Conveyancing Perspectives

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Why a Fidelity Fund Certificate is important for you and your estate agent

“I’ve finally received my qualification to practise as an estate agent, but am still waiting for my Fidelity Fund Certificate. Some people say I can start practising as an estate agent as long as I’ve applied for my Fidelity Fund Certificate. Is this correct, and can I already practise as an estate agent?”

In terms of the Estate Agency Affairs Act (“Act”) an estate agent must have a valid Fidelity Fund Certificate (FFC) in order to receive any payment or commission arising from his or her duties as an estate agent.

In clarifying this provision it has been held by our courts that even if a FFC has been applied for, if a valid FFC was not held by the estate agent at the time of the transaction in terms of which he or she is claiming a commission or payment, the estate agent is not entitled to any commission or payment for such transaction.

The purpose of the requirement for an estate agent to have a FFC is to ensure that the public is not misled and as such the FFC is an important control measure to help reduce the risk to the public against corrupt agents.

Accordingly, a FFC will not be issued to any estate agent that, among other things:

(1) has been dismissed from a position of trust due to improper conduct;
(2) has at any time been convicted of an offence involving dishonesty;
(3) is an unrehabilitated insolvent;
(4) is of unsound mind;
(5) does not comply with the prescribed standard of training; or
(6) does not have the prescribed practical experience.

When the new Property Practitioners Bill is enacted, conveyancers may also not pay out commission, unless the estate agent has provided the conveyancer with a certified copy of his/her valid FFC. It would therefore be wise/prudent for buyers and sellers to request proof of a valid FFC before associating themselves with an estate agent or agency.

See original article.

218 35 Prevance - Bridging Finance South Africa

The Sale Of Immovable Property Without Approved Building Plans


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:

– Application form
– Affidavit by registered owner

– Application form
– Affidavit by registered owner

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

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

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

– 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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Chas Everitt – Property Signpost

prevance.pngHello everyone

Well, the biggest news in recent weeks was of course the national Budget presented by Finance Minister Pravin Gordhan – and not only because of the tax increases and decreases that were announced, but because it opened a window on what our economic future could be in the longer term.  And I must say that from a real estate point of view, that outlook at this point is “good and getting better” with the commitment of the Minister and his team at Treasury to focus on economic growth and job creation and to “spend on the right things” to achieve these objectives.

We agree, for example, that more of our collective resources should be allocated to rebooting consumer and business confidence, attracting more investment, facilitating enterprise and small business and supporting education, because these factors are also key elements in maintaining a healthy and growing property market.

It is even more positive that even in the current tough financial situation, the Minister has found a number of ways to directly encourage home buying and property investment – and all the social and economic benefits that flow from these activities. The first of these is an increase in the Transfer Duty threshold from R750,000 to R900,000, which we estimate will lower the transaction costs for buyers at this level by between R4500 and R15000, and will prove especially encouraging to first-time buyers by reducing the cash amount they need to save to enter the market.

There will also be a benefit for repeat buyers who already have equity that they can use to cover deposit and transaction costs, because they will probably now need to borrow less and be able to pay off their home loans faster. We were also pleased to note no increase for now in Capital Gains Tax, which might have proved a deterrent to the property investors we see returning to the market in greater numbers at the moment in response to a rising demand for rental homes.

Further positives for property are the significant additional Budget allocations to maintain our road, rail and other industrial infrastructure, facilitate wider access to broadband Internet, boost tourism and redevelop and improve urban housing environments to eliminate the terrible effects of apartheid spatial planning. But of course we can’t just wish away the obstacles on the road to this better future, staring with the fact that there is going to be a revenue shortfall of more than R30bn this year that taxpayers are going to have to cover.

We are obviously relieved along with everyone else that there was no VAT increase in the Budget, but “bracket creep” means that just about anyone who gets a wage or salary increase this year will be paying more income tax, and the burden on the so-called super-earners with incomes of more than R1,5m a year gets ever more onerous – and frankly discouraging in real estate terms.     

Meanwhile, everyone is going to be affected by the increases of 30c/litre in the general fuel levy and 9c/litre in the road accident fund levy, whether they drive a vehicle or not, because higher fuel costs boost the price of anything that has to be transported, not to mention taxi, bus and train fares.

Consequently, we think most households will remain under considerable – although decreasing – financial pressure this year, and we are not expecting any sudden surge or spike in home purchasing right now.  We do, however, foresee steady growth and an increasingly bright future for the real estate market in SA once consumers start to experience the tangible benefits of the plans and policies that were laid out in the Budget.

Warm property regards,


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Bridging Finance for Estate Agents

Bridging finance gives agents peace of mind and helps them focus on what’s really important – selling.

Money worries plague most of us at some point and unfortunately this can affect our performance levels. While this may not be much of an issue for those who enjoy full time, paid employment, it can be catastrophic for those who work on a commission basis.

Estate agents are in a worse position than most as although they do all the running around and all the hard work behind the scenes in order to get a property sold, more often than not, they have to wait months for the commission to be paid out. And therein lies the problem…cash flow.

We all have monthly obligations which need to be met and stressing about finances undermines our performance and production levels. This, in turn, causes more stress and so the cycle continues.

Fortunately there are ways to overcome this in the form of bridging finance. Essentially, bridging finance will advance a portion of the commission earned before the transaction has been finalised, allowing the agent to continue to focus on the most important aspect of his job – making more money.

Prevance Property Bridging Finance understands estate agents’ requirements and as such has designed a package specifically aimed at servicing their financial needs.

“We pride ourselves on offering a seamless, hassle-free online service that gives an agent access to 75% of their commission within 24 hours of approval,” says Christo Jonker –Marketing Manager for Prevance Capital Pty Ltd.

“Our track record in the industry speaks for itself and we are immensely proud of the way our company has paved the way for those who are passionate about their real estate careers.”

For further information go to: or log on to the Prevance FaceBook page:!/PrevanceCapital?fref=ts

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Sectional Title Levy Increases You Can Expect

4661c401-3eb2-4001-a88d-5205883fc609“My body corporate has warned that due to recent changes in the sectional title legislation we should be expecting higher than normal levy increases. I live on a tight budget and this news has me very worried. Is it true that my levies will increase or is the body corporate just making this up?”

New legislation affecting the sectional title environment came into effect recently, namely the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) and the Community Schemes Ombud Service Act 9 of 2011 (“CSOSA”), with both pieces of legislation potentially having an impact on sectional title levies.

The STSMA requires a body corporate to establish and maintain two funds, namely 1.) an administrative fund,  and 2.) a reserve fund.

The administrative fund must be used to fund the estimated annual operating expenses of the body corporate for the particular financial year. Such expenses will include maintenance, repair, management and administration of the common property, and rates, taxes and other municipal charges and insurance premiums relating to the sectional buildings or land. The reserve fund in turn must primarily be used to cover the (unexpected) costs of future maintenance and repairs of the common property.

The STSMA regulations prescribe specific formulas that a body corporate must use to determine the minimum contribution to the reserve fund. There are three categories:

Category 1 – If the amount of money in the reserve fund, at the end of the previous financial year, is less than 25% of the total contributions to the administrative fund for that previous financial year, the contribution to the reserve fund must be at least 15% of the total budgeted contribution to the administrative fund.

Category 2 – If the amount of money in the reserve fund, at the end of the previous financial year, is equal to, or greater than, 100% of the total contributions to the administrative fund for that previous financial year, then there is no minimum contribution to the reserve fund. There is thus enough “reserves” for future maintenance.

Category 3 – This is when the amount of money in the reserve fund, at the end of the previous financial year, is more than 25%, but less than 100% of the total contributions to the administrative fund for the previous financial year. The budgeted contribution to the reserve fund must then be at least the amount budgeted to be spent from the administrative fund, on repairs and maintenance to the common property, in the financial year being budgeted for.

If your Sectional Title Scheme does not have any reserve fund in place, you fall under category 1 and your levies are likely to increase in order for the body corporate to implement the practice of a reserve fund.

In general, there is no limit to what the levies can be increased to, but the management rules do determine that the body corporate may, on the authority of a written trustee resolution, increase the contributions due by the members by a maximum of 10% at the end of a financial year to take account of the anticipated increased liabilities of the body corporate.

The second piece of legislation – CSOSA – is intended to establish the Community Schemes Ombud Service (“the Ombud Service”) and to provide for a dispute resolution mechanism to resolve disputes in community schemes (sectional title schemes, home owners associations, housing schemes for retired persons, etc) and to ensure their good governance.

Every community scheme must in each calendar year, on a quarterly basis pay to the Ombud Service a compulsory levy, subject to discounts or waivers as may be prescribed. The compulsory contribution is calculated according to the following formula:

The lesser of R40, or 2% of the amount by which the monthly levy charged by the Scheme exceeds R500 i.e. (your levy minus R500) x 2% up to a maximum of R40.

Based on the above pieces of legislation now in place, there is a realistic chance that your levies may increase in order to allow your sectional title scheme to start recovering contributions from you and the other units, in order to pay the levy to the Ombud Service and establish a reserve fund for the scheme. How much your levies may increase, will differ from one scheme to the next. But nonetheless, prepare yourself for the possibility of a higher than usual levy increase this year.


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What Should a Conveyancer do?

4661c401-3eb2-4001-a88d-5205883fc609Conveyancing (or conveyance) is the legal term for the process whereby a person, company, close corporation or trust becomes the registered and legal owner of immovable property and ensures that this ownership cannot be challenged. It also covers the process of the registration of mortgages.

Conveyancing in South Africa can only be carried out by a licensed conveyancer, i.e. a lawyer who has passed the National Conveyancing Examination.

After an agreement of sale has been made, a conveyancer is appointed (normally by the seller, although the buyer will pay the fees) and instructions are sent to him by the estate agent. These include the names of both the buyer and the seller, a copy of the agreement of sale, and the passport numbers and marital status of the buyer and seller.

The conveyancer should:

  1. protect the interest of his client, the Seller, at all times and these interests should outweigh all other considerations except of course issues of legality;
  1. inform the seller of the conveyancing procedure and keep the seller informed of the progress of the transaction;
  1. advise the seller on the content of the Offer to Purchase, especially regarding suspensive conditions;
  1. advise the seller on the cancellation of his bond, any penalties, notice periods and other administrative charges which may affect the settlement figure;
  1. obtain the seller’s instruction before issuing any guarantees in respect of the transaction;
  1. do everything in his power to register the transaction on or as close as possible to the date agreed to in the offer to purchase;
  1. advise the seller on his obligations in terms of the offer to purchase, so as to ensure that the transfer is not delayed;
  1. meet with the seller to explain, as well as sign the necessary documentation in order to conclude the transaction;
  1. prepare the deeds for lodgement with care, so as to minimise the risk of rejection of the documentation by the Deeds Office;
  1. inform the seller of the transfer on the day of registration;

The process of selling and transferring your valued property can have many pitfalls if the correct advice is not received. This is why it is imperative to be cautious and maintain a serious regard for your own interests when choosing the right attorney to take responsibility for the transfer of ownership.

When looking for a conveyancer one must examine the following pre-requisites:

  1. Is the conveyancer known?
  1. Is the conveyancing firm well established?
  1. Does the conveyancer have experience? Is the firm of appointed attorneys outsourcing the transaction to a conveyancing firm unknown to the seller? Not all firms have conveyancers.
  1. Does the conveyancer have experience in what you require to be done?

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)

Taken from: Pagdens

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What To Do In A Case of Illegal Building by My Neighbour?

4661c401-3eb2-4001-a88d-5205883fc609“My neighbour has recently started building a new double-storey extension to his house which has dramatically impacted on my view as I now look directly into the back of his double storey from my main living area. I was not aware that he would be building and am worried about what this could do to the value of my house. Is he allowed to just build?”

More and more home owners choose to rather expand or renovate their current homes than purchase a new property. Unfortunately, many home owners embark on this process without adhering to the applicable standards and regulations as set out in the National Building Regulations and Building Standards Act 103 of 1977 (“Building Standards Act”) and obtaining all the necessary consents.

According to the Building Standards Act, any plans and specifications by a property owner which involves the erecting of buildings and/or structures must be approved by the local authority beforehand. This approval process involves a comprehensive inspection of the building plans by the local authority’s building control officer in order to determine if all the major and essential requirements, laws and regulations have been complied with.

During the approval process, the local authority has a discretion, in terms of section 7 of the Building Standards Act, to refuse a building plan application on the grounds that it could negatively affect (disfigure) neighbouring properties in the area in which the building is to be erected, if the planned building work will be unsightly or objectionable or if it will detract from the value of adjoining or neighbouring properties. This section is of great importance due to the fact that it protects property owners from ending up in a situation where their property suffers a drastic decrease in value due to building activities of their neighbours.

In your case, I would therefore recommend that, if you suspect that your neighbour is conducting building activities without following the proper procedure or which could have a detrimental impact on your property, you can liaise with the relevant local authority and ascertain whether the required processes have been followed and approvals obtained. If a neighbour did not submit his building plans for approval, he could be fined or even be instructed to cease construction and/or demolish any progress to date. For assistance with this process, it may be prudent to involve your attorney.

Taken from: Wright Rose-Innes

Head Office : 011-274-1700