BEFORE YOU BUY OR SELL PROPERTY THIS FESTIVE SEASON….

           “Who acts in haste repents at leisure” (Aesop)

Our Festive Season is always a busy time for property sales, and this year should be no different – pent up demand, increased affordability, relocations, record low interest rates and availability of bonds are all factors likely to drive a busy property market for at least the next few months.

If you are one of the many property sellers or buyers planning to take advantage, you are in for an exciting time, and as far as practical advice goes you have a treasure trove of it awaiting you on the internet.

Just don’t neglect the legal aspects – rushing in without legal advice risks falling foul of any one of the many pitfalls out there, and if that happens you really will “repent at leisure”.

Here’s 12 reasons to call your attorney first:

Let’s look at some of the benefits of making your lawyer your very first port of call –

  1. Local, specialised knowledge: Lawyers have their fingers on the pulse of what is happening locally – what is happening in the property market, who is selling and who is buying, what marketing strategies are producing results, which banks are granting bonds on the best terms, and so on. All invaluable information for both sellers and buyers.
  2. Choosing a conveyancer: As a seller insist on choosing which conveyancing attorney will attend to the transfer in the Deeds Office. Pick a lawyer you trust to act quickly and efficiently, protecting your interests at every step.
  3. The Offer to Purchase/Deed of Sale: Typically a written offer from a buyer becomes the Deed of Sale on acceptance by the seller, and it is that Sale Agreement that is at the heart of whether a sale proceeds smoothly or whether it devolves into a nightmare of cost, delay and dispute. Prevention being as always better than cure, both buyer and seller should sign nothing until they fully understand and accept all the terms and conditions in the document. Our law will with very few exceptions hold you to your agreements – and if you sign in haste you are likely to regret at leisure!
  4. Agent’s commission: Don’t risk any misunderstanding or dispute if you decide to market your property through an agent or agents – in a worst-case scenario when dealing with multiple agents, you could even risk double commission. Have your lawyer check the agent’s mandate before you sign it, and as a buyer look for any undertakings you may be giving in the sale agreement regarding commission disputes.
  5. Other costs: Both parties need to fully consider their total costs, and not all of them are immediately apparent. As a seller for example you need to consider things like bond cancellation costs, compliance certificate costs, tax risks (capital gains tax can be a big factor here) and the like. Buyers of course need to plan for transfer duty, transfer costs etc. Ask your lawyer to give you an estimate.
  6. Bond clauses: Our courts are regularly called upon to resolve “bond clause” disputes. A properly worded clause, correctly recording what you have both agreed to, is essential. As a seller ask about the “72-hour clause” concept if you are selling subject to the buyer getting a bond and you think you may get another and better offer in the interim.
  7. Other suspensive and resolutive clauses: A “suspensive” clause is one that says the agreement is “suspended” until the happening of something – for example the granting of a bond to the buyer as we covered above, or the granting of a sub-division or something similar. A “resolutive” clause on the other hand provides that the agreement is binding on signature but falls away on something happening. Both can cause all sorts of confusion and their interpretation is best left to the experts.
  8. Views, alterations, home businesses, title deed restrictions etc: As a buyer if you have fallen in love with a house because of its spectacular sea views for example, or because it is perfect for adding on that second story or granny flat, or because you plan to move your pandemic-hit business into the garage, have your lawyer check the title deeds and local town planning regulations for what is allowed and what is not. Many a bitter neighbour dispute has its roots in building extensions that block views or exceed local zoning restrictions, or in objections to business activities on residential property. A title deed inspection will also reveal any hidden pitfalls such as servitudes, usufructs and the like.
  9. Investment Properties: Property can be an excellent investment, but good upfront advice is essential, particularly if you plan to undertake any development or alterations. Understand the costs, the tax implications, and the risks of property “flipping” if you plan to resell, or of managing tenants if you plan to be a landlord.
  10. Who will the buyer be? Trusts, joint ownership, life partners and other considerations: Should you buy in your personal name or hold your house in a trust or company? Should you buy jointly with your spouse or life partner? These are critical decisions, involving questions of estate and tax planning, marital regime if married, cohabitation agreements if not married, financial status, risk profile in the commercial sense, and a host of other factors. Not getting this 100% right upfront is a recipe for disaster.
  11. Defects and the old “voetstoots” chestnut: Avoid any risk of dispute over defects, be they “patent” (easily identified on inspection) or “latent” (hidden or non-obvious) with a properly structured voetstoets (“as is” or “without any warranty”) clause. Buyers – bear in mind the old “buyer beware” maxim. Sellers – manage your potential liability for undisclosed defects.
  12. Community Schemes: Buying into a community scheme comes with many advantages, provided that you understand fully what you are letting yourself in for. For example, our courts will hold you to whatever housing complex rules and regulations apply. It will avail you nothing to say you weren’t aware of them when buying. In a sectional title development understand exactly what you are buying and how the concepts of “exclusive use” and “common property” areas affect you.

Every situation will be different so tell your attorney everything that could possibly be relevant.

For more information and professional legal advice, contact Adri Ludurf, Tracey Watson-Gill or Bardine Hall at Goldberg & de Villiers Inc. on 041 5019800.

 

Credit:LawDotNews

 

PROPERTY & THE LAW: Double Commission

The agent who was the effective cause of the sale of the property is the one entitled to the commission. However, when there are 2 or more agents involved im the sale of a property it can get complicated.

Tracey Watson-Gill, Director at Goldberg & de Villiers Inc.  explains more in this episode of Property & the Law.

For more information, contact Tracey on 041 5019800 | twg@goldlaw.co.za
www.goldbergdevilliers.co.za

PROPERTY & THE LAW: Ratification Clause

Did you know that the Ratification Clause allows a seller to continue marketing the property until the suspensive conditions have been fulfilled?

Our Property Director, Tracey Watson-Gill explains more in this episode of Property & The Law.

For more information, contact Tracey on 041 5019800.
www.goldbergdevilliers.co.za

PROPERTY & THE LAW : Suspensive Sale

When you sell your house subject to the successful sale of the buyer’s property, what does this in fact mean?

In this episode of Property & the Law, Tracey Watson-Gill explains.

For more information, contact Tracey on 041 5019800.
www.goldbergdevilliers.co.za

PROPERTY & THE LAW : Trusts

 

In this episode of Property & the Law, Tracey Watson-Gill, explains what to look out for when dealing with Trusts.

Tracey is a Director at Goldberg & de Villiers Inc. and can be contacted for more information on 041 5019800 | email twg@goldlaw.co.za.

www.goldbergdevilliers.co.za

 

PROPERTY & LAW : Electronic Signatures

Tracey Watson Gill, Property Law Director, explains when it is permissable to use an electronic signature on a document and when not.

For more information, contact Tracey on 041 5019800 | email twg@goldlaw.co.za.

www.goldbergdevilliers.co.za

PROPERTY: GREEN SHOOTS, AGENT’S COMMISSION AND FIDELITY FUND CERTIFICATES

        “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate” (Andrew Carnegie, billionaire industrialist)

Dollar billionaire Andrew Carnegie said it a century ago, and it still rings true – wise property investment can be hard to beat when it comes to accumulating wealth. The exciting opportunity for buyers at the moment is of course the more attainable sale prices and the lower interest rates resulting from the pandemic and the lockdown. It is, by all accounts, still very much a buyer’s market.

On the other side of the coin, sellers and estate agents are no doubt heartened by recent signs that the first green shoots of a recovery are in the offing, and so the time is ripe for a reminder that, in terms of the Estate Agency Affairs Act (“the Act”) only agents with a valid and current Fidelity Fund Certificate (FFC) can operate and earn commission.

The challenge for agents is that when it comes to the issue of FFCs, they are at the mercy of the Estate Agency Affairs Board (EAAB), which has reportedly struggled in the past to issue certificates efficiently and on time. This problem will presumably be exacerbated by the ongoing lockdown restrictions and the risk of precautionary office evacuations.

However there is some good news for agents (not such good news perhaps for those sellers or landlords hoping to save on commission!) in a recent Supreme Court of Appeal (SCA) judgment…

No FFC, but not the agent’s fault

  • Two estate agencies (“S” and “A”) jointly brokered a lease agreement, but when S asked for its 50% share A refused, partially on the basis that S had no valid FFC at the time the commission was earned.
  • In fact S had done everything necessary to apply for its annual FFC, which was issued by the EAAB on 1 January 2018 in the wrong name (S had converted from a close corporation to a company). The EAAB acknowledged its error and in May 2018 issued a correct FFC to S, backdated to 1 January.
  • However the High Court dismissed S’s commission claim, holding that mere entitlement to an FFC is not enough – a valid FFC must have been actually issued at the time the commission was earned.
  • S appealed to the SCA, which reversed that finding and awarded S its 50%. The Court held that the Act’s strict and peremptory requirement for a FFC had to be interpreted in light of both Constitutional considerations and consistency “with what the Act seeks to achieve”.
  • On that basis, and commenting that “But for the error on the part of the Board, [S] was entitled to, and would have been issued with, a valid fidelity fund certificate for the period 1 January – 31 December 2018” and that “the fault lies squarely and solely with the Board”, the Court concluded that “the estate agents were rightly considered to have been in possession of a certificate”. S is therefore entitled to its commission.

Agents – don’t lose your commission!

The Court was however at pains to point out that the particular facts of this case were “in a narrow compass” and it is clear that the general rule remains – hold a valid and current FFC or almost certainly forfeit your commission. Do not even try to rely on an EAAB mistake unless you have complied strictly with all the formalities for a certificate and can prove that you are entitled to one.

And as the Court put it, if something does go wrong with the issue of your FFC “…estate agents should not adopt a supine attitude in the face of the Board’s errors. They should do what is reasonably within their power to have the situation rectified. In the meantime their compliance with the requirements should be a primary factor in the determination of disputes that arise before the error is rectified” (emphasis supplied).

For more information contact Adri Ludorf or Tracey Watson Gill at Goldberg & de Villiers Inc. on 041 5019800 for professional legal advice.

Credit: LawDotNews

INTEREST RATES CUT – JULY 2020

The Monetary Policy Commiteee has cut the repo rate by 25 basis points. This takes the repo rate to 3.50% per annum, with effect from 24 July 2020. Prime interest rate is now 7%

To view the full MPC statement delivered yesterday click here: MPC statement July 2020

For more information contact Tracey Watson-Gill at Goldberg & de Villiers Inc. on 041 5019800.

 

ELECTRONIC SIGNATURES IN PROPERTY & OTHER TRANSACTIONS

 

“To sign a document means to authenticate that which stands for or is intended to represent the name of the person who is to authenticate” (quoted in the case below)

 

We all know that verbal agreements, although fully binding for most types of transaction, are a recipe for uncertainty and dispute. It’s not just a question of trust – even if no one is deliberately dishonest about what was agreed, innocent misunderstandings are common. We have a natural tendency to hear what we want to hear and to remember what we want to remember, and a properly-drawn written agreement avoids that.

So even when a written and signed document isn’t required it is always wise to insist on one. Note that the parties themselves can require a document to be in writing and signed. Or it could be required by law – the most common examples of the latter are property sale agreements, wills, suretyship agreements, ante-nuptial contracts, and credit agreements (there are other less common examples – take professional advice in doubt).

But that’s not always easy to achieve, and the COVID-19 lockdown in particular has highlighted the challenges of getting everyone together for an old-fashioned original “paper and ink” signing session. Even when social distancing is no longer required and ceases to be the norm in society, the convenience and benefits of being able to sign documents remotely (whether you and the other party/ies are in different houses, cities, countries or even different continents) are obvious.

Firstly, when is a digital agreement “in writing”; and can property sales and wills be electronic?

Fortunately our law, in the form of the ECTA (Electronic Communications and Transactions Act) recognises the general validity of digital documents. A “document or information” is “in writing” if it is –

  • “In the form of a data message; and
  • Accessible in a manner usable for subsequent reference.”

As a result, perfectly valid and enforceable agreements are now often entered into online, by email, WhatsApp and the like.

Note that there are some specific exceptions where a physical (“wet ink on paper”) as opposed to an electronic format is still required – most commonly property sale agreements, “long” (10 or more years) leases and wills (there are others – take advice in doubt).

Secondly, is “signature” always required?

Formal “signature” isn’t always essential as the ECTA provides that if the parties to an electronic transaction don’t specifically require an electronic signature, “an expression of intent or other statement is not without legal force and effect merely on the grounds that –

  • It is in the form of a data message; or
  • It is not evidenced by an electronic signature but is evidenced by other means from which such person’s intent or other statement can be inferred.”

Thirdly, how can you sign a document electronically?

Where “signature” is required, the ECTA recognises the concept of “electronic signatures” (defined as “data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”. They are valid except in cases where either a law (like the laws relating to property sales etc mentioned above) or the parties themselves require actual physical signatures.

An electronic signature can take many forms. Where it is required by the parties but they haven’t agreed on a particular type of electronic signature to be used, it is valid if –

  • “A method is used to identify the person and to indicate the person’s approval of the information communicated; and
  • Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.”

That definition will often be wide enough to include names on email messages, scanned images of physical signatures and the like. But remember the parties can specify what formats are and aren’t allowed, plus our courts may well look at all the circumstances of a case and decide for example that an actual manuscript signature is required even when transmitted electronically (see for example the “R804k” judgment discussed below).

“Advanced” electronic signatures

This is a concept of authentication designed to make an electronic signature more reliable and it is used when a law requires signature for specified documents or transactions but doesn’t require another particular type of signature.

The Deeds Registries Act and the Credit Agreements Act provide good examples.

Even when not specifically required, a big advantage of advanced electronic signatures is that they are presumed to be valid. That means anyone attacking one would have to prove its invalidity and not the other way round.

Security and fraud; with an R804k example

Cyber criminals are as always waiting to pounce so all the normal warnings in regard to electronic communication apply here, with the added need to ensure that electronic documents cannot be altered after completion/signature.

A recent example of “forged electronic signatures” is an online fraud that went horribly wrong for a firm of financial advisers who were sued for R804,000 when their client’s Gmail account was hacked by fraudsters –

  • Using the investor’s authentic email credentials, the fraudsters sent three emails to the financial advisers instructing them to transfer a total of R804,000 to the fraudster’s accounts. Two of the emails ended with the words: ‘Regards, Nick’ while the third ended with ‘Thanks, Nick’.
  • The financial advisers made the transfers and the investor sued them on the grounds that they had paid out contrary to the written mandate he had given them which stipulated that ‘All instructions must be sent by fax to [011 *** ****} or by email to [***@***.co.za] with client’s signature.’
  • The financial advisors argued that they had complied with the mandate in that the email endings “Regards, Nick” and “Thanks, Nick” were valid electronic signatures in terms of ECTA.
  • The SCA (Supreme Court of Appeal) however upheld the High Court’s ruling that the financial advisors were liable. They had not complied with the mandate which “requires a ‘signature’ which in every day and commercial context serves an authentication and verification purpose … The word ‘electronic’ is conspicuously absent from the mandate … The court below cannot be faulted for concluding that what was required was a signature in the ordinary course, namely in manuscript form, even if transmitted electronically, for purposes of authentication and verification.”

Play it safe – have your lawyer draw and manage your agreements for you to minimise this sort of risk, and ask also about using an external service provider for secure, authenticated and verifiable electronic document signing and storage. If you do come to blows with the other party down the line, the integrity and evidential value of your electronic documents and signatures could be make-or-break.

For more information contact Adri Ludorf or Tracey Watson-Gill at Goldberg & de Villiers Inc. on 041 5019800.

Credit: LawDotNews

SUPPLY OF ELECTRICITY IS IN ITSELF, NOT AN INCIDENT OF THE POSSESSION OF THE PROPERTY TO WHICH IT IS DELIVERED

The mandament van spolie (spoliation) is a remedy in our law, based upon the fundamental principle that persons should not be permitted to take the law into their own hands to seize property in possession of others without their consent.

Spoliation provides a remedy in such a situation by requiring the status quo preceding the dispossession to be restored by returning the property ‘as a preliminary to any enquiry or investigation into the merits of the dispute’ as to which of the parties is entitled to possession.

As a result, a court hearing a spoliation application does not require proof of a claimant’s existing right to property, as opposed to their possession of it, to grant relief. A spoliation order is thus no more than a precursor to action over the merits of the dispute.

The Supreme Court of Appeal recently analysed the principles applicable to spoliation proceedings in the case of Eskom Holdings SOC Limited versus Nomajapan Masinda[1].

In the matter, Eskom disconnected the supply of electricity to property owned by and in possession of a consumer. The consumer applied successfully for an urgent spoliation order, and Eskom appealed against this decision. Eskom contended that the connection made from its grid to the consumer’s property was illegal and a danger to the public. For this reason, it asserted that it had acted lawfully in disconnecting the supply.

The consumer contended that the lawfulness or otherwise of the dispute was not an issue and that the supply had to be reconnected where after the parties could determine its legality.

It was held by the Supreme Court of Appeal that the mere existence of such a supply is, in itself, insufficient to establish a right constituting an incident of possession of the property to which it is delivered.

To justify a spoliation order, the right must be of such a nature that it vests in the person in possession of the property as an incident of their possession. The obvious examples that come to mind are rights bestowed by servitude, registration or statute.

In contrast, rights that flow from a contractual nexus between the parties are insufficient as they are purely personal and a spoliation order, in effect, would amount to an order of specific performance in proceedings in which a respondent is precluded from disproving the merits of the applicant’s claim for possession.

Judge Leach expressed a view that previous cases which held that such supply is in itself an incident of the possession of the property to which it is delivered, should be regarded as having been wrongly decided.

[1] Eskom Holdings SOC Limited v Masinda [2019]  JOL 44966 (SCA)

For more information, contact the professional legal team at Goldberg & de Villiers Inc on 041 5019800.

 

 

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