Monthly Archives :

August 2017

400 267 Prevance - Bridging Finance South Africa

What Is Bridging Finance?

Bridging finance is ideal for those looking to raise funds in the short term. Generally speaking bridging finance is a cash advance that’s secured against future proceeds deriving from the sale of a property although there are packages available that will advance money to those who have been granted a new bond on an existing property, a second bond, or who have switched banks and are waiting for the new bond to be registered..

Not only do companies offering this service often provide a competitive rate, one of the biggest advantages is the turnaround time, mainly due to the fact that monies advanced in this manner are secured by the proceeds of the sale of a property.

Obviously, the time it takes to approve an advance of this nature will differ from company to company, but using a specialised bridging finance company will usually result in the money landing in your account a lot sooner than with traditional lenders.

It is imperative to deal with a reputable bridging finance company which will provide you as the client with a comprehensive quote, including a thorough breakdown of costs associated with the transaction. All admin costs should also be clearly laid out.

“We strongly suggest that those seeking bridging finance deal with a company that is registered with the Bridging Finance Association of South Africa (BFASA),” says Christo Jonker, sales and marketing manager, Prevance.  “All the leading bridging finance companies in South Africa are members, and are obliged to adhere to a strict code of conduct.”

Jonker notes that one of the biggest dangers associated with raising finance through an bridging finance company that doesn’t enjoy a solid reputation within the industry is hidden costs. “Anyone who applies for bridging finance must ensure that the quote supplied contains a comprehensive account of all of the relevant costs in order to ensure there’ll be no nasty surprises further down the line.”

“At Prevance we understand that those who apply for bridging finance generally need to access funds as quickly as possible. Our product allows sellers access to as much as 75 percent of the nett proceeds before the actual transfer goes through. Our team prides itself on not only offering one of the most affordable bridging financing packages available, but our highly qualified, dedicated staff also strive to continuously deliver superior levels of professional service.

“We have always focused on building long-term business relationships with our clients and are extremely proud of the fact that many of our clients repeatedly use our services.”

Jonker adds that the company has gained a solid reputation for its ability to design and create new short term financial solutions as well as for its capacity to adapt to what’s really needed in the ever-changing market.

“It’s important to remember that different people have different needs, and as such those in search of pre-transfer finance need to work with a company which not only understands those needs, but which is in a position to draw up a personal proposal which will afford the client maximum benefits.”

Jonker notes it’s imperative to work with a company that specialises in the area of bridging finance. “Some legal firms have in-house bridging finance operations. Clients using this type of service need to be extremely cautious and understand that there may be a conflict of interest under certain circumstances.”

He says Prevance prides itself on the superior and unique financial solutions it offers, and which it believes has led to the company being regarded as a leader in the industry.

“We have been advancing clients much needed capital on their property transactions for 25 years and have gone from strength to strength during that time. We look forward to being able to help thousands more South Africans achieve their dreams for many years to come.”

218 35 Prevance - Bridging Finance South Africa

The Sale Of Immovable Property Without Approved Building Plans

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Selling your house after making alterations or additions to the property without approved building plans might have certain legal implications. The National Building Regulations and Building Standards Act specifies the need for building plans and approval from the local authority. The local authority may approve or reject building work and renovations on all properties.

The lack of approved building plans could lead to the local authority refusing to allow any further renovations which a purchaser might have had planned. In some instances, although not too often, the local authority could order that the illegally erected structure or additions be demolished. The local authority is also entitled to levy fines on any “illegal” building work that was done without approval.

Most sale agreements contain a voetstoots clause. Essentially, this clause indicates that the purchaser accepts the risk relating to patent and latent defects existing at the time of the sale. The exceptions to this clause are instances where the seller deliberately and fraudulently conceals latent defects from the purchaser that he or she was aware of at the time. In such instances, the seller will remain liable for these defects. The purchaser will, of course, have to provide evidence that the seller knew what was wrong.

Our law considers a property with buildings erected without municipal approval as a property with a latent defect. The voetstoots clause will normally cover latent defects and a seller will not automatically attract liability if he sells a property with unauthorised building works. If the seller knows that there are no plans and he organised and did the renovations himself, and he deliberately does not disclose this fact (with the intention to defraud the purchaser), the seller cannot hide behind the voetstoots clause.
A latent or patent defect that is of a significant nature, and affects the use and enjoyment of the property, does allow the purchaser certain remedies, including cancellation of the agreement, which he is entitled to do, if he can prove that the defect is so serious that he would not have bought the property had he been aware of this. Other courses of action include a reduction in the purchase price or a claim for damages, depending on the seriousness of the defect and the specific circumstances involved.

In many cases, an offer to purchase a house will be dependent on the purchaser obtaining home loan finance from a bank or other institution. And in most instances, (although not all), the financial institution will want to see up-to-date approved plans before finance will be granted. If the plans lodged with council do not match the house as it stands, then the sale could fall through and set the seller’s plans back for quite a length of time, together with additional costs to rectify the problem.
It is therefore of the utmost importance that sellers ensure that they have municipal approved building plans before selling or marketing their property.

See original article.

550 105 Prevance - Bridging Finance South Africa

What is SPLUMA? And How it Affects Property Owners

prevance.png1. What is SPLUMA?
SPLUMA is “The Spatial Planning and Land Use Management Act 16 of 2013” and came into operation on 1 July 2015.
In 2000 the entire country was demarcated into wall to wall municipalities.  The result being that all land in South Africa is included in a municipality and municipalities are required to extend their planning and land use management beyond the traditional township areas.

2. What is the purpose of SPLUMA?

SPLUMA sets the principle that all land development applications must be submitted to the municipality as the authority of first instance – without actually prescribing in detail how spatial planning and land use management issues are to be dealt with within municipal areas.
SPLUMA seeks to promote consistency and uniformity in procedures and decision making for all land development within its authority.

3. What is the effect of SPLUMA on the local authorities?
SPLUMA is a national framework act that requires provincial legislation to enable municipalities to enact spatial planning and land use management by-laws.  The municipal SPLUMA by-laws prescribe how land use applications and appeals are dealt with.
Municipalities in Mpumalanga all basically have similar spatial planning and land use management by-laws.  These by-laws have many requirements and procedures regarding spatial planning and land development.  One such requirement is that municipalities are required to issue SPLUMA certificates before a property can be registered or transferred in the deeds office.

In order for the municipality to issue a SPLUMA certificate the following needs to be in place:

• All funds due by the owner in respect of the land has been paid
• All contravention penalties must have been paid
• All compliance directives must have been complied with
• The land and buildings constructed on the land unit need to comply with the requirements of the land use scheme
• All conditions of approval of any land development application must have been complied with.

The importance of these requirements should not be underestimated as non-compliance in any of the listed conditions will result in unnecessary delays in the issuing of a SPLUMA certificate by the Municipality, and thus a delay in the transfer and registration of a property.  In certain instances, these delays could result in being a deal-breaker for purchase agreements!

4. Are the municipalities geared for implementing SPLUMA?
No, the implementation of SPLUMA is not without problems and challenges.
As the respective by-laws are being implemented by municipalities various shortcomings have been identified in the legislation that will require the by-laws to be amended in future.
Not all municipalities have access to updated property data, aerial photography and GIS systems that will affect the efficiency of the municipal officials and the issuing of SPLUMA certificates.
The bulk of the Mpumalanga SPLUMA municipal by-laws are incomplete as it lacks sections for the granting of real rights (specifically servitudes) in general.
It is yet to be seen how development of state land, tribal areas and farmland is to be authorised by the municipality.

5. How does SPLUMA affect me as property owner?
SPLUMA affects all properties: commercial, industrial, residential, sectional title, share block, tribal, farm, etc.  State land is also subject to the SPLUMA legislation.

Most property owners will not be aware of the requirements of SPLUMA and it will have little affect on them as municipalities do not actively police and enforce compliance in terms of municipal requirements.  However, the SPLUMA requirements affect all properties as a municipal SPLUMA certificate is required by the Registrar of Deeds prior to a land unit being transferred / registered in the deeds office.  Although most transactions will be as a result of sale agreements, certificates will also be required for the transfer of properties from a decease estate or sale of property in execution, or any other instance where a property needs to be transferred or registered in the deeds office.

6. How do I ensure that my property is SPLUMA compliant?
To be SPLUMA compliant the owner must ensure that the following is in place:

• Approved building plans for all buildings – including swimming pool;
• The use of the property has to be in accordance with the municipal zoning. For example, if your property is residentially zoned, operating a guest house from the property would be a violation of the bylaws;
• Ensure that there are no encroachments over the building lines and property boundaries.  If you are uncertain regarding the encroachments of building lines and property boundaries, a professional land surveyor should be consulted.

7. What must I do if my property is non-compliant in respect of the following?
It is advisable that property owners seek the advice of knowledgeable property professionals to assist them with the ever changing and complex legislation involving properties and property transfers specifically.

• Building plans:
Appoint an architect or draftsman to prepare the necessary building plans for lodgement with the Municipality.

• Zoning:
Apply for the property to be rezoned.  Although the procedure is complex property owners can lodge rezoning application themselves, or have a town planner or land surveyor lodge the application on their behalf.

• Encroachment
In the event of an encroachment it is advisable that a land surveyor be consulted to confirm and quantify the encroachment.  There are various options in dealing with encroachments, including:

a) Structures to be demolished or relocated;
b) Servitudes to be registered for areas of encroachment;
c) Portions of properties to be purchased or swopped;
d) Building line relaxation can be applied for;
e) The Mbombela bylaw makes provision for the Purchaser to conclude a written agreement with the municipality regulating the rectification of the contravention whereupon the municipality will issue the SPLUMA certificate in order for the transfer to proceed irrespective of the contravention.  However, this is not the case in all municipalities.

8. How are SPLUMA certificates applied for?
Each Local Municipality has different requirements due to different by-laws.  In order to apply for SPLUMA certificates the respective municipalities have different requirements, for example:

• MBOMBELA
– Application form
– Affidavit by registered owner

• THABA CHWEU
– Application form
– Affidavit by registered owner

• GOVAN MBEKI
– Application form
– Affidavit by registered owner
– Land use rights certificate
– Occupation certificate

• EMALAHLENI
– Application form
– Issued rates clearance certificate
– Occupancy certificate
– Site visit

• STEVE TSHWETE
– Application form
– Affidavit by registered owner
– Occupancy certificate not older than three months
– Site visit

• EMAKHAZENI
– Application form
– Issued rates clearance certificate
– Site visit

9. Must I provide my Conveyancer with a SPLUMA certificate?
No, it is the responsibility of the Conveyancer to attend to the administration involved in obtaining the SPLUMA certificate from the municipality. The Conveyancer will provide you with all the necessary documentation for signature and inform you of the application costs involved.

The municipality may refuse to issue a SPLUMA certificate if there is uncertainty regarding encroachments of building lines and property boundaries.  In such cases it would be advisable for an owner or conveyancer to obtain a certificate from a land surveyor prior to requesting a certificate from the municipality.

10. How is SPLUMA enforced in the deeds office?
From 1st of June 2017 the Registrar of Deeds Mpumalanga has indicated that no transfer of property will be registered without a certificate issued by the relevant municipality indicating that the SPLUMA requirements have been complied with.

See original article.

241 105 Prevance - Bridging Finance South Africa

Can I be held ransom with a rates clearance certificate for future municipal debts?

prevance.png“I’m in the process of selling my house. When I requested a property rates clearance certificate from my municipality they requested me to pay the estimated rates until the end of their financial year, which would be months after my house has been transferred to the new owner. Surely I can’t be held ransom for these future rates just because I need a rates clearance certificate?”

In short the answer according to a recent Supreme Court of Appeal case is “no,” you cannot be held liable for payment of the property rates for the entire financial year of the municipality when requesting a rates clearance certificate.

In the case of Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd the municipality required Amber Mountain Investments to pay rates from 1 July 2009 until the end of its financial year, which would be a few months after the date of the registration of the property transfer. Amber Mountain Investments paid the amount of R2 281 014.68 under protest in order to obtain the rates clearance certificate needed for lodgement at the deeds office to register the transfer. However, they were not happy with the fact that they were accountable for R1 066 532.00 more than was actually due and took the municipality to court.

The question the court had to consider was whether a property owner in the case of a sale of property, is liable to pay rates calculated until the end of the financial year of the municipality or until date of registration of the property transfer?

The court held that the intention of the legislature was clear from Section 118 of the Municipal Systems Act that municipalities were only entitled to recover municipal debts due two years prior to the date of application for the clearance certificate, and that the municipality was not entitled to recover future municipal debts for periods which extended beyond this date, irrespective of whether the municipality had a policy in place which determined otherwise. The court accordingly found in favour of Amber Mountain Investments.

If your municipality is accordingly asking you to pay rates estimated until after the date of application for the rates clearance certificate, you should ask your attorney to assist you to bring the outcome of this case to the municipality’s attention.

See original article.

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