) during the marriage has an automatic claim against the other for half the difference. But with a “redistribution order”, there is nothing automatic or 50/50 about it – instead the court exercises its discretion as to what (if anything) to award to who.

The aim here is not to put the spouses into equal financial positions, the aim is to redress an unfair financial imbalance.

06 Jun 2022

Landlords: Zoning Law Contravention Could Invalidate Your Lease

Here’s a warning to property owners to know and comply with your local municipal zoning laws. Contravene them at your peril.

For example, as a landlord you could be left with an invalid lease, and no claim against your tenant for arrear rental, municipal service charges, or anything else. That’s exactly the fate that befell a landlord recently when a High Court ruled in favour of a tenant whose business (“coffee shop, home industry and restaurant”) fell foul of the “Single Residential 2” zoning that applies to the leased premises.

We discuss the outcome in that case and end off with some practical suggestions for both property buyers and landlords.

“…it is a general rule that a contract impliedly prohibited by statute is void and unenforceable…” (extract from judgment below)

Here’s yet another warning from our courts of the importance of complying with your local municipal zoning laws, whether you buy property to live in, as a capital investment, or to let out.

One risk for a landlord is finding yourself with an invalid lease and no claim against your tenant. A recent High Court decision illustrates –

The unlawful coffee shop and the invalid lease

A landlord rented premises to a tenant for use as a coffee shop, home industry and restaurant. The tenant also resided on the premises, but no rental for the residential component was specified in the lease.
The business use was contrary to zoning provisions indicating that the property could only be used for dwelling purposes as it was zoned “Single Residential 2”.
The landlord, although aware of the zoning restrictions, told the tenant that she could operate her business.
When the landlord sued for arrear rental and payment of municipal charges the tenant’s defence was that the lease was invalid and unenforceable.
The High Court (hearing an appeal from the Magistrate’s Court) held the lease agreement to be illegal, void and unenforceable. The tenant, it said, could not be expected to establish from the municipality, before entering into the lease agreement, whether the premises could be used for her business. She had seen other restaurants in the same street and had no reason to question the landlord’s right to allow her to trade as she did.
As to the applicable law, the Court found that “although it is a general rule that a contract impliedly prohibited by statute is void and unenforceable, this rule is not inflexible or inexorable [inevitable].” The Court’s analysis of when this will apply (and when it won’t) will be of great interest to property professionals, but for most landlords the important thing is the fact that your lease will normally be invalid when it contravenes local legislation.
In that event, you will have no claim against your tenant because, as the Court here put it “this court shall not countenance unlawful conduct by allowing the [landlord] from benefiting from an illegal contract.”
Bottom line – the coffee shop tenant is not liable for rental, nor even for municipal charges relating to her occupation and use of the premises.

Zoning – what to do when buying or letting out property

The bottom line is that you need to understand all local zoning restrictions before buying property or letting it out to a tenant. If as a landlord you are aware of a possible issue in this regard, take professional advice on whether you may be able to word the lease in such a way as to protect you from losing all your claims against the tenant should worst come to worst.

15 Mar 2021

POPI & DIRECT MARKETING – ALL A PROPERTY PROFESSIONAL NEEDS TO KNOW:

The Protection of Personal Information Act (POPI) deals specifically with the subject of direct marketing, and strict rules are in place to regulate this. This is what you need to know:

1. Direct marketing includes any direct approach to generate business. This approach could be by email or other electronic messaging system, by ordinary mail or in person. It therefore includes all email marketing, SMS’s and WhatsApp’s, newsletters, drops, tele-canvassing and cold calling.

2. The Act deals separately with direct marketing by means of electronic communication, and “other” direct marketing.

3. “Other” (non-electronic) direct marketing is dealt with very briefly and we are all given the right to object to having our personal information used for this type of direct marketing. Once such an objection has been raised, a Property Professional may no longer use the person’s personal information for direct marketing.

4. Direct marketing by means of electronic communication is dealt with in more detail and the rules are a bit more complicated. The default position is that this type of marketing is prohibited, unless it is done in accordance with the rules laid down in the Act.

5. A distinction is drawn between those people who you have already dealt with in the context of your business, whose personal details you collected during your previous dealings with them, let’s call them “existing client contacts”, and people who you are looking to generate new business from, let’s call them “new prospects”.

6. You may continue to include “existing client contacts” in your direct marketing on 2 conditions:

6.1 You only may market products and/or services to them that are similar to those that were provided when you acquired their personal details; and

6.2 The person must be given the option to opt out with each marketing communication sent.

7. For “new prospects” you may only carry out direct marketing to them by electronic means if the person has consented to receive such marketing. If such consent is refused, you may not ask for consent again. In addition, these “new prospects” must be also be given the option to opt out with each marketing message sent.

8. The Act prescribes a form that a “new prospect” needs to sign to give their consent to allow their personal information to be used for direct marketing, and this consent form can be found here. I have also prepared an amended consent form, to make it more user friendly for your business, and this can be found here. Feel free to make the form your own, but be careful not to move too far from the prescribed wording.

9. When sending direct marketing material you must include your details as the sender. You must also give the recipient an address or other contact details where they could send a request to unsubscribe.

10. The bottom line is that you need to give all recipients of digital marketing material the opportunity to “unsubscribe” from your marketing list/database every time that you send marketing material, and if a person does unsubscribe, you need to respect this decision and do the necessary.

Deon Welz
Miltons Matsemela Inc.

11 Mar 2021

EXPROPRIATION WITHOUT COMPENSATION IN 5 EASY STEPS

A MEASURED RESPONSE TO THE STARTLING VIDEO DOING THE ROUNDS ON SOCIAL MEDIA

I recently received a WhatsApp message with a startling video from an organization called IRR, setting out how South Africans could lose their property in 5 easy steps if the proposed law on expropriation was passed, and how this would irrevocably change property rights, our country and our economy. I felt the video was sensationalist and needed a response. Unfortunately to do a proper job required a little longer than a 3 minute 40 second video. But anyway, here goes.

False Proposition 1

If the proposed Expropriation Act becomes law, property rights in South Africa will never be the same again.

This is not true. The proposed Expropriation Act of 2020 is fully in line with our Constitution as it now stands and therefore changes nothing to the underlying position which has prevailed since 1994. It was always on the cards that an Act of this nature would be passed. It is remarkable that it has taken so long to happen.

Steps 1 & 2

The Expropriating Authority must investigate the property and negotiate to acquire the property with the owner.

If no agreement is reached between the Expropriation Authority and the owner, an expropriation notice is issued where the owner is invited to make representations as to why they should keep the property or what amount of compensation should be paid.

Summing up the pre-expropriation process in one or two sentences does not do it justice. The process is clearly laid out in the Bill and follows a transparent and logical path where everyone whose rights are affected are included.

An expropriating authority has to complete a substantial amount of preliminary work, which includes the instruction of a valuer to provide a valuation of the property, before starting the expropriation process.

An affected owner must then receive a “notice of intention to expropriate” which must set out, amongst other important details, the reason why and the purpose for which the property is required, along with the intended date of expropriation. These reasons and purposes must obviously be legitimate and in line with the requirements of the Constitution, i.e., for a public purpose and in the public interest.

The notice must give the affected owner 30 days to raise objections and to make submissions. It also calls upon the affected owner to furnish the details of the amount of compensation which he believes to be just and equitable and the details of the holders of any unregistered rights in the property (so that their rights can also be protected).

Within 20 days after receiving this notice from the owner the Expropriating Authority must reply on the issue of compensation, and if not agreed, the Expropriating Authority must make a counter-offer “furnishing full details and supporting documents in respect thereof”. This is a serious process in which the Expropriating Authority cannot just thumb suck a number or allege that no compensation should be paid.

A further period of 40 days is then given within which the parties can negotiate an agreement.

If no agreement is reached, and if the Expropriating Authority still wishes to proceed with the expropriation, it can then make a unilateral decision to expropriate. This decision to expropriate must be motivated and the reasons must be published with the notice. The amount of compensation must also be explained.

Such a decision to expropriate would be an “administrative act” and as South Africans, we all enjoy constitutional protection against unjust administrative actions.

In terms of section 33 of our Constitution we all have the right to administrative action that is lawful, reasonable, and procedurally fair, and if this is not the case, this administrative action can be taken under review by a court and set aside.

In addition, in terms of section 34 of our Constitution we all have the right to have any dispute that can be resolved by the application of law resolved by a court.

These are fundamental rights which are entrenched in the Constitution and both of these sections are highlighted in the preamble to the new Bill. An expropriated owner can therefore always approach the courts to set aside an unjust expropriation, and in certain circumstances there will be scope to approach the courts to stop the process before any final expropriation takes place.

Step 3

After this process the Expropriation Authority can issue a notice of expropriation which will set out a date on which ownership of the property will pass to the new owner. There is no time period stipulated for this.

This is also correct. One must however note that a fairly long period of time will have passed since the initial notice of intention to expropriate was given. There will also have been many attempts for the parties to reach agreement and for the parties to place their positions on record, substantiated with whatever documentary evidence they might have available.

Furthermore, in this notice the Expropriating Authority must set out their offer of compensation and explain how the amount (if any) was decided upon. All supporting documentation relating to this decision must also be attached.

The process is accordingly transparent. Should an Expropriating Authority be acting in bad faith or unreasonably this should be able to be demonstrated on the basis of the submissions already on record.

Step 4 & 5

Property owners with means can seek mediation or approach the courts to challenge the validity of the expropriation. Such a dispossessed owner will bear the onus of proof. This will leave people without the means to fight the matter. In addition, if the property owner is unsuccessful, they will have to pay the legal costs of the state.

This is partially correct. Mediation is specifically provided for because this is a cheaper process with less formality, and the purpose is to encourage the parties to reach agreement between themselves. If mediation fails, the parties can approach the courts.

It is true that the onus to prove their case will be on the expropriated owner and that these proceedings can be expensive. There is however no doubt that there will be many human rights and public interest organizations who will assist expropriated owners with these cases until such time as the courts have passed judgments and created precedents which will be able to be applied to other cases. These precedents will give us guidance as to how the courts view these matters, and this will assist parties to reach agreement.

In addition to this, on the issue of costs, the courts always have a discretion, and because of the political sensitivity and importance of these judgments, and provided that the expropriated owner has not acted unreasonably, I would not be surprised to see a court making an order in terms of which each party should pay their own costs, even if the landowner fails.

In Conclusion…

The fairness of the expropriation process depends on the state acting reasonably and honestly, and on the courts upholding our constitutional rights. For this process to turn into a plunder of assets, both of these attributes must be lacking. While there might be a question mark over the motives of certain highly placed politicians, our courts have thus far carried out their civic duty and upheld our constitution admirably.

Throughout the world, countries have laws which entitle the government to take assets from their citizens for the public benefit and South Africa is no different. The current expropriation laws that we have in place date back to 1975 and are long overdue for an update. Having regard to the specific provisions of our Constitution which deal with expropriation, this proposed Act was to be expected.

Finally, if one looks at the sections of the Act which deal with the calculation of compensation, it is clear that expropriation without compensation is intended to take place only in exceptional circumstances. If one needs more evidence of the government’s current policy towards land redistribution you need look no further than the budgeting of R9.3 billion to finalize 1409 Land Restitution claims over the next 3 years. Why would the government be budgeting to pay for land if they intended to pass a law that would entitle them to take it away without paying for it? It is therefore highly unlikely that this piece of legislation will change the nature of our economy or our country.

Deon Welz
Miltons Matsemela Inc.

08 Mar 2021

THE PROTECTION OF PERSONAL INFORMATION ACT (POPI)

THE FIRST STEPS TOWARDS COMPLIANCE

During the next few weeks we will be focussing on the implementation of POPI in the businesses of estate agencies. This is to ensure we are all ready for full compliance when the period of grace ends on 30 June 2021.

While we do so we need to keep in mind the intention behind POPI, which is to balance 2 competing interests. These are our individual constitutional rights to privacy (which requires our personal information to be protected); and the needs of our society to have access to and to process (work with) our personal information for legitimate purposes, including the purpose of doing business. While the implementation of the new laws will require some effort from everybody, if we all play by the rules this will be a worthwhile exercise.

In certain circumstances POPI does allow us to access and work with the personal information of people without their consent, but this is the exception. The golden rule is that all businesses need to obtain consent from their customers to use their personal information in the context of their business relationship at the time that the customer’s personal information is collected.

For estate agencies, this could be done by the signature of a stand-alone generic blanket type consent, or, if the client is a seller or a landlord who is signing a written mandate, by the inclusion of such a consent in the mandate. We would also recommend the inclusion of such a consent as a standard clause in your deed of sale/offer to purchase and in your lease.

The generic blanket written consent in the form of a stand-alone document is available on our website. You can access it by clicking this LINK. You are welcome to download it and customise it to make it your own. Please exercise caution if you change the wording, as the document has been drafted to give maximum compliance with the minimum of words.

The standard clauses we suggest including in your mandates, deeds of sale and leases are set out below. You will note we have extended the consent to allow you to discuss matters arising from your mandate with your trusted legal advisors.

CLAUSE TO INSERT IN SALE OR LEASE MANDATE:

I/we hereby give AGENCY NAME consent to process my/our personal information, in accordance with the provisions of the Protection of Personal Information Act, for all purposes related to the carrying out of this mandate. Such consent shall extend to the sharing of my/our personal information with your trusted legal advisors who you may approach for advice or assistance during the provision of your services to me/us.

CLAUSE TO INSERT IN DEEDS OF SALE:

The Seller/s and the Purchaser/s hereby give their consent to the estate agency/ies involved in the sale, and to the Conveyancing Attorneys who will register the transfer of the property, to process our personal information for all purposes related to this sale, in accordance with the provisions of the Protection of Personal Information Act.

CLAUSE TO INSERT IN LEASES:

The Landlord/s and the Tenant/s hereby give their consent to the estate agency/ies involved in the lease, to process our personal information for all purposes related to this lease, in accordance with the provisions of the Protection of Personal Information Act. Such consent specifically includes the consent to work with and disclose our bank account details to facilitate the payment of the deposit and the monthly rent to the Landlord/s, and for the refund of the deposit to the Tenant/s.

You will note that we have included a specific consent to process information related to the clients’ bank account in the clause suggested for leases. This is in compliance with section 106 of POPI.

We hope that this will assist you with your efforts in complying with the new laws. Our next instalment of POPI compliance will follow in a few days.

Kind regards

Deon Welz
Miltons Matsemela Inc.

01 Mar 2021

Buying and Selling Property: Nine Important Questions

When you buy or sell your “Home Sweet Home”, particularly for the first time, the process can seem complicated, the terminology confusing, and the risks of making a costly mistake intimidating. You are after all dealing with quite possibly your most important asset!

To help you navigate the process, as either seller or buyer, here are some common questions, with answers.

1. Where can I get a simple guide to the process?

When you come down to the details it certainly is important to get everything right, but a simple, broad overview to start with will go a long way to de-mystifying the process and to setting you safely onto the right path.

Have a look at the Law Society of South Africa’s “Buying or Selling a House: What You Need to Know”. Download it in any of four languages here.

Simply and clearly written, the guide is full of really important information and advice, both practical and legal – take the time to read it in depth!

Turning now to a few of the other more common questions you will no doubt have…

2. Do I really need legal advice?

Our law reports are full of court disputes that could have been avoided with a simple upfront request for legal advice. The danger of not doing so is that many pitfalls await the unwary and you will be held to anything you agree to. It’s only sensible therefore to take advice early – well before you appoint an agent, start looking for a house, or get involved in submitting offers and negotiating sale agreements.

Not having your “offer to purchase” or “agreement of sale” legally checked is a recipe for disaster. Once you sign on the dotted line you are on the hook for everything in the document. With very limited exceptions our law holds you to your signature and it is no good saying later “But I didn’t read the document, it all looked like the normal standard stuff” or “I had no idea I was agreeing to term x or condition y” – tough, you are bound.

Bottom line – chat to your attorney before you do anything else!

3. Whose name/s should I put the property in?

Should you buy the house in your name or in your spouse’s name? Should you buy jointly? Does it matter what marital regime applies to your marriage? What if you are in a permanent cohabitation arrangement rather than a formal marriage? Or perhaps you are wondering whether you should put the house into the name of a company or family trust.

Your choice now will have far-reaching legal, tax and practical consequences; and with some complex areas of law involved, specialist upfront advice is a no-brainer.

4. What else should I ask my attorney?

Common areas of dispute and litigation include “bond clauses” and “72-hour clauses” in sale agreements, confusion over the need to identify or disclose both visible and invisible defects, disagreements over what is a “fixture” that comes with the house and what isn’t, misunderstandings over neighbours’ rights to build and encroach on views and the like, not checking for building plans and municipal Certificates of Occupancy (you will have a problem if a previous owner built or extended without proper plans), not checking the zoning and title deed restrictions (which could put a damper on any plans you have to extend, go up a storey, build a home office, or the like), servitudes or other rights of use over the property, limited “home business” options and so on.

(Tip: Take lots of “before and after” photos of the house and property with your cell phone – a dated picture is hard to argue with!)

Other “homework” items to ask about – what paperwork you will need (do you know where your title deed is?), how long your particular transfer is likely to take (and a linked question “what date of occupation should we agree on?”), to whom deposits and any occupational rental must be paid (and who gets paid the interest earned on monies held in trust), what compliance certificates you need, how to find the best bond rates, whether you might qualify for a FLISP (Finance Linked Individual Subsidy Program) subsidy, how to cancel and open municipal service accounts, the rights of any occupiers (not just tenants, also “unlawful occupiers”), and so on – you will have your own list.

5. What about planning my finances?

Ask your lawyer for a breakdown of who will pay what and when. Think deposits, bond and transfer costs, transfer duty, agent’s commission, bond settlement balances and so on. Cash flow forecasting, and a clear understanding of the timelines involved, are critical here to avoid unpleasant surprises down the line.

As a buyer, factor into your “affordability budget” not only bond repayments and your projected regular monthly costs (rates, services, insurance premiums, security costs etc) but also an emergency fund to cover any unexpected costs that may crop up.

On the subject of finances, cyber-fraud is a growing issue when it comes to electronic communications and payments so agree with your lawyer on measures to ensure that neither of you falls victim. Fraudulent “here are my new bank account details” emails are flavour of the month, but the scams are constantly evolving.

6. Should I buy-to-let in the current market?

Buying-to-let can be an excellent investment channel, and for a whole host of reasons this time of pandemic and disruption has opened up an abundance of opportunities to prospective landlords. Just don’t rush in blind – choose the right property in the right area, go into the process with your eyes fully open, and in particular beware the common pitfall of failing to minimise your risk of having to fight a difficult, destructive or non-paying tenant. Residential property occupiers enjoy strong protections against eviction even in normal times, and these protections are even stronger for the duration of the National State of Disaster.

It is essential also to understand the impact of the Rental Housing Act on the landlord/tenant relationship – do you know for example the specific requirements around rental deposits and joint property inspections? “Ignorance of the law” is no excuse, and non-compliance could cost you dearly.

7. Who appoints the conveyancer and why do I need one?

In a nutshell, you need to appoint a specialist lawyer (a “conveyancer”) to pass transfer of ownership from the seller to the buyer in the Deeds Office. That’s because only on registration of the transfer does the buyer become the legal owner of the property.

As a seller, insist on choosing the conveyancer – pick a firm you can trust to act with professionalism, integrity and speed.

8. What about buying into a complex?

Owing a house and living in a community scheme come with substantial benefits, just understand exactly what you are letting yourself in for both on a practical level and in regard to the various rules and regulations you will be agreeing to.

Our courts regularly have to sort out bitter (and unnecessary) disputes around owners desperately – and almost always unsuccessfully – trying to get out of complying with body corporate and Home Owners Association rules. Common areas of complaint are home businesses, pet ownership and control, vehicle parking, noise, nuisance objections and the like.

9. What records and paperwork should I keep?

One thing is certain – the document you don’t keep on file is the one you will be desperately searching for in 10 or 20 years’ time! So when in doubt about a particular item keep it, but at the very least have a file (backed up electronically) with –

Your title deed (also called a “deed of transfer”) from the conveyancer. If your property is bonded the bank will keep the original in which event keep a copy plus a note as to which bank has the original. If you lose your title deed you can get a copy but there are delays and costs attached which you really want to avoid when you come to sell again down the line.
The full signed agreement of sale and annexures,
The conveyancer’s final statement of account and associated invoices,
All bank loan and bond documents,
Your municipal Certificate of Occupancy if you undertook any building work (construction, renovations, extensions etc),
A running list with supporting documents of all tax-relevant expenses. For example, keep a running Capital Gains Tax schedule with –
- A list of expenses relevant to the house’s “base cost” (purchase price, transfer costs and legal fees, bond costs, agent’s commission, costs related to the sale or purchase like advertising, architect’s fees etc) and
- Ongoing capital expenses i.e. improvements and renovations (but not repairs or maintenance).
“Before and after” photos of the house and property,
Ask your lawyer if there is anything else you should keep relevant to your particular property and transfer.

This article was published recently by LawDotNews. We credit the original author.

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