Posts By :

SearchKings Africa

1024 684 Prevance - Bridging Finance South Africa

Can your neighbour object to building plans?

Nothing can disrupt a person’s life as much as a dispute between neighbours and even more so when there are building works and renovations involved. Disputes of this nature tend to escalate where one owner decides to build on their property and the neighbouring owner is of the opinion that the renovations will interfere with his property rights. As a result, neighbours who are of the opinion that their rights are being violated by either obstruction of views, the aesthetics of the renovations or even excessive noise, may want to address the problem by preventing the approval of building works by the Local Authority.

Although the application for approval of building plans is lodged with the Local Authority, they are required to adhere to the requirements set out in the National Building Regulations and Building Standards Act.  It is therefore important to note that this Act does not create a legal obligation for any owner to notify their neighbours of their intent to apply for building plans nor does it create a right for the neighbours to object.

The Local Authority have a duty in terms of section 7 of the National Building Regulations and Building Standards Act to consider the rights of neighbouring properties and can therefore, within their discretion, request that the neighbour be informed and consent to the prospective building works in terms of their By-Laws.  A neighbour must be informed of building plans where the application for building plans is made simultaneous to an application to rezone the property or where an application is made to remove a restrictive condition (e.g. application for the relaxation of a building line).

During the approval process the Local Authority must also objectively determine if the interference of building works will be reasonable by taking into account various factors listed in the Act:

  • The measure or extent of the interference
  • The suitability of the plaintiff’s use
  • The duration of the interference
  • The time the interference took place
  • The sensitivity of the plaintiff to the harm; and
  • The possibility of avoiding or mitigating the harm.

In conclusion, if an objection is submitted, the objection itself does not necessarily prevent the Local Authority from approving the building plans. The Local Authority will within its discretion apply the factors and weigh up the rights of the different parties prior to making a decision regarding the approval.

If the aggrieved neighbour does not agree with the approval, they will have the option to object to the approval and follow the internal procedure available for such objections.  Only after they have exhausted all other remedies and are of the opinion that the owner did not follow the correct procedure, will they be able to apply for setting aside of the approval in terms of the Promotion of Administrative Justice Act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Source: https://smutsco.co.za/

220 150 Prevance - Bridging Finance South Africa

Property Owners: Your Rates Could Quadruple for Unauthorised Land Use

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

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

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

The house whose rates bill quadrupled

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

If your neighbour breaches land use laws…

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

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


Different strokes for different municipalities

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


Check the zoning before you buy property

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

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

This article originally appeared in LawDotNews and is reproduced with the permission of Gerings Attorneys and DotNews

800 301 Prevance - Bridging Finance South Africa

Is a Seller held liable to repair a leaking roof after the property is sold?

Is a Seller held liable to repair a leaking roof after the property is sold?

To understand which party is liable, one must appreciate the difference between latent and patent defects. A latent defect is not visible or can be discovered when inspecting the property. This type of defect impairs the use and enjoyment of the property. Typical examples of latent defects are leaking roofs, dampness and/or structural defects in the foundation, to name but a few.

On the other hand, a patent defect is visible when inspecting the property. Hence, the parties can discuss the options of who will attend to the repairs. The same may be negotiated between the parties, be it the Seller who repairs the patent defect or reduces the purchase price for the Purchaser to repair.

Thus, it is the latent defect matter that triggers the dispute between the parties should it arise. The common law position is as follows;

If the Seller gives the purchaser an express written warranty that the property is sold free from any defects, and after the sale is concluded, the purchaser confirms that there is a defect, the Seller can be held liable for the repairs. For example, if the Seller declared in the agreement of sale that the roof does not leak and after the sale the Purchaser experiences leaks in the roof, the Seller is held liable as there has been a breach of contract.

If the Seller misrepresents to the Purchaser regarding the property’s condition, the Seller can be held liable. For example, if the Seller is aware that the roof leaks and does not declare the same to the Purchaser, the Seller can be held liable, and the sale can be set aside, or the Purchaser may proceed with the sale and claim a reduction in the price for the damages.

One may ask, but what if the Seller did not know about the latent defect? The answer is yes, the Seller can be held liable if the latent defect existed when the sale was concluded between the parties.

But why is there a voetstoots clause in the sale agreement, which is supposed to protect the Seller by informing the Purchaser that he/she/they are purchasing the property as-is (voetstoots)? The voetstoots clause does not protect the Seller and does not exclude the Seller’s liability if the misrepresentation is proven; hence if the Seller was aware of the latent defect and did not disclose same to the Purchaser, the Seller can be held liable.

The Consumer Protection Act, which came into effect on the 1st of April 2011, states the Purchaser has to be informed of all details regarding the property that he/she/they are purchasing. Once the Seller expressly states what condition the property is in and the Purchaser expressly accepts the current state of condition of the property before purchasing the property, the implied warranty of the property’s condition falls away. The effect of the CPA has been that the voetstoots clause does little to protect the Seller when it is tomes to defects; hence the Seller is urged to declare all defects of the property to the Purchaser before concluding a sale agreement.

 

Reference List:

PRACTITIONERS GUIDE CONVEYANCING & NOTARIAL PRACTICE BY ALLEN WEST

CONSUMER PROTECTION ACT 68 OF 2008

 Source: Miller- Bosman- Le Roux

800 300 Prevance - Bridging Finance South Africa

The Seller passed away during the transaction. What now?

While concluding the sale of an immovable property, the seller will sign a power of attorney, which gives the attorney the obligation and authority to attend to the transfer of a certain property, which has been sold for a certain amount on behalf of the said seller.

Each power of attorney will differ in its content and the terms contained therein, but the basics will remain.

When the seller dies any power of attorney that may have been executed will automatically lapse. The legal principle behind it is that you, as the authorized person, can not act on behalf of a person that can not act for himself, which is common sense.

The same principle applies when a person becomes insolvent, or is so incapacitated that they can not make their own decisions.

In the latter case the Court may grant an order declaring the patient to be of unsound mind and as such incapable of managing his affairs and following this, to have a curator bonis appointed to administer the patient’s financial affairs.

The curatorship application is usually brought by a member of the patient’s family. However, any person who can show sufficient interest can also do so, for example, a friend or business partner.

It is important to keep your family up to date on powers of attorneys signed, so that someone can let the attorney know who is holding a power of attorney on your behalf.  If a transaction is registered after date of death on a power of attorney that has lapsed,  it can have far reaching consequences for the estate and the finalization thereof.

Source is Neuwmann Van Rooyen. https://www.nvrlaw.co.za/Home.aspx

700 467 Prevance - Bridging Finance South Africa

How the new Property Practitioners Act will impact property developers

Accreditation and compliance already dominate the operations of South Africa’s property developers – such as ensuring that the necessary certifications are obtained and that the property to be developed follows all the necessary zoning laws. Now, for some property developers, the Property Practitioners Act (PPA) will usher in a new era of additional compliance and certification requirements.
 

Wilco du Toit, associate, Barnard Incorporated Attorneys

Wilco du Toit, associate, Barnard Incorporated Attorneys

From 1 February 2022, the Property Practitioners Act repeals the Estate Agents Affairs Act and casts a wider candidate net that now includes property developers – including their directors, members, or trustees, who act as a facilitator on behalf of another in the sale and letting of immovable property for profit or gain.

The many property developers who will fall under the definition of a “property practitioner” defined in the Act will, among other legislation and provisions, need to ensure compliance with Chapter 8 of the PPA.

Fidelity Fund Certificate

Sections 47 and 48 of the Act compels property practitioners (including its directors, members or trustees, and its employees who act as property practitioners) to obtain and hold a valid Fidelity Fund Certificate. No property practitioner can act as a property practitioner unless a valid Fidelity Fund Certificate is held by that person.

Anybody that fails to obtain a valid Fidelity Fund Certificate may be required to repay any amounts received in respect of any property transaction.

Source: BIZCommunity
600 400 Prevance - Bridging Finance South Africa

Selling property out of a deceased estate

 

If an agreement for the sale of immovable property is concluded and the seller dies before the property is transferred, the sale can still proceed.

Upon the seller’s death, his/her estate vests in the Master of the High Court until an executor is appointed.

Once appointed, the executor is enabled to sign the transfer documents. The power of attorney to pass transfer is then sent to the Master for approval and is then endorsed by him/her in terms of section 42(2) of the Administration of Estates Act 66 of 1965.

The heirs, who usually need to consent to a sale out of a deceased estate, need not give their consent, as the property was sold by the deceased during his/her lifetime. The property can then be transferred to the purchaser in terms of the Deeds Registries Act 47 of 1937.

Contact me should you wish to discuss the sale of property out of a deceased estate further.

Source: Miller Bosman Le Roux en die Phatshoane Henny Group

1024 682 Prevance - Bridging Finance South Africa

Property Sellers: Why, How and When to Choose Your Own Conveyancer

“A great deal is at stake in the transfer of fixed property. It is generally the largest single asset that a person owns and the transaction for the purchase or sale of a fixed property is probably the most important contract undertaken by individuals” (Law Society of South Africa)

For many of us, our home is our most important asset so when it comes time for us to sell, do everything possible to ensure that your interests are fully protected, that the sale goes through quickly and smoothly, and that you are paid without unnecessary delay.

Appointing the right conveyancer is key here. Let’s have a look at the “Why, Who, How and When” of it…

Why do I need a conveyancing attorney?

Legal ownership in “immovable” or “fixed” property (that is, land and permanent attachments such as buildings) can only be transferred from seller to buyer through a formal registration process in the Deeds Office. This is carried out by specialist attorneys who have been admitted to practice as conveyancers.

Who appoints the conveyancer, and how?

As the seller, it is your right to choose which conveyancer will carry out the transfer.

The agreement of sale (it may be called an “Offer to Purchase”, “Deed of Sale” or similar) should contain a clause specifying the conveyancing (or “transferring”) attorney. Make sure you fill in your chosen attorney’s name and details in the space provided, and do not allow anyone else to dictate to you who to use!

You may occasionally come across an offeror/buyer wanting to appoint their own attorney for one reason or another, perhaps with the argument that because they are paying the transfer costs (which include the conveyancer’s fees), the choice should be theirs.  But the fact is that you carry more risk, and there is nothing to stop the buyer from employing another attorney to monitor the transfer on their behalf if they really feel this necessary.

Bottom line – stick to your guns! This is your house at stake, so the choice is yours, and yours alone.

How to choose the right conveyancer

Your choice here is critical. You need to appoint someone you can trust to handle the process with the utmost professionalism –

  • Speed will be important to you (“time is money”!), and whilst a certain amount of delay is inevitable (there are lots of formalities and red-tape requirements involved), a pro-active and committed conveyancer will keep delays to a minimum.
  • Communication: Progress updates should be regular and timely, keeping you in the loop at every step of the process.
  • Attention to detail is also vital. Conveyancing is a specialised field, calling for meticulous compliance with a host of rules and regulations. Moreover every sale agreement will be different, and its precise terms and conditions must be complied with.
  • Cybersecurity has become a major issue in recent years, particularly around the question of email integrity. You will need to play your part here too (to take just one example, don’t ever take at face value an email purporting to come from your attorneys “advising you of our new banking details”), but knowing that your chosen firm of attorneys has security protocols in place is critical to resting easy that the purchase price will indeed end up in your account.
  • The need for scrupulous integrity goes without saying – a lot of your money will be at stake here!

When should I bring my attorney into the sale process?

Ideally, from the very start. When you first decide to sell, you will find it invaluable to have your attorney’s advice on how to go about it, whether you should speak to an estate agency, how best to market your property, what pitfalls to avoid and so on.

When it comes to the agreement of sale itself, a myriad of things can go wrong if the contract isn’t professionally drawn to be clear, concise, legally enforceable and configured to protect your interests. So if you are presented with an offer or agreement drawn by someone else, take legal advice before you agree to anything!

Source: Lawdotnews en Tanners & Associates. 

1024 684 Prevance - Bridging Finance South Africa

Cancelling Your Bond What You Need to know

Most homeowners selling their properties have a registered bond that needs to be cancelled with the financial institution that originally financed their purchase. What most homeowners do not realise is the implication of early termination of the bond and the amount of penalties imposed by financial institutions for the early termination. The cost for cancellation and early termination is for the account of the seller and therefore it is important for the seller to understand exactly what is required to reduce his or her risk.

In terms of the National Credit Act, financial institutions are entitled to charge an early termination penalty should the seller wish to cancel their bond prior to the completion of the term of the bond. The aforementioned charge or penalty depends on the specific terms of the credit agreement between the seller and the specific financial institution.

It is important for homeowners to remember that giving notice to the bank of your intention to cancel and the actual cancellation of the bond are 2 different things. Giving notice only starts the process of calculating the penalty interest but the bond must physically still be cancelled in the Deeds Office. This process will be initiated by the bank giving instruction to a conveyancer to attend to the cancellation.

If registration takes place after the 90 day notice period, the penalty will fall away.  If registration of the transfer of the property falls within the 90 day time period, the penalty will be reduced pro-rata to the time left on the notice period.

WHAT STEPS DO YOU NEED TO TAKE TO CANCEL YOUR BOND?

  1. The moment you put your property up for sale proceed to give written notice to your bank of your intention to sell and to cancel your bond. The notice can be done telephonically but we advise clients to have written confirmation of same in case the date of notice is disputed at a later stage.
  2. Confirm with your bank what their exact process is regarding notice i.e. do you give a once off notice and after the 90 days no penalties are charged or do you need to give notice every 3 months if the property hasn’t sold yet?
  3. Check whether your original credit agreement corresponds with the process indicated by the bank.
  4. The bank will instruct an attorney to attend to the cancellation of the bond. If the bond is on a R0,00 balance and not linked to a transaction, the attorneys will contact you and proceed with the cancellation.  If there is still a balance outstanding and the cancellation is linked to the sale of your property, the attorneys will be in contact with the attorneys attending to your sale.
  5. Remember that once you give notice to the bank, most banks put a hold on your access facility (if applicable). So it is advisable to withdraw any access funds that you may need prior to cancellation of the bond before same are frozen.

Contact our office should you require any assistance to cancel your bond and we will notify the relevant bank accordingly – 021 824 2020 or info@smutsco.co.za

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Source: Smuts and Co Attorneys
https://smutsco.co.za/2021/09/01/cancelling-your-bond-what-you-need-to-know/

385 257 Prevance - Bridging Finance South Africa

Executive Premier Funding Solutions by Prevance Capital

Executive Premier Funding Solutions by Prevance Capital
Are you tired of waiting for lengthy traditional funding methods to be approved? We are excited to announce that have just launched our latest new property finance solution, the Executive Premier Funding Solution, targeted at the experienced, successful property developers and businesses in South Africa.

The Executive Premier Funding Solution is a first of its kind in South Africa as it breaks the conventional barriers of short term loans by enabling much larger facilities – up to R100 million – whereas before we could only offer up to R7 million! Yes, you read correctly, facilities of up to R100 million are now available to businesses and property developers who meet the standard requirements, the ability to demonstrate a credible repayment exit strategy and provide first line mortgage bonds over readily releasable property. In other words, if you have an excellent track record, strong balance sheet and access to your own tangible equity contributions, this is the alternative funding solution you have been looking for!

Whilst the concept of business loans and development finance are not new concepts, and are what the foundation of our business is built on, it is important to note that, other than traditional banks, there is no bridging finance company in South Africa that offers this kind of facility – that is until now of course!

Traditional funding methods secured through common financial institutions (such as banks) under conventional terms are often lengthy and time-wasting processes, with unfavourable results, and many additional hidden costs i.e., administrative fees, initiation fees etc. Thus, the magnitude of an alternative funding solution offering such large facilities in the landscape of short term finance solutions, is ground breaking for South African property developers and businesses. The Executive Premier Funding Solution is an alternative and viable short term funding solution aimed at providing a better overall Rand cost for your facility and giving you the freedom of advancing your project timeously.
Another advantage of choosing us as your preferred alternative funding provider (instead of laborious traditional banking methods) is that our process is quick and simple. From start to the end, you will be in the capable hands of industry experts and know exactly where you stand throughout the entire process. Our focus is to build partnerships and strong business relationships. By talking directly with decision makers your project or transaction is timeously assessed on merit and viability. Less red tape than traditional funding methods means we have faster processes and decision-making abilities, making the Executive Premier Funding Solution the perfect alternative solution for very successful businesses and property developers with a proven track record, experience and security to grow their businesses to the next level.

Take a look at the core highlights of the future of executive funding solutions for your development or business:
Approval of facilities up to R100 million.
More favourable and affordable interest rates.
Fast turnaround from our vast experienced credit committee.
Security in the form of unbonded/unencumbered with a 2 to 1 Loan to Value Ratio.
To apply, you will need to showcase your excellent track record with years of experience in the property development and business industry.
A strong balance sheet.
Access to own equity contributions is vital to qualify.
Preferably loans to be short term.
Each project or transaction is assessed on its merits.
Feasibility and viability of the project to be demonstrated.
Once approved and in place, rolling facilities can be approved for future phases.
Property developer council approvals to be in place i.e. approved building plans etc.
Tangible payback mechanism to be demonstrated.

We understand our clients’ needs are unique and varied and we are proud to continuously bring new and exciting innovative solutions to our clients. The Executive Premier Funding solution is unique in its offering as it is by far our largest facility on offer to qualifying enterprises and it breaks the mould of traditional short term property finance solutions. We understand time is money which is why we aim to build relationships and get to know your business so we can ensure that we are offering you the best funding solutions for many years to come. We are serious about you and your business.

Why not use the Executive Premier Funding Solution to unlock your development?
Our experienced, highly trained and qualified business executives are waiting to discuss the Executive Premier Funding Solution with you.
Get in touch with us today: 0860 987 987
Email: info@prevance.co.za

220 150 Prevance - Bridging Finance South Africa

Buying Property from a Company – Should You Buy the Shares or the House?

“There is never a wrong time to buy the right home” (Anon)

You find the house of your dreams, agree on the price and get ready to put pen to paper. The house is in the name of a company, and you are offered a choice – either buy the house out of the company or take over the company (which owns the house and nothing else) by buying the shares and thus avoid the delay and cost of a normal property transfer and registration in the Deeds Office.

What should you do? There are a host of both practical and legal factors to consider before deciding. Holding property in a company can come with significant advantages, but there can also be major disadvantages, so professional advice specific to your own circumstances is a no-brainer here.

Some of the many factors you should consider are –

  • Tax and estate planning considerations. These are complex and no two cases will be identical, but consider the higher capital gains tax rates payable by companies (and the annual exclusion and “primary residence exclusion” of R2m for individuals), the differential income tax rates, possible VAT considerations, your own estate planning circumstances (including the estate duty angle) and the like.
  • Asset protection. Particularly if you run your own business or are in a profession at significant risk of litigation, it may be important to you to protect your major assets (like your house) from possible attack by creditors. Any assets held in your own name will be a natural target if you run into financial problems, whilst those held in another entity like a company or trust will generally be much harder to attack. Complicated multi-level structures such as having a trust owning your company’s shares have generally fallen out of favour for a variety of reasons, but you may still be advised to consider one in your particular situation.
  • Joint ownership. Joint ownership of property comes with its own set of risks and issues, and depending on your needs you might be advised to address them with a company/shareholder structure.
  • Costs and simplicity. Running a company comes with extra costs (accounting/auditing, statutory costs etc), formalities and responsibilities, getting a bond in your own name is likely to be a simpler process than taking it in a company, and so on.
  • The hidden risks. When you buy a company’s shares you get the company as it is, with all its assets and liabilities. If the seller is in any way unreliable, you could find yourself losing the house to an undisclosed company liability that suddenly crawls out of the woodwork. Suretyships are a particular danger here – there is no central register of suretyships you can refer to, and it is common for groups of companies and other entities in particular to sign cross-suretyships without necessarily keeping a record of them all. These are risks that can be largely managed with proper advice and due diligence, but a residual whiff of doubt is inevitable.
  • Other factors. There will be many other aspects to consider, depending on your circumstances and needs, and on the company in question.

Transfer duty – you pay it either way!

As a buyer you can never lose sight of all the costs you will incur in buying a house, and the “big one” is normally transfer duty. It’s essentially a government tax, payable by you as buyer (unless the property sale is subject to VAT), and it can be a lot of money.

Do not however fall into the old (and surprisingly still-common) trap of thinking that by buying the company you avoid paying transfer duty. That was indeed a commonly used loophole in decades past and it is still sometimes referred to. But in reality that all changed many years ago, and (subject to what is said below) you should budget to pay transfer duty as set out in this table –

Source: SARS “Budget Tax Guide 2021

So for example if you buy a house for R3m you will pay R146k in transfer duty. Or R916k on a R10m house. Finding a way to avoid or reduce such a cost is an attractive proposition, and indeed until 2002 it was a common way for buyers and sellers to save transfer duty and to instead pay only ¼% “Securities Transfer Tax” – a huge saving.

That loophole closed however many years ago – on 13 December 2002 to be precise – and since then the sale of shares in a “residential property company” (a company with over 50% of its asset value in residential property) attracts transfer duty on the “fair value” of the property. No savings there!

What about “buying” a property-owning trust?

Similarly, before 2002 a common transfer duty avoidance strategy was to hold property in a trust, then to “sell” the trust to a purchaser by substituting him/her as a beneficiary of that trust. That loophole was also closed in respect of beneficiaries holding “contingent interests” in the property – the situation here is a bit more complicated than it is with companies as there are various types of trust you could be dealing with, so specialist advice is essential.


“This article originally appeared in LawDotNews and is reproduced with the permission of Gerings Attorneys (Tel: (011) 440 1282, Email: nita@gerings.co.za ) and DotNews”.

Head Office : 011-274-1700