Interesting Perspectives

1024 684 Prevance - Bridging Finance South Africa

10 Things to know when purchasing a property

Buying a property, especially if it is your first home, is often an emotional and stressful experience. We have identified the top tips in making the process smoother and easier.

  1. GET PRE-QUALIFIED FOR FINANCING AND STICK TO YOUR BUDGET

Contact a reputable mortgage originator who will assist you with a credit check and will determine your affordability. In South Africa every person can check their credit record free of charge once a year. By checking your credit rating you will be able to identify any problems and take the necessary steps to rectify the issue. Your originator will, based on your budget and expenses, be able to determine the maximum amount you will be able to purchase for.

  1. BUDGET FOR COSTS

Ensure that you are aware of all the costs involved in the purchase of a property and that you have enough cash available to cover these expenses. Certain amounts (e.g. transfer duty) must be paid prior to transfer and ensure that you always have a buffer for unexpected costs (such as Home Owners Consents). Costs to consider include transfer fees (i.e. legal fees), transfer duty (i.e. property tax), advanced rates & taxes (pro rata portion depending on the municipality), levies and occupational rent.

Also take monthly costs into account that will be payable after registration to determine your budget available for bond repayments (e.g. rates & taxes, levies, insurance and connection fees of DSTV and wi-fi).

  1. INSPECT THE PROPERTY FOR ANY DEFECTS

When purchasing a property, you purchase the property with all latent defects. Latent defects are defects not easily picked up by a superficial inspection of the property e.g. leaking roofs, faulty geysers etc.  In South Africa it is up to the purchaser to inspect the property to determine any visible defects but it is the duty of the Seller to disclose all known defects. If the Seller was therefore not aware of a defect you will not be able to hold them responsible for the damages.

Ensure that you receive a written list of all defects and that you thoroughly inspect the property before signing the contract. In fact, it is in your best interest to have the property inspected by a professional although this cost will be for the purchaser’s account.

  1. WHAT WILL BE INCLUDED IN THE SALE AND WHAT NOT

Disputes often arise between sellers and purchasers relating to fixtures and fittings removed after the purchase of a property. Ensure that all possible fixtures and fittings that can be removed (e.g. decorative items in the garden, DSTV Dishes etc) be included in the Deed of Sale.

  1. FINANCIAL REQUIREMENTS OF THE CONTRACT

Your transaction will be made up of a cash payment or a bond or a combination of both. Ensure that you have enough cash available to cover your deposit together with all other costs.  Furthermore, as your deposit and transfer duty will be payable by a certain date you have to ensure that the money will be available timeously.

  1. COMPLIANCE CERTIFICATES

One of the important documents that the Seller will have to present prior to registration is the compliance certificates (e.g., electrical, plumbing, beetle, gas, electric fence etc). Most certificates are legal requirements and will certify that the installation meets the legal requirements. Ensure that you know exactly which certificate you must be provided with and what exactly they cover.

  1. GET YOUR DOCUMENTS IN ORDER

There is a lot of paperwork involved in buying a property. Ensure that you request these documents (house plans, guarantees for appliances e.g., air conditioners, stoves, ovens, garage door motors etc.) from the Seller. You will also be required to present your FICA documents to the agents and the conveyancer.

  1. OCCUPATION

A very important question when purchasing your property is when you will be able to move in. In general, if your contract determines that you can take occupation prior to transfer, a date will be specified in the contract against the payment of occupational rent. The rent will be paid in advance i.e. you can only move in once the rent has been paid. If no date is determined in the contract you will be able to move into the property on date of registration.

  1. GET ADVICE BEFORE SIGNING ANY DOCUMENTS

Mistakes on contracts can be time-consuming and expensive – confer with one of our experienced conveyancers before you sign any contract.


Source: Smuts and Co Attorneys
https://smutsco.co.za/
300 200 Prevance - Bridging Finance South Africa

Court finds against EAAB in battle for FFCs

In a scathing judgement handed down from the High Court on 15 March, the failure of the Estate Agency Affairs Board (EAAB) to issue Fidelity Fund Certificates (FFCs) to the applicant estate agents has been found without merit.

 Tony C

This comes after an urgent application from the Real Estate Business Owners of South Africa (REBOSA) as a last resort to assist real estate professionals still awaiting the issuance of their FFCs for 2021.

The EAAB was not only unable to provide any evidence supporting the lawful withholding of FFCs from the applicant agents and agencies, but its conduct during litigation was also such that it was explicitly called out in the court’s judgement as “further evidence of the disarray in the EAAB and the concerns raised by REBOSA”.

As a result, the court found in favour of REBOSA and its co-applicants, with costs. The EAAB has been given urgent deadlines by which they must either issue the outstanding FFCS to each qualified agent and agency listed in the application or notify them of valid reasons for not doing so.

Further to this, the EAAB has been ordered to file a report with the court within 30 days detailing the number of applications for FFCs received on or before 31 October 2020, how many of these applications were approved for certification, and how many certificates have been issued. The regulator must also disclose the total number of unresolved queries lodged by estate agents and the total funds currently held in its suspense account.

“REBOSA welcomes the judgement, as it highlights the plight of the average agent in our industry,” says REBOSA Chairman, Tony Clarke. “Even more importantly, we hope that it will open doors to collaborating with the EAAB on resolving its service delivery challenges once and for all. This would be a huge step towards achieving a mutually beneficial working relationship with our regulator and building a better professional future for the real estate industry as a whole.”

Source is www.eprop.co.za
1024 683 Prevance - Bridging Finance South Africa

Buying and Selling Property: Nine Important Questions

“Owning a home is a keystone of wealth… both financial affluence and emotional security” (Personal Finance Expert Suze Orman)

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

 

Reference
www.tanners.co.za
dotnews.co.za

800 371 Prevance - Bridging Finance South Africa

Prevance capital – Sellers Advance: Capitalising on the Buyer’s Market

The adage of “Cash is King” has never been more pertinent than in the year 2020. The Covid-19 global pandemic has left many investors digging the fleece out of their back pockets. As per Stats SA, the first quarter report for South Africa’s 2020 GDP is down by 2% for the period and the Consumer Price Index for April 2020 is showing a year-on-year increase of 4.6% for Housing and Utilities. This paints a pretty clear picture of the squeeze as South Africans are asked to do more with less.

As can be seen from the Lightstone prediction model below, these macro market forces are set to have a marked effect on the interest rate.

 Although the outlook on the property market is currently quite gloomy, the silver lining is that it is a great time to be bargain hunting. Property remains a sound long-term investment and your future self could very well benefit from a savvy move made in the present. If you’re looking to buy to rent, Sandton Central is a prime location to secure an investment property for future income generation.

In an era where cash flow is tantamount to a science, it can often give you the edge in any prospective financial dealing. Having liquidity on hand to capitalise on any opportunities that may arise could well be the difference between the winning offer-to-purchase, and the second-best offer.

Recent interest-rate slashes of 300 basis points in 2020 alone have led industry insiders such as Samuel Seeff, chairperson of Seeff Property Group, to believe that we may be seeing the start of the “best buyers’ market in over 35 years”. It is imperative that any would-be buyers are armed with the proper modern financial tools and knowledge for the job. Ignorance is not an excuse in the digital age, which is why we at Prevance, a specialist provider of short-term property finance solutions, are dedicated to ensuring that our products, such as Sellers Advance, are perfectly placed to meet our clients’ needs.

As we can see from the Lightstone property price forecasts below, the low value property range is set to drop substantially across the board. Music to the ears of prospective property investors looking to buy low and sell high into the inevitable upturn.

Whether you are looking to beat the rush to a hot, new-on-the-market property as an upgrade to your family home, or you are more concerned with increasing turnover efficiency by minimising costly delays in the transfer process of real estate, the Sellers Advance solution can give you up to 75% of your sale’s net proceeds on successful registration/transfer with minimal fuss and at an extremely low cost. The funds can be available as soon as the transfer bond documents have been signed and the transfer costs are secured.

Once the buyer’s purchase price has been secured, the process is seamlessly integrated into the transfer of ownership cycle. When we receive the undertaking from the transferring attorney and our agreement with the seller is secured, then the funds are immediately transferred into your designated bank account. Prevance will recoup their advance plus costs when the sale eventually goes through, often months later. But in the meantime, you are free to enjoy the fruits of your newfound fortune.

It is easy to see the benefits of having such a rapid cash injection i.e. to secure your next property purchase. You can rest assured in the knowledge that your capital will be on hand once you are done dealing with the stress of selling your home. There will be no administration nightmares awaiting you as you prepare for the next step of your journey.

 

150 150 Prevance - Bridging Finance South Africa

Sandton Rentals & Sales

Sandton Central offers prime property

Sandton Central is not only South Africa’s financial capital, it’s also home to high-rise apartment blocks, lifestyle estates and complexes, and some of the country’s most sought-after residential spaces.

Sandton Central – and its most immediate outskirts: Morningside, Rivonia, Benmore, Sandown and Strathavon – had been holding its own despite the implementation of the National Credit Act in 2005, the financial crisis of 2008-2009, the rolling out of load shedding in 2014, and high interest rates in the face of a weakening economy.

The last two years, however, have witnessed a growing lack of investor confidence, even in prime areas such as Sandton. This has seen desperate sellers reduce their selling price, which has created a buyer’s market. And as property prices are expected to decline further over the next few months, we will see some of the best purchase opportunities in more than a decade, whether you’re looking to buy a residential or investment property in Sandton.

The effects of the pandemic on the property market

The low interest rate – the lowest it has been in half a century – is expected to be lowered again by September, which will make it even easier to qualify for a home loan. The interest rate is expected to remain low for the next 18 months.

The gross household income needed to purchase a R1 million property has decreased by around 20% since 2019. This, coupled with the lifting of the threshold for transfer fees to R1 million that was announced in February’s Budget, has been favourable for first-time property buyers. The greatest activity has been in the low to mid-market range, around R1.5 million, with budgets stretching up to R3 million in prime areas, such as central and greater Sandton.

Despite the reduction in property prices, potential investors are playing a wait-and-see game as they opt to rent instead of buy, until they determine what the future holds.

Why now’s the time to buy an investment property

An over-supply of properties coupled with a lower demand means that now’s the best time to buy a property in Sandton Central.

As Baron Rothschild said: “Buy when there’s blood in the streets, even if the blood is your own.” This contrarian investing principle encourages investors to go against market trends – buy when others are selling and sell when others are buying. This results in the markets becoming temporarily over- and under-priced. Though it might be a risky strategy, it pays off in the long-term.

The poorer the market performs, the greater the opportunity for profit in the future. On average, property investors who had the courage to buy property after the last financial crisis of 2008-2009 have witnessed their property value increase by more than 50% in the last decade, with mid-value houses fairing the best.

What the work-from-home trend means for property investors

The Covid pandemic and national lockdown have changed work dynamics. Tenants now consider Fibre and WiFi as a non-negotiable – whether it’s inclusive in their monthly rental rates or an additional cost. After bearing the cost of installation, the property owner can either negotiate the ongoing cost with the tenant as a percentage of their monthly rental costs or allow the tenant to settle the costs with the service provider.

Vacancies and good standing tenants

An investment property in a well-located area like Sandton Central – that’s perceived to be safer, offers a comfortable lifestyle and is close to key amenities, such as good schools, private hospitals and shopping malls – is unlikely to stand vacant.

Prime areas remain in high demand, despite the fact that many tenants will downgrade or opt for co-sharing properties until financial stability returns. However, in many cases monthly rentals are becoming more expensive than bond repayments on the same property.

To give Sandton property investors an idea, 81% of residential tenants in Greater Sandton remained in good standing during the first quarter of 2020, according to the TPN Rental Monitor. When it comes to good standing according to rental value, 86.30% of tenants who pay between R7 000-R12 000 monthly remained in good standing. They appeared to be the least affected segment of the market during lockdown, with a post-lockdown vacancy rate of 8.6%. Meanwhile, 84.28% of tenants within the R12 000-R25 000 remained in good standing with a post-lockdown vacancy rate of 11.3%.

My predictions for the future

In the past, it might have been easier for an employee to get a home loan than it was for their employer, namely a self-employed business owner or a commission earner. I sincerely hope that lending organisations undertake a mindset shift when it comes to offering home loans to such entrepreneurs, especially if their business is growing.

Markets will remain depressed for the next year, due to the economic effects of the lockdown, a lethargic economy, an over-supply of properties, and prolonged online property shopping before a purchase is made.

Competition between the major lenders has resulted in a lean towards 100% bonds, while ABSA is offering a 105% loan to value ratio. . Buyers with available capital for a deposit should take advantage of this situation.

If you have taken the decision to buy a property in the near future, take the risk and you might pick up a well-priced bargain. You are likely to pay off your bond through rental payments and if you wait long enough for the market to recover before selling, you will likely profit for future investments. 

Stephen Brian Szewach

Stephen is the principal of an Estate Agency -Sandton Rentals & Sales and has been a property investor for 20 years with numerous properties in Sandton. He is the founder of the Property College (www.propertycollege.co.za: launching August 2020), a learning and educational platform that assists property buyers with property investment strategies. He holds a Bachelor of Commerce and a Bachelor of Accountancy (Honours Degree) from the University of the Witwatersrand. Stephen is a Fellow member of the Chartered Institute of Management Accountants and a Chartered Global Management Accountant.

800 300 Prevance - Bridging Finance South Africa

Electronic signatures – valid or just fantasy?

 
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The COVID-19 pandemic and nationwide lockdown, as well as the continued restriction on many economic activities, has created severe financial pressure for many businesses, especially from a cash flow perspective. It is therefore vital for businesses to not only rearrange and amend their current contractual obligations, but also to enter into new contracts, in order to survive.

Rearranging of current contractual arrangements may involve anything from entering into addendums to amend contractual performances (such as lease agreements or contracts with suppliers) or entering into entirely new agreements. Businesses will of course need to enter into new agreements with clients to secure work and generate income, or even conclude agreements to secure financial assistance (such as loan agreements).

The current nationwide restrictions on movement, as well as the need to enforce social distancing and limiting physical interactions with others, have made it difficult for people to get together to physically sign contracts. Furthermore, while many people may have access to a smartphone, tablet or computer and internet connection at home, not everyone has access to a printer and scanner. These circumstances have made it difficult for contracts to be signed. In order to proceed with business activities under these circumstances, many businesses are proceeding with verbal agreements or written understandings that have not been officially signed off.


Must a contract be in writing to be valid?

A common misconception regarding contracts is that they must be in writing to be binding and valid. Our law does generally not require formalities for concluding contracts and therefore a contract generally does not need to be in writing and signed by the parties to be legally valid. There are however exceptions to this general rule, which requires certain contracts to be in writing, or which prescribe certain formalities (such as, for example, suretyship agreements and leases with a duration of more than ten years).

While verbal contracts might be simple and convenient, especially under the current circumstances, it should be kept in mind that they are difficult and complicated to enforce in the event of a dispute. It speaks for itself that unless the verbal communication between parties can be proven, it is very difficult to show an objective and clear record of the agreement details and terms. This becomes problematic if there is a disagreement between the parties and makes the identification of an accurate solution or remedy a lengthy and potentially costly process. Especially given the uncertainty and unpredictability of the current times, legal certainty is essential.

Must a contract be physically signed?

A further question that then arises is whether you need the original signed version of the contract in order for it to be valid. There is still a general misconception that only an original handwritten signature on an original document will be valid. This is not the case. Copies of electronic contracts, faxed and e-mailed versions of contracts, as well as scanned or electronically stored versions, are all feasible formats for legally binding contracts and are enforceable.

Contracts are now very commonly executed electronically, with one person signing, then transmitting the contract in some form to the other, who then signs it and transmits a countersigned version back. It should also be kept in mind that it is also possible and legally valid to sign a contract in counterparts, thus having separate agreements, each signed by a party to the contract, which together form a valid and binding contract.

Can a contract be signed electronically?

The current legal position of electronic agreements in general is regulated by the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”), which confirms that that digital communications are no less legally valid than paper-based communications. ECTA allows for the use of electronic signatures or “digital signatures” as long as certain requirements are met.
What are the requirements for a valid digital signature?

An ordinary electronic signature is described in terms of ECTA as data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature.
According to ECTA, there both ordinary and advanced digital signatures that may be used in respect of transactions, depending on the circumstances. The following constitute four examples of ways to establish a digital signature:

• When a stylus or your finger is used to draw your signature on a device that allows for this. This can be done on a touch screen device (like a tablet or a smartphone).
• Where you upload an image/photo of your handwritten signature. Taking a photo of your handwritten signature on a piece of paper and uploading it to the correct place in the applicable document.
• Using your cursor or mouse to draw your signature. There are a number of programs that allow for the drawing of a signature in this way.
• Typing your signature on your keyboard.

Is a contract entered into with an electronic signature binding?

Generally speaking, while most agreements may be signed electronically, an agreement will generally require a signature by hand if a law requires this and will overlap with agreements that are required to be in writing to be valid (such as wills).

It is important to keep in mind that if you are going to make use of an electronic signature, such as by taking a photo of your signature and then using it in a contract, to keep this safe and secure, in order to ensure that not just anyone can obtain the image of your signature and use it recklessly or against your wishes.

You should also keep in mind that some contracts which you have already concluded may prevent their amendment by way of an electronic signature or data exchange. You should therefore look out for these non-variation clauses in current agreements that you want to amend.

What if I am unsure?

It is essential that contracts are legally enforceable and have a sense of certainty, especially given the uncertainty of the current times. Rather make sure that you have a written contract that has been validly concluded and make sure that you know what this process entails. Concluding contracts by electronic means will likely become a standard practice in doing business going forward and especially in the coming months.

If you are unsure about concluding a contract by way of electronic signature, approach an experienced commercial attorney in order to ensure that your electronic agreements are indeed binding and enforceable.

Source :  https://www.dupwest.co.za/

150 150 Prevance - Bridging Finance South Africa

Subdivision and Rezoning of Your Land / Hoe Verlening van Opsie Waarde Toevoeg

 

‘n Jare-lange vriend, wie op ‘n groot erf in ‘n prestige deel van die Kaap woon, vertel dat hy voortdurend deur ontwikkelaars en agente verpes word om ontwikkelings-regte te bekom vir die eiendom. Die vriend het natuurlik ‘n buitengewone en ietwat onrealistiese prys in gedagte, want hy het gehoor wat ander eienaars al vir hul eiendomme in daardie area gekry het. Hy soek advies.

The interested parties are of course apprehensive about buying the land outright, but they are prepared to conclude some type of an agreement to obtain rights to acquire the land, on the condition that sufficient security is provided, to ensure that they will not be at risk with planning costs but have no real claim to the land when the rights are granted.

Vir die vriend sou so ‘n reëling natuurlik beteken dat die beplannings-potensiaal verwesenlik word sonder dat hy die koste daarvan sal moet dra en ook nie opgeskeep sal wees met die administratiewe uitdagings wat met ‘n hersonering en onderverdeling aansoek gepaard gaan nie.

For landowners that find themselves in a similar situation it would be best to engage a strategy that would be advantageous for both landowner and the prospective developer.  A landowner should be vigilant against so called development agreements where the developer merely tries to gain control over the property with the intention of passing such right on to a third party against payment of an opportunity fee.

Grondeienaars word aangeraai om slegs deur ‘n prokureur te werk indien daar sodanige belangstelling in hul grond is. Dit sal verseker dat die meeste risiko’s grotendeels uitgeskakel word en prokureurs, wat spesialiseer in eiendomsreg, is gewoonlik deeglik bewus van met watter ontwikkelaars ‘n ooreenkoms aangegaan kan word, met wie daar met groot omsigtigheid onderhandel moet word en wie selfs liefs vermy moet word.

One of the better legal structures to employ under such circumstances is an Option Agreement that gives the developer the option (known as a “call option”) to purchase the land (usually at an agreed sum, or at a future market related price, as determined by a third party less certain pre-agreed deductions upon very specific terms) which affords the option holder  the ability to acquire the development right for the property, without the risk that they will be compelled to acquire a parcel of land without the benefit of planning. Entering into an Option Agreement normally also benefits a landowner as it can realise a higher than normal price for their land without having to put forward their own funds in obtaining the rights.

Indien kontantvloei belangrik is vir die grondeienaar, kan hy in die gepaste omstandighede altyd die betaling van ‘n opsie-geld onderhandel. Hierdie opsie-geld sal gewoonlik betaalbaar wees as ‘n vaste bedrag by verlening van die opsie, of teen ‘n onbepaalde bedrag betaalbaar in vaste maandelikse paaiemente, vanaf verlening van die Opsie, totdat die eiendom oorgedra is nadat die Opsie uitgeoefen word.  Wanneer die Opsie uitgeoefen word, word die opsie-geld gewoonlik teen die verkoopprys afgespeel terwyl dit deur die ontwikkelaar verbeur word, indien die Opsie nie uitgeoefen word teen die ooreengekome sperdatum nie.

The developer can apply for planning permission once the option agreement has been signed, knowing that if the planning application is unsuccessful, it will not be obliged to proceed to purchase the plot of land, but that if planning rights are granted and produces a viable scheme, they have the ability to acquire the land on terms already fixed with the land owner.

Indien dit vir die ontwikkelaar belangrik is, sou die partye die opsie-ooreenkoms afdwingbaar kon maak teen derde partye, deur dit by wyse van ‘n notariële kontrak as ‘n verbod op vervreemding teen die titelakte van die eiendom te laat aanteken.  Dit sal natuurlik addisionele koste meebring, insluitende koste vir toestemming daartoe, deur die verbandnemer, maar die gemoedsrus wat dit meebring behoort vir die ontwikkelaar van groot waarde te wees.

Call options are useful to landowners as they can put forward their land for development without having to go through the complexities and costs involved with obtaining planning permission. The added benefit to landowners is that the price payable for the land under the option is usually based on the site being a viable development site, and therefore the owner will benefit from a higher price reflective of the true planning potential.

Kontak enige van ons aktebesorgers indien jy meer in die verband wou verneem of enige ander eiendom verwante vrae het.

Source: VAN ZYL KRUGER INCORPORATED

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Does the CPA afford any remedies to the purchaser of immovable property?

 

“I recently purchased a house through an estate agency. Prior to purchasing the house, I did a few viewings with one of their agents, and he assured me that there were no major defects. Transfer has taken place and I have been living in the house for 1 month now and my bathrooms walls are cracking. A plumber has advised that there is a leakage which seems to have been there for a long time. Can I rely specifically on the Consumer Protection Act in any way considering that registration has already taken place? “

The Consumer Protection Act No. 68 of 2008 (CPA) was mainly enacted to promote a fair, accessible and sustainable marketplace for consumer products and services.[1] It applies to every transaction which happens within the Republic of South Africa.[2] If your property transaction happened in South Africa, which it probably did, then the CPA definitely protects you.

An estate agency carries out work related to immovable property in the ordinary course of their business. In most instances they provide a service for the seller. The CPA defines a service as “any work or undertaking performed by one person for the direct or indirect benefit of another.”[3] A supplier is defined as a person who markets goods or services. The agent – who markets the house (thereby rendering a service and marketing goods) then becomes the supplier, and the seller (who is receiving the service) becomes the consumer. Likewise you, as the purchaser, are also a consumer as the goods (in this case the immovable property) were marketed to you. It is clear therefore that the Consumer Protection Act applies in this instance, but only with regards to the relationship between either the agent and the seller, or the agent and yourself. You will not be able to rely on the CPA in any action against the seller, as he most likely would be found not to sell properties in the ordinary course of his business, and would therefore not fall under the CPA definition of a supplier.

The estate agent however also represents the seller and acts as the seller’s agent, creating a fiduciary relationship.  A person is in a fiduciary relationship with another when he or she has rights and powers which he is bound to exercise for the benefit of that other person.[4] [5] This then means that an estate agent will have some liability for a defect such as the one you have in your house because they are the ones supplying you with the service (marketing of the property) on behalf of the seller.

Liability of Sellers in circumstances such as yours, is a question that legal practitioners have interpreted differently. Our view is that a seller is fully responsible and liable for their property, as they are the party who best knows the condition of their property. You have an option, according to the law of contracts, to go back to the contract signed between yourself and the seller, and make sure that there was no mention of defects in the house. If the contract stipulated that any leaking pipes will be repaired by the Seller, he will then be liable to repair the leak(s) and resultant damage, or to compensate you for any costs that you incurred for such repairs. If the Seller knew that there was a leaking pipe, or could reasonably have been expected to know about the leak, and wilfully withheld this information from you or tried to hide it, the leak will be considered a latent defect and the Seller will also be liable. Your claim will however not be in terms of the Consumer Protection Act, for reasons stated earlier, ie the seller is not a supplier.

 The estate agent has a responsibility, under the CPA, to sell goods or to promote the sale of goods and to honestly present the goods that are being sold. If an estate agent neglects to inform you that there is a defect in the house that they sold and marketed to you, then the agency has failed to discharge their duty and have in fact falsely represented the house to you. You can hold the estate agent liable under the CPA as they are the suppliers of the service and goods that they have marketed to you.

Of course an estate agency will not be liable for the repair of the house because the previous owner is liable for such defects, especially if they were aware of them. However, estate agents must be careful of negligent conduct and filling out property condition reports on behalf of sellers without making 100% sure of the actual condition of the property, as they can incur liability.  False representation of goods goes against the purpose which the CPA was enacted for. Apart from having to forfeit their commission income, estate agents may face long-term consequences like losing credibility and having their licence revoked because of bad conduct.

Another remedy for the purchaser would be to hold the seller vicariously liable for the misrepresentation. This means that the seller would be liable for the agent’s negligence in assessing the property and carrying out their duty.

The best option, though, is to hold the seller liable for the defects that he should have reasonably known about and communicated to the agent. It would also be reasonable for the agent to lose some – or all – of their commission for not carrying out their work and providing the service as they should have.

Source: Tonkin Clacey Inc.

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Beware of Property Cyber Scammers

“Forewarned is Forearmed!” (Wise old saying)

Why yet another warning about cyber-scams in the property industry? It’s because the hard fact is that the criminals are winning this war. In fact we are now reportedly the “second most targeted country in the world with regard to cyber-attacks” (Law Society of South Africa).

Hence, no doubt, the Legal Practitioners Indemnity Insurance Fund report of “over 110 cybercrime related claims with a total value of R70m” in the period July 2016 to August 2018.

The scammers are using more and more sophisticated techniques to lull their victims into complacency, and your best protection is your own vigilance – forewarned is definitely forearmed!

And remember that property transactions will always remain a firm favourite with online fraudsters for two simple reasons –

  • Property sales usually involve large amounts of money.
  • Electronic communication between attorneys and clients is a fertile ground for interception and deception.

How your money gets taken – 2 main scenarios

Cyber criminals are resourceful, creative and constantly updating their methods so this is by no means an exhaustive list of your risk areas. To date however the two main categories of scam remain –

  1. Your attorney’s payments to you: As a seller, when you give the transfer instruction to your attorney you will nominate a bank account – account A in this example – to receive the sale proceeds. Before transfer however (often at the very last minute) the conveyancing firm receives a genuine-looking email “from you” changing your banking details to “my new account, account B”. Your emails to and from your attorney have been intercepted, and your details cleverly spoofed. Your money is gone – forever. Of course if you chose the right attorney to attend to your transfer in the first place this shouldn’t happen to you – but, as we shall see below, the scammers are so sophisticated now that you can never ever let your guard down, no matter how trustworthy the firm.

  2. Your payments to the attorney: The main risk here is to the buyer paying the whole or a large portion of the purchase price to the transferring attorney. Of course transfer duty and other costs of transfer can also add up to a tidy sum, whilst as a seller you will be paying for things like bond cancellation costs, rates, agent’s commission and so on.

    The scam here is that once again emails are intercepted, and this time you receive an authentic-looking but entirely fraudulent email asking you to pay into “account C”. The email appears to come from the conveyancing firm but of course it is again a clever (often very sophisticated) impersonation, this time of the firm’s branding, details and email address.

    The false account details might be in the email itself or in a falsified attachment – nothing is safe. The email may be in the form of a “we’ve changed our banking details” notification, or the criminal may work on the basis that you just won’t notice the change. And of course account C isn’t the conveyancer’s trust account at all, and the minute you make a payment into it your money is – once again – gone forever.

Who can you recover your loss from?

By the time you realise you have been duped, the criminals are long gone and your chances of catching up with them are remote to say the least.

So could the attorney possibly be liable? A recent High Court judgment deals with that very issue…

Court: Attorney negligent, must pay

In this case a transferring attorney was ordered to pay her client damages of almost R1m for negligence.

In a nutshell, the attorney had attended to a property transfer for the sellers, and a scammer intercepted emails between the sellers and the attorney’s secretary. This was a classic “Scenario 1” operation, and seemingly a sophisticated one – the scammer persuaded the secretary to accept an emailed “my bank account details have changed” instruction and to pay the proceeds into the scammer’s account.

The sellers sued the attorney for damages, the attorney denied any negligence whatsoever, but the Court found that she had indeed failed to carry out her mandate with the “due care, skill and diligence expected of a reasonable attorney and a conveyancer in the circumstances.”

What is important for you is that the Court reached this conclusion on the particular facts of this matter. There were specific factors present here such that a “diligent, reasonable attorney” would, said the Court, have taken steps to verify the information in the fraudulent emails.

That suggests that there are many possible sets of facts which would have left the seller unable to prove any failure of duty by the attorney. Your risk is that if you try to hold the attorney liable you will have to prove that your loss resulted from his/her fault and not from yours – that’s never going to be easy and if you fail, you are left high and dry.

Protect yourself. Be vigilant!

So prevention really is much better than cure here. Litigation will be expensive and risky, and even if you succeed in your damages claim the attorney’s normal indemnity insurance excludes these types of claims so your victory could be a hollow one.

Fortunately there are several common sense steps you can take to minimise your risk –

  • If you have the choice of transferring attorney (which you normally would have if you are the seller), choose an attorney you trust to do the job properly, carefully and professionally.
  • Having said that, no matter how much security your attorneys have put in place on their side, if it is your system that is vulnerable that is what the criminals will exploit. So keep all your anti-virus, anti-malware and other security software updated, learn all about protecting yourself from malware/spyware/phishing attacks, and generally treat all electronic communications with caution – even those appearing to come from a trusted source like your attorney.
  • Read “Is That Sender For Real? Three Ways to Verify the Identity of An Email” on FRSecure’s blog. All the tips given there are important, but at the very least use the methods given to find out where the email really comes from. Then check back to see that it matches in every detail the email address you were given at the start of the transfer process.
  • Be suspicious if anything in an email just feels “not-quite-right” – perhaps only a cell phone number is given, or a free generic email address (like Gmail) is used, or the wording is somehow “off”. If the email makes you even the slightest bit uneasy, err on the side of caution and investigate further.
  • Most importantly, never accept notification of any supposed change in your attorney’s banking details without visiting or phoning your attorney to check all is in order (don’t of course use the contact details given in the suspicious email, they could also have been doctored!). 

Source: Tanners &  LawDotNews

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Prevance introduces Evance Online – a revolutionary deal management platform

 

As the old saying goes “time is money.” In today’s fast-paced business environment, improving efficiency can go a long way to making your life easier. As leaders in the industry, we are always on the lookout for innovative solutions that improve the lives of our customers.

We are pleased to introduce our new, online deal management platform – Evance Online.

Evance Online provides a powerful dashboard enabling customers to instantly submit deals, offering unprecedented speed and accuracy.

Prevance strives to be at the forefront of new technology with modern day online applications and processes, while at the same time being environmentally conscious.

Worldwide consumption of paper has increased 400% in the past 40 years and the paper industry is the fifth largest consumer of energy in the world. Environmentally conscious companies are looking for cost effective, impactful ways to help reduce their carbon footprint.

With Evance Online, the need to physically print out documents is dramatically reduced. Going paperless clearly helps to save the environment, not only by reducing the number of trees that are cut down, but also by reducing pollution and saving water. The benefit for companies is a more efficient system and cost savings.

Not only is the system paperless, but it is speedy and efficient. Deals can be submitted online in a few minutes, agreements are automatically captured and signed electronically, and active deals are monitored online. You can also keep track of all your correspondence in one place.

In addition, there is an online quote calculator and settlement figures are generated online. An algorithm is used for credit analysis, providing you with credit information in a matter of minutes.

Selling a property can be a stressful time. While your home may be officially sold, there can be a long delay until you finally receive the proceeds from the sale. Your cash flow may be tight while you wait for the proceeds to come through and you need to pay the deposit on your next property purchase.

With Sellers Advance, you can have access to your funds as soon as your home has been sold. This means that once the purchase price has been secured by your buyer, Prevance may be able to offer you up to 75% of your total nett proceeds (after deducting the bond amount and all costs associated with the sale). Applying for a Sellers Advance is quick and easy through Evance Online, enabling you to receive a cash injection when you need it most.

Ask your conveyancing attorney to submit an application online for advance funding on the sale of your property. It’s quick and easy.

Conveyancers can benefit greatly with increased efficiency and less paperwork with simplified application procedures, using Evance Online. Give Prevance a call on 0860 987 987 or email them on info@prevance.co.za to have one of their skilled consultants provide a demonstration of Evance
Online.

Head Office : 011-274-1700