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Sectional titles: What is the role of the body corporate?

Sectional titles: What is the role of the body corporate?

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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.

  1. The Body Corporate controls and runs the Scheme.
  2. Day-to-day administration of the Scheme is vested in trustees who are appointed by the Body Corporate.
  3. 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:

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)

What is the sale agreement?

What is the sale agreement?

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Whenever you buy or sell a house you will encounter the sale agreement, which is also called an “offer to purchase”. This is a contract between a buyer and seller and covers the terms and conditions governing the sale of the property. Buying or selling a house can be stressful and sometimes confusing, however, the sale agreement doesn’t have to be.

An agreement of sale is a written agreement signed by both the buyer and the seller (and also by the seller’s spouse if he’s married or subject to the laws of a foreign country), whereas an offer to purchase may be either oral or written. If it’s in writing and signed by the buyer and accepted by the seller, an offer to purchase constitutes a binding agreement of sale, whereas an oral offer isn’t binding.

What should a sale agreement include?

These are a few things a sale agreement should include:

  • The names, identity numbers and marital status of all the parties.
  • The buyer’s address.
  • Description and size of the property as detailed in your deed of transfer.
  • The selling price and whether a deposit will be payable. If so, the deposit money will be held in the trust account by the transferring attorney.
  • A provision that the buyer pays all transfer and bond costs.
  • The name of the attorney handling the transfer.
  • The date of taking possession and occupation.
  • The provision that the buyer is responsible for all taxes and other municipal charges from the day of taking possession.

Who is responsible for the sale agreement?

The agreement, or contract, is usually an offer by the interested buyer.  The buyer presents the offer to the owner of the property, who will accept it by signing it. This forms a binding contract. It is necessary to always consult a property lawyer who can assist you in a sale agreement.

References

  • Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.
  • Legalwise.co.za

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

When is a gas certificate required?

When is a gas certificate required?

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Rising electricity costs, as well as an increase in the popularity among South-African homeowners to utilise gas installations in their homes led to gas regulations being introduced in 2009. According to the Pressure Equipment Regulations that have been promulgated under the Occupation Health and Safety Act (No 85 of 1993), all gas installations must have a Certificate of Conformity.

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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)

When is an electricity certificate required?

When is an electricity certificate required?

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An electricity certificate is a document that verifies that the electrical installations in a home comply with the legislated requirements detailed in the Occupational Health and Safety Act. This certificate is required when an electrical installation is intended for use or lease by a user or lessor.

Click here to download PDF

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)

How can I evict my tenant lawfully?

How can I evict my tenant lawfully?

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You’ve discovered that the tenant renting your apartment has damaged several appliances, including the floor tiles due to irresponsible behaviour. Therefore, you have decided to terminate the lease contract and evict the tenant. Are you allowed to do that and how do you get started?

Firstly, there has to be valid reasons to evict a tenant, such as the example above. Even if you do have a valid reason to pursue eviction, a legal process has to be followed if you want to stay within the law. The first step is to cancel the lease contract with the tenant and let the tenant know that it’s cancelled and the reasons why. After the contract is terminated, the tenant would be occupying the premises illegally. You can then go to a court with an eviction application or “ejectment order”. When you do this you will be required to prove that the contract with the tenant was properly terminated and that the reasons for doing so were valid.

It’s important to make sure the reasons you want to evict the tenant are valid. This is because tenants are protected by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, No. 19 of 1998. You cannot just evict a tenant because you don’t like them.

Other grounds for an eviction

Besides a tenant causing serious damage to a property there are two other grounds for an eviction. The obvious one is the tenant not paying his/her rent after having been told to do so. Another reason is the tenant using the property for anything other than was agreed upon in the contract. A tenant who opens a business in the apartment they are renting would be in breach of their contract if it was agreed to be rented for residential purposes only.

What happens at the court?

The eviction application can be taken to the Magistrate’s Court or the High Court. Court proceedings will follow, which the tenant should be notified about. It’s very likely that the tenant will deny any wrongdoing and say the eviction doesn’t have good grounds. If this is the case, they can inform the court. A dispute and court case may ensue, the outcome of which would depend on the evidence of what happened. Therefore, if you are considering evicting a tenant, make sure your reasons are clear and that there is evidence for the eviction. If the tenant broke property on your premises because of being irresponsible, then that could be solid evidence.

Dealing with the tenant

The tenant may agree that they have done something wrong or simply decided not to oppose the eviction, in which case the court would issue an ejectment order. The ejectment order will force the tenant to leave the property, which will be carried out by the Sheriff of the Court. It’s important to remember that the landlord is not allowed to personally remove tenants from their premises. Leave that to the authorities. Furthermore, the court may order the tenant to pay the legal costs of the landlord.

Reference:

  • Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

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)

How does the Budget Speech affect you, your property transactions and your estate?

How does the Budget Speech affect you, your property transactions and your estate?

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On 21 February 2018, Finance Minister Malusi Gigaba delivered his 2018 Budget Speech.

Hereby a summary of the most significant proposals for the 2018/2019 Budget as tabled by the Minister of Finance:

2018/2019 Tax Proposals:

  •  VAT: A one percentage point (1%) increase in VAT from 14% to 15%.
  • No adjustments to the top four income tax brackets. Below inflation adjustments to the bottom three income tax brackets proposed.
  • Fuel Levies: Overall increase of 52c/litre for fuel, consisting of a 22c/litre increase in the general fuel levy and 30c/litre increase in the Road Accident Fund levy, effective 4 April 2018.
  • Luxury Goods Tax: Increase in the ad-valorem excise duties rate on luxury goods from 7% to 9% effective 1 April 2018.
  • Estate Duty Tax: Increased estate duty, to be levied at 25% for estates above R30 million, effective 1 March 2018. This is a 5% increase.
  • Capital Gains and Dividend Tax: The capital gains tax rate for individuals remains unchanged at 18%, while the dividends tax rate remains unchanged at 20%.
  • Medical Tax Credits: The medical tax credits will increase from R303 to R310 per month for the first two beneficiaries (2.3% increase), and from R204 to R209 per month for the remaining beneficiaries (2.5% increase).
  • Sin Tax: Excise duties on tobacco products will increase by 8.5% and on alcohol by 6-10%.
  • Environmental & Health Tax: Increases in the plastic bag levy, the motor vehicle emissions tax and the levy on incandescent light bulbs to promote eco-friendly choices.

 

Transfer Duty Fees:

Transfer duty fees have remained unchanged. The following rates on transactions in respect of acquisition of property is payable (and not subject to VAT). 

Value of Property (R) Rate
0 – 900 000 0%
900 001 – 1 250 000 3% of the value above 900 000
1 250 001 – 1 750 000 10 500 + 6% of the value above 1 250 000
1 750 001 – 2 250 000 40 500 + 8% of the value above 1 750 000
2 250 001 – 10 000 000 80 500 + 11% of the value above 2 250 000
10 000 001 and above 933 000 + 13% of the value above 10 000 000

 

Estate Duty Tax:

The 2018 Budget proposes to increase estate duty from 20% to 25% for estates worth R30 million and more. This is in line with Davis Tax Committee recommendations, and in keeping with the progressive structure of the tax system. Any donations above R30 million in one tax year will be taxed at 25%, in order to limit the staggering of donations and avoid the higher estate duty rate. Both measures will be effective from 1 March 2018.

Estate duty is levied on property of residents and South African property of non-residents less allowable deductions. The duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% above R30 million. A basic deduction of R3.5 million is allowed in the determination of an estate’s liability for estate duty as well as deductions for liabilities, bequests to public benefit organisations and property accruing to surviving spouses.

 

JLJ_BudgetInfograph

READY TO SIGN THE OFFER TO PURCHASE FOR YOUR DREAM HOME? MAKE SURE YOU HAVE CONSIDERED ALL THE
COSTS INVOLVED.

READY TO SIGN THE OFFER TO PURCHASE FOR YOUR DREAM HOME? MAKE SURE YOU HAVE CONSIDERED ALL THE
COSTS INVOLVED.

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You’ve finally found the property you want. Your bank says your chances of being approved for a mortgage loan are good. You’ve even saved up a 10 % deposit in case this is required. You’re happy, because you’re now ready to sign the offer to purchase.

Before you sign however, do you know what other costs you need to pay when purchasing property?

Buyers rarely take the time to find out the details with regards transfer fees and bond registration costs. They are often caught off guard when they receive invoices from different attorneys involved in the transfer and registration process of the property.

Transfer and bond fees

Confusion often arises between the buyer and the seller as to who should bear the transfer duties. That’s why it’s a good idea to ask your property agent or attorney to obtain a written quote for these fees, so that you will know exactly what you are liable to pay.

Buyers are not only responsible for paying transfer duties. They will also need to pay the bank a bond registration fee once the loan application has been approved. This often needs to be paid days after all necessary documentation has been completed and signed by the buyer.

In addition to these costs, a bank initiation fee is required, which can range from R1 000 to R6 000, depending on the loan amount and the banking institution you are applying with. Fortunately, if a buyer is unable to pay the initiation fee in full, he can arrange to have this included in his bond repayments.

Buying property is an expensive affair. To help encourage home ownership in South Africa, our previous Finance Minister, Pravin Gordhan, announced in his 2017 Budget that buyers who purchase property less than R900 000 will no longer have to pay transfer duty. One and two bedroom sectional title units have become very popular for investors and first time home owners. Discuss this with your property agent or a property conveyancer beforehand, and keep in mind the location in which you want to buy. Location of property plays a big role.

Deposit payments and loan criteria

Your deposit is not there to pay the extra costs involved in purchasing property. It is to secure the purchase of the property you want to buy. Banks currently only grant 100 % mortgage loans for clients with exceptionally good credit profiles.

There are certain reasons why they would grant a lesser amount or decline the application completely.

  • If the buyer has a Less than perfect credit score
  • The bank area exposure has reached its limit
  • Property condition and property location

Let’s say for example, a buyer qualifies for an amount of R650 000 according to the bank. The buyer goes out and finds a property and signs the offer to purchase. The bank only grants him a loan of R600 000. The reasons – condition of property and location.

Is it avoidable? No not really. What you can do though is get as much information about the property and the location as possible. Speak to your agent or a conveyancer. They can give you good advice based on their profession, knowledge and experience.

When applying for a mortgage loan, buyers should not only apply with their own bank. It’s advisable to also approach other financial institutions to make sure you receive the most competitive offer on interest rates.

Municipal rates and taxes, levies

Buyers need not worry about this. It is the seller’s responsibility to pay these costs three months in advance to obtain a clearance certificate. In other words any outstanding municipal rates and levies must be paid by the seller until transfer of ownership has taken place, i.e. until the property is lodged and registered at the deeds office. Thereafter, those fees will be the responsibility of the new property owner.

If the property registers earlier for example in month two, the attorney will need to obtain the last month’s rates and/or levies back from the buyer (pro rata).

Knowing and understanding the different costs involved will create a much clearer picture from the beginning, and avoid any delays and disappointments for both the buyer and the seller. Buying property is a long term commitment, and should not become a financial burden for anyone under normal circumstances.

Make sure you have all your facts and figures before you sign the offer to purchase.

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)

What should a conveyancer do?

What should a conveyancer do?

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Conveyancing (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 an admitted 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/her by the Estate Agent or the Seller. 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 all the parties at all times, and these interests should outweigh all other considerations except of course issues of legality;
  2. inform the parties of the conveyancing procedure and keep both the Seller and purchaser informed of the progress of the transaction;
  3. advise the seller on the cancellation of his bond, any penalties, notice periods and other administrative charges which may affect the settlement figure;
  4. 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;
  5. advise the parties on their obligations in terms of the offer to purchase, so as to ensure that the transfer is not delayed;
  6. meet with both the Seller and Purchaser to explain, as well as sign the necessary documentation in order to conclude the transaction;
  7. prepare the deeds for lodgement with care, so as to minimise the risk of rejection of the documentation by the Deeds Office;
  8. inform the parties 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?
  2. Is the conveyancing firm well established?
  3. 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.
  4. 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)

Co-owning property with someone else: The ups and downs

Co-owning property with someone else: The ups and downs

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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:

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

References:

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)

How can a person get married in South Africa?

How can a person get married in South Africa?

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A person can get married in terms of a civil marriage, customary marriage, civil union or religious marriage. A religious marriage is not recognised as a valid marriage, but the spouses in a religious marriage can be protected by law in certain instances.

What are the general requirements for a valid marriage?

  • Both persons to the marriage must give consent to get married and must be older than 18 years of age.
  • A person younger than 18 years of age, needs the permission of his/her parent/s or guardian/s to get married. No person younger than 18 years of age can enter into a civil union.
  • The marriage must be lawful, for example:
    • persons who are closely related (such as brother or sister, or parent and child) may not get married; or
    • a person may not have more than one marriage at a time, except for customary marriages.
    • Certain formalities must be adhered to, such as that the marriage must be concluded by a marriage officer and in the presence of two witnesses.
    • A marriage must be registered at the Department of Home Affairs.
      .

The difference between marriage in and out of community of property

  • MARRIAGE IN COMMUNITY OF PROPERTY:

there is one estate between a husband and a wife. Property and debts acquired prior to or during the marriage are shared equally in undivided shares (50%). Both spouses are jointly liable to creditors.

  • MARRIAGE OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACCRUAL SYSTEM:

the spouses have their own estates which contain property and debts acquired prior to and during the marriage (“what is mine is mine and what is yours is yours”). Each spouse is separately liable to his/her creditors. Prior to the marriage, an ante nuptial contract must be entered into to indicate that the marriage will be out of community of property.

  • MARRIAGE OUT OF COMMUNITY OF PROPERTY WITH THE ACCRUAL SYSTEM:

this is identical to a “marriage out of community of property” but the accrual system will be applicable. The accrual system is a formula that is used to calculate how much the larger estate must pay the smaller estate once the marriage comes to an end through death or divorce. Only property acquired during the marriage can be considered when calculating the accrual. The accrual system does not automatically apply and must be included in an ante nuptial contract.

References:

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)