Property Archives - Smuts & Co Attorneys

CO-OWNING PROPERTY WITH SOMEONE ELSE: THE UPS AND DOWNS

Wed, 02 May 2018 12:47:19 +0000

What is co-ownership?

Co-ownership is when one or more people jointly own the same property. In essence, it is when they legally share ownership without dividing the property into physical portions for their exclusive use. It is thus commonly referred to as co-ownership in undivided shares.

It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70 percent and the other 30 percent of the single property. The different shares can be recorded and registered in the title deeds by the Deeds Office.

The benefits

On paper, it’s a great idea. For starters, the bond repayments and costs of maintaining the home are halved. However, there can be problems and although not every friendship or relationship is destined to disintegrate, there does often come a time when one of the parties involved wants to sell up and move on to bigger and better things.

The risks

If ownership is given to one or more purchasers, without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares.

The risks, the benefits and the obligations that flow from the property are shared in proportion to each person’s share of ownership in the property. For instance, one of the co-owners fails to contribute his share of the finances as initially agreed, resulting in creditors such as the bank or Body Corporate taking action to recover the shortfall.

Having an agreement

If two people own property together in undivided shares it is advisable to enter into an agreement which will regulate their rights and obligations if they should decide to go their own separate ways.

The practical difficulties that flow from the rights and duties of co-ownership are captured by the expression communio est mater rixarum or “co-ownership is the mother of disputes”. It is therefore important that, when the agreement the co-owners entered into does not help them solve disputes, certain remedies are available to them.

The agreement should address the following issues:

In what proportion will the property be shared?
Who has the sole right to occupy the property?
Who will contribute what initial payments to acquire the property.
Who will contribute what amounts to the ongoing future costs and finances.
How the profits or losses will be split, should the property or a share be sold?
The sale of one party’s share must be restricted or regulated.
The right to draw funds out of the access bond must be regulated.
A breakdown of the relationship between the parties.
Death or incapacity of one of the parties.
Dispute resolution options before issuing summons.
Termination of the agreement.

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)

Reference:

http://igrow.co.za/co-ownership-of-property-what-you-need-to-know/
http://www.privateproperty.co.za/advice/property/articles/the-pitfalls-of-property-co-ownership/5046
http://www.jgs.co.za/index.php/property/owning-prop-jointly-the-do-s-and-dont-s

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IMPORTANT STEPS FOR THE TRANSFER OF PROPERTY

Wed, 04 Apr 2018 15:10:21 +0000

The transfer process can take up to three-months, sometimes longer. There are different steps involved in the transfer of a property, these include:

Instruction.

A conveyancer receives the instruction to transfer the property.

Communication.

The conveyancer communicates with the various role-players involved in the transfer process, such as the seller, purchaser, transfer and bond attorneys, municipality, bank, South African Revenue Service (SARS).

Collection.

Certain information and documents are required, such as the agreement of sale, deeds office search, existing deed, bond cancellation figures from the bank and so on. The conveyancer should continuously report to the various role-players about the progress being made.

Drafting and signing.

As soon as all the information and documents have been collected, the conveyancer will draft the transfer documents and request the seller and purchaser to sign them. These transfer documents will include a power of attorney and various affidavits.

Finances.

Financial arrangements include requesting an advance payment for the conveyancer’s interim account for certain expenses, requesting the bank guarantee, collecting the purchase price or deposit and so on.

Transfer duty.

Obtaining a transfer duty receipt from SARS, confirming that the tax relating to the transfer of the property has been paid by the purchaser.

Clearance certificate.

Obtaining a clearance certificate from the municipality, confirming that all amounts in respect of property have been paid for the last two years.

Prep.

The conveyancer prepares for lodgement (submission) of the deed of transfer and other documents necessary for registration at the deeds office.

Registration.

Once the deed of transfer and other documents have been lodged it, takes the deeds office about 7 – 10 working days to examine these documents. If the deeds office is satisfied that the requirement for the transfer of property has been met, the deed of property is registered. The conveyancer will notify the various role-players of the registration.

Accounts.

Once registered, the conveyancer makes the necessary calculations and payments relating to the sale, for example, the estate agent’s commission, purchase price and so on. The conveyancer’s final account is also drawn up and sent to the purchaser and the seller for payment.

Having an experienced and expert conveyancer is extremely important to ensure that the transfer of property takes place quickly and efficiently.

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WHAT IS A TITLE DEED?

Wed, 04 Apr 2018 15:08:03 +0000

If you are planning to buy a new property, you will need to get the title deed transferred into your name to prove that you are the owner of the property. You will need the assistance of a lawyer specialising in property transfers (also known as a conveyancer) to help you transfer the title deed into your name.

You will only become the owner of the property when the Registrar of Deeds signs the transfer. After it has been signed, a copy of the title deed is kept at the Deeds Office closest to you.

A Title Deed is documentary proof of ownership in terms of the Deeds Registries Act 47 of 1937. Each property has its own separate Title Deed. It is an important document containing all the details pertaining to a particular property.

These details are:

The name of the existing owner as well as the previous owners.
A detailed property description which includes size.
The purchase price of the property paid by the existing owner.
Conditions applicable to the zoning, use and sale of the land.
All real rights registered in respect of the property.

The owner will normally have the Title Deed or a copy thereof in his possession. Before signing an offer to purchase carefully scrutinize the Title Deed.

What is The Deeds Office and The Deeds Registry?

There are numerous Deeds Offices throughout South Africa. Each Deeds Office holds a Deeds Registry, containing filed Title Deeds of all the properties in its particular jurisdiction. All the Deeds Registries are linked to a computer network. Your estate agent can, via a computer-linked facility from his office, examine any Title Deed (registered from 1980) in the country’s combined Deeds Registry.

What’s the Difference Between a Property Deed and a Title?

Title is the legal way of saying you own a right to something. For real estate purposes, title refers to ownership of the property, meaning that you have the rights to use that property. It may be a partial interest in the property or it may be the full. However, because you have title, you can access the land and potentially modify it as you see fit. Title also means that you can transfer that interest or portion that you own to others. However, you can never legally transfer more than you own. Deeds, on the other hand, are actually the legal documents that transfer title from one person to another. Sometimes the Deed is referred to as the vehicle of the property interest transfer.

References:

https://www.westerncape.gov.za/service/title-deeds-proof-property-ownership

https://www.rocketlawyer.com/article/whats-the-difference-between-a-roperty-deed-and-a-title-ps.rl

http://www.conveyancing24.co.za/

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VIGILANTLY OR CRIMINAL? TAKING THE LAW INTO MY OWN HANDS

Wed, 04 Apr 2018 15:01:42 +0000

If someone gets something of theirs stolen, they might be tempted to go take it back, by force if necessary. However, that would be considered illegal and would put your belongings back into the hands of the thief.

Mandament van Spolie

The Mandament van Spolie is an extraordinary, quick and robust remedy for the restoration of possession. Its purpose is to restore possession to the person who was deprived, and is based on the principle that no man should take the law into his own hands.

Since the object is to restore possession to the applicant, the court will not consider any defences based on the respondent’s rights of ownership. Therefore, neither the applicant nor the respondent need to prove ownership. Only the requirements listed below need to be proven. Based on this unique characteristic of the Mandament van Spolie this remedy can be used by a thief or any other person without the right of ownership. The Mandament van Spolie is a final order and is appealable. The respondent, however, may continue with other proceedings if he is the owner.

The requirements for this remedy were set out in two important decisions that are still relevant in this regard, namely Nino Bonino v De Lange 1906(T) and Yeko v Qana 1973(A).

Proof that the applicant was in peaceful and undisturbed control of the property. The first requirement means that the applicant had control over the property in question. For purposes of the spoliation remedy this control must have existed “peacefully and undisturbed” for a period long enough, and in a manner stable enough, to qualify any unlawful disturbance of the peace.
Proof that the respondent took or destroyed that control by means of unlawful self-help or spoliation. The second requirement for the spoliation remedy is that the existing peaceful and undisturbed control must have been unlawfully spoliated by the respondent.

Conclusion

The spoliation remedy is aimed at preserving peace and order in the community. People cannot be permitted to circumvent the remedy by contract. Parties to a contract cannot agree that one of them will be permitted to take property from the other without proper legal procedure.

References:

A J van der Walt & G J Pienaar: Introduction to property law, 5^th edition, pp 218-223.

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VAT increase and the effect on property transfers and the registration of transfers before and after 1 April 2018.

Tue, 20 Mar 2018 09:15:34 +0000

The increase was announced in the Minister of Finance’s Budget Speech on 21 February 2018. The standard rate of VAT will change from 14% to 15% on 1 April 2018 (the effective date).

How will this VAT increase affect property transactions, property registrations and estate agent commissions?

Question 1: How will the rate increase work generally for fixed property transactions?

The rate of VAT for fixed property transactions will be the rate that applies on the date of registration of transfer of the property in a Deeds Registry, or the date that any payment of the purchase price is made to the seller – whichever event occurs first. (See, however, the exception in Question 2 below where registration (delivery) of the fixed property occurs on or before 23 April 2018.)

If a “deposit” is paid and held in trust by the transferring attorney, this payment will not trigger the time of supply as it is not regarded as payment of the purchase price at that point in time. Normally the sale price of a property is paid to the seller in full by the purchaser’s bank (for example, if a bond is granted) or by the purchaser’s transferring attorney.

However, if the seller allows the purchaser to pay the purchase price off over a period of time, the output tax and input tax of the parties is calculated by multiplying the tax fraction at the original time of supply by the amount of each subsequent payment, as and when those payments are made. In other words, if the time of supply was triggered before 1 April 2018, your agreed payments to the seller over time will not increase because of the increase in the VAT rate on 1 April 2018.

Example:

A vendor sells a commercial building and issues a tax invoice to the purchaser on 10 January 2018. If the property will only be registered in the Deeds Registry on or after 1 April 2018 and payment will be made by the purchaser’s bank or transferring attorneys on the same date, then the time of supply will only be triggered at that later date. In this case, VAT must be charged at 15% as the rate increased on 1 April 2018 which would be before the time of supply. It does not matter that an invoice or a tax invoice was issued before the time of supply and before the VAT rate increased. The tax invoice in this case would also have to be corrected as it would have indicated VAT charged at the incorrect rate of 14%.

See also the next questions below for the rate specific rule that provides an exception for the purchase of “residential property” or land on which a dwelling is included as part of the deal.

Question 2: Is there a rate specific rule which is applicable to me if I signed the contract to buy residential property (for example, a dwelling) before the rate of VAT increased, but payment of the purchase price and registration will only take place on or after 1 April 2018?

Yes. You will pay VAT based on the rate that applied before the increase on 1 April 2018 (that is 14% VAT and not 15% VAT). This rate specific rule overrides the rules as discussed in Question 1, which applies for non- residential fixed property.

This rate specific rule applies only if:

you entered into a written agreement to buy the dwelling (that is “residential property”) before 1 April 2018;
both the payment of the purchase price and the registration of the property in your name will only occur on or after 1 April 2018; and
the VAT-inclusive purchase price was determined and stated as such in the agreement.

For purposes of this rule, “residential property” includes:

an existing dwelling, together with the land on which it is erected, or any other real rights associated with that property;
so-called plot-and-plan deals where the land is bought together with a building package for a dwelling to be erected on the land; or
the construction of a new dwelling by any vendor carrying on a construction business;
a share in a share block company which confers a right to or an interest in the use of a dwelling.

Question 3: How will the VAT increase affect the seller of the property and estate agent commission?

Two possible scenarios can apply:

Scenario 1:

Should the contract of sale read that a percentage commission plus VAT is payable, that will be calculated at 14% if transfer takes place before 1 April 2018 and at 15% when registration takes place on or after 1 April 2018.

The net result is that the seller (who sold prior to 31 March 2018) will receive a lower net amount on the selling price because of the increased VAT, should transfer take place after 31 March 2018.

Scenario 2:

Should the contract of sale refer to a fixed commission amount inclusive of VAT, the opposite will apply. The seller will receive the same amount, but the agent will receive less because of the increased VAT.

For more information on the VAT Increase, download the SARS VAT Increase general guide and FAQs here:

Please contact us should you have any specific questions

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AWAITING YOUR DEPOSIT

Thu, 08 Feb 2018 12:36:50 +0000

What to know when your landlord has your deposit and has failed to pay it out

You have viewed the new property and secured it by paying the correct deposit amount to the landlord. With the transition into your new space being as breezy as it was, no red flags were raised as to how your landlord could trick you going forward. How do you approach a situation where your landlord won’t pay you back your deposit after you move out?

Firstly, a pre- and post-occupation inspection of the rental space must be completed before and after the tenant moves in. This inspection is the landlord’s responsibility and if he or she does not conduct the said inspection, they are then unable to claim against the tenant upon the lease expiration. The Rental Housing Act states that the tenant has the right not to have their home or property searched by the landlord, and thus, the landlord must give reasonable notice for inspection 3 days before the lease ends.

Regarding deposits, section 5 of the RHA states that, should there be damages incurred by the tenant under the said lease needing repair after the post-occupation inspection, the landlord must refund the remaining deposit amount, if any, to the tenant within 14 days. In the case where no claims for damages have been made by the landlord, and the tenant is debt free in terms of charges and rent, the deposit must be refunded within seven days following the lease expiration. A tenant who refuses to take part in the inspection process, and damages have been found, is liable to receive their remaining deposit 21 days from the expiration of the lease.

If a landlord refuses or has failed to refund the tenant their deposit, the tenant may approach the Rental Housing Tribunal.

References:

Rental Housing Act No. 50 of 1999. (2017). [PDF] Cape Town: Republic of South Africa, pp.6-7. Available at: https://www.gov.za/sites/www.gov.za/files/a50-99.pdf [Accessed 20 Nov. 2017].

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CAN MY PROPERTY BE USED FOR AIRBNB?

Thu, 08 Feb 2018 12:32:57 +0000

When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

According to Brett Herron, the mayoral committee member for transport and urban development at the City of Cape Town, different holiday accommodation land use types, such as B&Bs and guest houses, are regulated by the City’s zoning scheme, called the Development Management Scheme.

If referring to Cape Town, for instance, the city has a Guest Accommodation Policy that sets out the guidelines that have to be considered when applications are made to obtain the necessary planning permissions. According to the Policy, if you wanted to provide a self-catering, flexible accommodation option in line with current trends for transient guests, visitors and tourists, then these are the guidelines that should be followed:

Purpose

A building or group of buildings consisting of separate accommodation units rented for residential purposes, each incorporating a kitchenette / full kitchen, but may also include an option of meals being provided communally to guests.
May include communal areas for the exclusive use by lodgers / transient guests.

Scale

Form and scale of development determined by development parameters of particular zone (i.e. floor space, building lines, height) and the site context.
No general restriction on number of units, but must be locally appropriate in context of the building/site characteristics and surrounding area.
Council may determine / restrict the number of units per development in cases and lay down conditions necessary to mitigate the impact thereof.

Location

Not supported on a single residential zoned property, subject site must have suitable general residential, mixed use or commercial zoning.
Locational criteria that should be considered, include:
- proximity to public transport routes, commercial centres and tourist activities.
- character of the surrounding area;
- mixed use or commercial locations (including areas designated for high density development) are encouraged.

Conclusion

In many cities, you must register, get a permit, or obtain a licence before you can list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local municipalities may also vary greatly in how they enforce these laws. However, it is not impossible to list your property on Airbnb, you just have to find out from the local municipality if you have the correct permissions and if the property has the correct zoning.

References:

Guest Accommodation Policy, the City of Cape Town, Department of Planning & Building Development Management.

“Regulating Airbnb in Cape Town”, Jan Vermeulen, MyBroadband. https://mybroadband.co.za/news/government/210884-regulating-airbnb-in-cape-town.html

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CONTROLLING FUTURE DEVELOPMENTS OF PROPERTY

Tue, 30 Jan 2018 08:11:09 +0000

The provincial heritage resources authority (PHRA) granted a permit in terms of Section 34 of the National Heritage Resources Act 25 of 1999 for the demolition of a structure that was older than 60 years and situated on a property with no formal heritage status. By doing so, conditions were imposed controlling future development on the property and it was held that such conditions were lawfully imposed.

Gees v the Provincial Minister of Cultural Affairs and Sport

The Supreme Court of Appeal (SCA) recently dismissed an appeal against a judgment of the Western Cape High Court. In so doing the SCA held that the large concentration of art deco buildings spanning Davenport Road, Vredehoek, Cape Town, forms part of the national estate and is worthy of protection as a heritage resource.

Therefore, the SCA held that Heritage Western Cape, in granting a permit for the demolition of the appellant’s 60-year-old block of flats, was justified in imposing conditions controlling future development on the property.

It is true that the conditions imposed in the demolition permit amount to a curtailment of the appellant’s entitlement to deal with his property as he sees fit, and may therefore to a certain extent be regarded as a deprivation of property. However, it is widely recognised that in our present constitutional democracy an increased emphasis has been placed upon the characteristic of ownership which requires that entitlements must be exercised in accordance with the social function of law in the interest of the community.

Conclusion

AJ van der Walt and GJ Pienaar in “Introduction to the Law of Property” 7ed (2016), put it as follows:

‘. . . the inherent responsibility of the owner towards the community in the exercise of his entitlements is emphasised. The balance between the protection of ownership and the exercise of entitlements of the owner regarding third parties, on the one hand, and the obligations of the owner to the community, on the other hand, must be maintained throughout. This might, in certain circumstances, even mean that an owner’s entitlements could be limited or infringed upon in the interest of the community. In such cases the infringement must always be reasonable and equitable [not arbitrary].’

References:

Gees v The Provincial Minister of Cultural Affairs and Sport (974/2015) [2015] ZASCA 136 (29 September 2016)

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SECTIONAL TITLES: WHAT IS THE ROLE OF THE BODY CORPORATE?

Thu, 07 Dec 2017 13:57:34 +0000

When it comes to sectional title schemes, there is still widespread misunderstanding of even the basics, starting with the body corporate and how it is established, as well as what its functions and powers are. This misunderstanding often gives rise to many problems and disputes in sectional title schemes which could quite easily have been avoided.

What is a sectional title?

A Sectional Title Development Scheme, usually referred to as a “scheme”, provides for separate ownership of a property, by individuals. These schemes fall under the control of the Sectional Titles Act, which came into effect on 1 June 1988.

When you buy a property that’s part of a scheme, you own the inside of the property i.e. the space contained by the inner walls, ceilings & floors of the unit. You are entitled to paint or decorate or undertake alterations as desired, providing such alterations do not infringe on municipal by-laws.

What is the body corporate?

The Body Corporate is the collective name given to all the owners of units in a scheme. Units usually refers to the townhouses or flats in a development. The body corporate comes into existence as soon as the developer of the scheme transfers a unit to a new owner. This means that all registered owners of units in a scheme are members of the Body Corporate.

The Body Corporate controls and runs the Scheme.
Day-to-day administration of the Scheme is vested in trustees who are appointed by the Body Corporate.
Major decisions regarding the Scheme are made by the Body Corporate, usually at the annual general meeting (AGM), or at a special general meeting (SGM). At these meetings, matters, which affect the Scheme, are discussed, budgets are approved, rules can be changed and trustees are appointed. Each member of a Body Corporate is entitled to vote at these meetings, providing that the member is not in arrears with levy payments or in serious breach of the rules.

The Body Corporate exists to manage and administer the land and buildings in the scheme. This means, that the Body Corporate is required to enforce the legislation and rules in the Sectional Titles Act, the Management Rules and the Conduct Rules of the scheme. Amongst their other duties, the Trustees manage the Body Corporate’s funds, enforce the rules and resolve conflict to the best of their ability.

References:

http://www.angor.co.za/news/understanding-sectional-title-terminology-body-corporate/

http://www.sectionaltitlecentre.co.za/faqs.aspx

http://www.bizcommunity.com/Article/196/568/161017.html

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