Boundaries drive owner up the wall

Alan — Wed, 08 Feb 2012 15:23:26 +0000

This week the Property Poser panel considers a boundary wall problem with a few twists.

About seven years ago a reader purchased a unit in a complex. She explains that her property lies adjacent to the boundary wall enclosing the entire development and a small river runs just beyond that.

For about five of the seven years she has lived there, the local municipality cleaned up the riverbanks and secured the area with sandbags whenever there were heavy rains.

When the owners of the properties adjacent to the boundary wall requested that the municipality do more extensive work to protect their properties, all aid suddenly stopped. The reason given was that the property over which the river runs belongs to a local church and is therefore not municipal property after all.

Upon investigation, the reader also discovered that the wall is not actually built as indicated on the approved building plan. In fact, whereas the wall is currently about 12 metres from her house, it should only be three metres away.

In effect, the reader’s back garden has suddenly shrunk by three quarters of its original size. However, when she purchased the property, she was clearly under the impression that the boundary wall was in the correct position.

To make matters worse, the wall is falling apart and the reader has therefore decided to erect a new one in the correct place. She wants to know who would be liable for future damages, should the river encroach further on her property.

The reader claims that the attorney who handled the transfer of her property knew it was not the size it appeared to be. He maintains the sale agreement indicated the size of the erf and that it was her responsibility to check these measurements.

This is a very unfortunate situation, which has been aggravated by the actions of various parties over the years, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch.

“However, unless misrepresentation can be shown on the side of the transferring attorney, or the seller for that matter, his statement is correct. It is the duty of the purchaser to confirm the correct size of the property.”

Geldenhuys says an agreement of sale will often contain a clause pertaining to the fact that no representations were made by the seller regarding the size of the property or its boundaries.

Furthermore, says Schalk van der Merwe from Rawson Properties Helderberg, when the new wall is erected, any future damage to it will be for the reader’s account.

According to Van der Merwe, the only remedy she may have will lie with the owner or occupant of the adjacent land.

“It is his or her responsibility to keep the river free flowing and clear of any overgrowth that could cause it to block up, thereby increasing the potential for damages to the reader’s property.”

To ask a property related question visit www.propertyposer.co.za.

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List Price: £26.99 Price: £23.99 Your browser does not support iframes. Suretyship makes CC members liable Alan — Wed, 01 Feb 2012 10:10:55 +0000 This week the Property Poser panel deals with an issue where the defaulting tenant of a rental property is not a natural person but a close corporation (CC). The reader asks how a landlord can hold a tenant liable for a breach of contract when the tenant is a CC with only one member. In this instance, the contract has been cancelled and the tenant evicted. Unfortunately, no sureties were provided in terms of the rental agreement. As a result, the reader would like to know whether the member can be held liable, in his or her personal capacity, for any losses suffered as a result of the breach of contract. He also says the member confirmed on behalf of the CC that there were sufficient funds to pay the rental as agreed upon in the contract. Because this turned out to be untrue, he would like to know whether this amounts to fraud and if the member could be held liable on these grounds for any losses suffered. Furthermore, the reader wishes to know what the consequences may be for the tenant who, knowing that eviction is pending, disposes of the CC’s assets in an improper way in order to avoid the attachment and sale in execution of such assets. When dealing with a legal entity, one must bear in mind that the separation of the individuals from the entity in question – and thus the protection it affords them – is often the reason for such a choice, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. Geldenhuys says other parties transacting with such entities need to ensure that they are protected by requesting that the individuals provide a surety for the debts. “In the absence of such a surety, it may be difficult to hold the individuals liable.” If there were indeed fraudulent actions on the part of the members, Geldenhuys says this may be a reason to “pierce the so-called corporate veil”. “Having said this, the mere fact that the tenant does not ultimately have the funds to honour the rental contract does not in itself necessarily amount to fraud.” According to Schalk van der Merwe from Rawson Properties Helderberg, any number of things may happen during the course of a rental agreement that jeopardise the financial security of a tenant. “Due to unforeseen circumstances, a tenant may run into financial difficulty despite having been completely financially secure at the outset or at times in between.” Should the tenant fraudulently dispose of assets to prevent them from being attached, Van der Merwe says the creditor may approach the court for relief. “A legal remedy could perhaps prevent such actions or undo the disposals effected during this time.” Van der Merwe says a summons with a rent interdict preventing the removal of goods can, however, be useful in this regard. Send your property related questions to pose@propertyposer.co.za or visit www.propertyposer.co.za. Regulating Unfair Banking Practices in Europe: The Case of Personal Suretyships New, ship fast, delivered in 5-7 days in UK, No PO BOX. List Price: £100.00 Price: £55.00 Your browser does not support iframes. Levies Divide Homeowners Association Owners Alan — Wed, 25 Jan 2012 08:54:21 +0000 This week, a reader confronts the Property Poser panel with a rather complex issue regarding levy payments in a freehold estate. He owns a property in such a development, which is managed by a homeowners’ association (HOA). When the estate was developed, he says, it was decided that there would be 25 separate plots and that the levy would be shared equally among the owners. A few owners, however, purchased double plots and built only one property per combined erf. Effectively, the estate ended up with 22 dwellings on 25 plots. Early on, the question arose as to how the levy payable by each owner should then be calculated under these revised circumstances. The reader says some of the double-plot owners were unhappy about paying twice the levy for essentially one house. Eventually, in an attempt to accommodate them, a complex calculation was devised for determining each person’s levy. Although it is a less than desirable position, he says their HOA constitution states that 70 percent of the owners have to vote in favour of changing the current calculation. To further complicate matters, a special levy was introduced a few years ago. This was paid equally by all owners, therefore the amount was simply divided by 22 and not 25. In light of this complex situation, the reader wishes to know how the actual determination of the levies payable can be settled once and for all. He specifically wishes to know whether arbitration is a possible route to follow, thus allowing for resolution by an external party. The first principle to keep in mind is that the HOA levy is normally paid per plot or erf, regardless of the size of the building erected on it, says Schalk van der Merwe from Rawson Properties Helderberg. “This is different from a sectional title complex, where the levies are calculated as per the participation quota, which is based on the size of the specific unit.” However, if the constitution states differently, Van der Merwe says these provisions will be binding. “To go about changing it, the provisions relating to amendment of the constitution will have to be followed.” If the constitution makes provision for arbitration by agreement or for a party to refer the disputed matter to arbitration, then this may be a viable way to resolve the issue, says Van der Merwe. According to Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch, any decision reached during arbitration will be binding on all parties, similar to a court ruling. “An arbitration award can only be set aside or taken on review under very limited instances.” Geldenhuys says typical examples would be misconduct by the arbitrator in relation to his or her duties, gross irregularity, the question of impartiality or if the arbitrator exceeds his or her powers. “The entire arbitration process is guided by the constitution and will be subject to the terms of the arbitration clause. If the constitution does not prescribe the procedural rules of arbitration, the parties can agree to procedural rules to be followed or they can choose to follow the rules of the courts.” Send your property related questions to pose@propertyposer.co.za or visit www.propertyposer.co.za. Surviving Homeowner Associations The Pros and Cons of Privately Incorporated Communities Governed by Homeowners’ Associations Pros Planned communities governed by Homeowner Associations usually feature attractive combinations of well-designed homes, amenities, and landscaped open spaces. The houses may even cost less than traditional housing due to more efficient use of land and more volunteer support by residents. Cons Numerous documented abuses of property owners have occurred particularly in the sun belt states causing financial loss, depression, divorce, suicide–in one case, even murder. Infringement on personal rights and civil liberties are usually not justifiable. State government agencies should investigate and exercise control when abuses are reported against property owners; they authorized these privately incorporated entities but have failed to provide oversight and protection to the residents. State leaders have not passed significant legislation to regulate but have yielded to for-profit interests. Courts could adjudicate that citizens residing in Planned Unit Developments have full Constitutional rights but, because of the private property contract language, have not so ruled. Homeowner associations should be recognized as Quasi-Governmental entities and issues of democratic governance actively addressed. Recent actions indicate that neither state legislatures nor the courts have the inclination and courage to make necessary changes to protect the rights of titleholders. Political Action Committees and big money are in control of the process. Of this, you can be assured.The Pros and Cons of Privately Incorporated Communities Governed by Homeowners’ Associations Pros Planned communities governed by Homeowner Associations usually feature attractive combinations of well-designed homes, amenities, and landscaped open spaces. The houses may even cost less than traditional housing due to more efficient use of land and more volunteer support by residents. Cons Numerous documented abuses of property owners have occurred particularly in the sun belt states causing financial loss, depression, divorce, suicide–in one case, even murder. Infringement on personal rights and civil liberties are usually not justifiable. State government agencies should investigate and exercise control when abuses are reported against property owners; they authorized these privately incorporated entities but have failed to provide oversight and protection to the residents. State leaders have not passed significant legislation to regulate but have yielded to for-profit interests. Courts could adjudicate that citizens residing in Planned Unit Developments have full Constitutional rights but, because of the private property contract language, have not so ruled. Homeowner associations should be recognized as Quasi-Governmental entities and issues of democratic governance actively addressed. Recent actions indicate that neither state legislatures nor the courts have the inclination and courage to make necessary changes to protect the rights of titleholders. Political Action Committees and big money are in control of the process. Of this, you can be assured. Price: Your browser does not support iframes. Early cancellation leads to lease disagreement Alan — Thu, 19 Jan 2012 12:05:10 +0000 This week’s scenario presented to our Property Poser panel relates to the early cancellation of a lease by a landlady. The tenant recently received a call from the person in question, who requested that she vacate the property as soon as possible to accommodate her daughter who was unexpectedly returning from overseas. During the conversation the landlady, who realised that she was terminating the lease before the end of the term, offered to waive the last month’s rental. The reader was obviously dissatisfied with the situation, but, after her landlady mentioned that another rental property might be available, agreed to investigate other options. This option proved viable but when the reader confirmed that she would move, she was told that she would be liable for the rental after all. Some of the reasons offered for this sudden change of heart included the fact that the landlady had not increased the rental for three years or insisted on a deposit. The reader examined the lease agreement, which stated that it was subject to annual renewal with a 6% increase but that no deposit was payable. She would like to know what her rights and obligations are. As in all contractual issues, the terms of the agreement are key in determining the parties’ rights and responsibilities, says Schalk van der Merwe from Rawson Properties Helderberg. “Provided, of course, that these terms aren’t contrary to the provisions of the Rental Housing Act. As we don’t have a copy of the agreement, we can merely speculate regarding possible clauses contained in it.” Van der Merwe says important issues to consider include whether the landlady was entitled to cancel the agreement. “From the information given, it appears that the lease was for a fixed term. Usually, someone would only be entitled to an early termination if the other party breaches the agreement or accedes to the request for cancellation.” In this instance, says Van der Merwe, it would appear that the reader agreed to the landlady’s request once she obtained other accommodation, on the basis that she would not be liable for the last month’s rental. “If the above is a true reflection of what occurred, then a valid agreement to alter the lease came into existence. The landlady cannot unilaterally change the terms by demanding payment.” Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says a general clause included in many contracts states that the failure to exercise one’s rights cannot be construed as a waiver and thus does not change the terms of the agreement. “However, if the landlady didn’t object to the reader’s lower payment on the date of increase, then the more likely interpretation of the situation would be that the parties tacitly agreed to continue with the lower rental.” Geldenhuys says such a tacit alteration to the lease would be just as binding as a verbal or written agreement. “Regarding the deposit, if the lease didn’t require one then the landlady cannot use this excuse to motivate her demand for the final instalment.” According to Geldenhuys, it would therefore appear that the reader has grounds for refusing payment. “However, if she is still uncertain, it would be wise to consult with an attorney, who will be able to advise her based on the exact terms of her lease, both written and verbal, while taking into account her rights as contained in the Act.” Send your property related questions to pose@propertyposer.co.za or visit www.propertyposer.co.za. 9 Important Lease Agreement Issues (Minitraining Guides) 9 Important Lease Agreement Issues9 Important Lease Agreement Issues Price: Your browser does not support iframes. Divorcee wants split from accrual system Alan — Wed, 11 Jan 2012 14:36:09 +0000 This week Property Poser’s panel considers the implications of being married out of community of property with the accrual system. A reader tells us that she is married in terms of this regime and that the split of the accrual is 25/75 in her husband’s favour. It appears that one of the biggest assets in the estate is a property valued at approximately R3 million, registered in her husband’s name. In the event of a divorce, she would like to know whether she could negotiate to keep the property in exchange for her claim on all other assets and, if so, whether she would have to pay a fee to have the house registered in her name. Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says the accrual system was introduced in the early eighties allowing spouses to maintain their separate estates during the course of the marriage. “In the event of death or divorce, however, the spouse who has had the least growth in value of assets in his or her name is entitled to share in a portion of the growth of the other one’s assets.” At the outset, says Geldenhuys, the starting value of each party’s estate is established and documented in the antenuptial contract. “Any assets that are to be excluded from the calculation, such as a business, can be specified.” Regardless of the growth in value of these assets, Geldenhuys says the other spouse will have no right to a share in them. “When the marriage ends, the final value of all assets forming part of the accrual system has to be determined.” Geldenhuys says the value of any liabilities is also taken into account. “So if there is for example a bond on a fixed property, it is deducted from its value.” In this instance, it is not clear whether there is a bond on the property in question, says Geldenhuys. According to Schalk van der Merwe from Rawson Properties Helderberg, the Matrimonial Property Act gives a court the power to deviate from the agreed terms of the antenuptial contract. However, such an order will only be made if there are exceptional factors that warrant it, says Van der Merwe. “It is very important to realise that the parties can divide the estate in any agreeable manner in the event of a divorce, regardless of the marital regime applicable.” Only when the parties cannot or do not wish to agree to other terms, will the marital regime be applied in its strictest sense, says Van der Merwe. “This means that in theory it is possible for our reader to become the sole owner of the fixed property while her spouse takes on full ownership of other assets.” Should the fixed property be transferred in terms of the divorce, Van der Merwe says there is a specific exemption on any transfer duty that may have been payable. “Conveyancing fees will however still be due for the transfer, which are based on the value of the property.” Send your property related questions to pose@propertyposer.co.za or visit www.propertyposer.co.za. Divorce & Splitting Up: A Complete Legal and Financial Guide (Which? Essential Guides) New Mint Condition Dispatch same day for order received before 12 noon Guaranteed packaging No quibbles returns A guide to divorce, dissolution and separation that offers practical assistance throughout the process for married couples, cohabiting couples or those in civil partnerships. It considers what happens when couples divorce, how the situation differs for unmarried couples, and considers civil partnerships and the process of how these are dissolved. List Price: £10.99 Price: £3.79 Your browser does not support iframes. Executor of deceased estate a dead loss Alan — Thu, 15 Dec 2011 04:28:53 +0000 This week the panel examines the role of the executor in a deceased estate following a query from an aggrieved beneficiary who considers one such incumbent a dead loss. The reader explains that a family member was appointed as executor but that she and fellow beneficiaries have been unhappy with his administration of the estate thus far. She would like to know whether he can be removed from his position and replaced. Furthermore, the reader would like to know whether she can insist on a progress report from the current executor in order to determine how far the matter is from finalisation. According to Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch the executor is normally appointed in terms of the wishes expressed in a deceased’s will. “The Master of the High Court formalises the appointment of the executor by issuing a ‘letters of executorship’, which authorises the appointee to administer the estate.” Geldenhuys says the executor has to take control of the assets that form part of the deceased estate and identify the beneficiaries. “Some of the executor’s first actions are to pay any outstanding creditors and collect any debts owing to the estate.” All of these actions are reflected in the so-called liquidation and distribution account, which must be submitted to the Master’s office for approval, says Geldenhuys. “The L&D account provides details of all movable and immovable assets as well as creditors paid. It goes on to show who the beneficiaries are, the extent of the inheritance and how the bequest will be transferred to them.” Geldenhuys says people with an interest in the estate, such as creditors or heirs, may query the account. “The executor’s duties culminate in the distribution of the estate to the beneficiaries in accordance with the final account.” In addition, says Schalk van der Merwe from Rawson Properties Helderberg, the executor is responsible for calculating and paying over any taxes such as income tax, capital gains tax and estate duty. The executor reports to the Master during the course of the administration process and the latter may at any time request further particulars and specific documentary evidence, says Van der Merwe. “If any beneficiaries or creditors are unhappy with the progress or actions of the executor, they can approach the Master with their specific queries.” Van der Merwe says it should be kept in mind that the administration of an estate can be complicated and that there are often delays as the executor deals with third parties in effecting certain transactions. “It stands to reason therefore that concerns are not necessarily justified merely because of delays. Rather, the main question should be whether there has been any impropriety on the part of the executor.” It goes without saying, says Van der Merwe, that the beneficiaries may contact the executor directly about any issues or uncertainties relating to the finalisation of the estate. “Only in instances where the executor is not forthcoming with information should the Master’s office be approached for relief.” Send your property related questions to pr@fullstopcom.com or visit www.propertyposer.co.za. What To Do When Someone Dies – A simple guide for family members and executors to settle an estate including funeral, tax and probate tips A simple step-by-step guide for family members, personal representatives and executors with day-to-day time-lines and checklists to successfully administer and close an estate. All related tax, legal, probate and financial topics are covered. Written for citizens of the United States. When a loved one, family member or friend passes away, most people quickly find themselves in a stressful, awkward situation with many more questions popping into their mind than answers. The first question being, “What am I supposed to do?” This book was written to clearly and concisely guide you through each and every step necessary to successfully settle the affairs of the person you cared for. It is organized by what needs to be done each day after death. Each time period has a checklist of actions to help organize and simplify the process. There are many tasks to complete. By breaking the list down to simple, straightforward actions, the entire process becomes less daunting and lowers stress. A simple step-by-step guide for family members, personal representatives and executors with day-to-day time-lines and checklists to successfully administer and close an estate. All related tax, legal, probate and financial topics are covered. Written for citizens of the United States. When a loved one, family member or friend passes away, most people quickly find themselves in a stressful, awkward situation with many more questions popping into their mind than answers. The first question being, “What am I supposed to do?” This book was written to clearly and concisely guide you through each and every step necessary to successfully settle the affairs of the person you cared for. It is organized by what needs to be done each day after death. Each time period has a checklist of actions to help organize and simplify the process. There are many tasks to complete. By breaking the list down to simple, straightforward actions, the entire process becomes less daunting and lowers stress. Price: Your browser does not support iframes. Close corporation divides family Alan — Thu, 08 Dec 2011 11:15:58 +0000 This week, the panel deals with an interesting situation involving conflict over a holiday house owned by a family in a close corporation. The man, his wife and children are all members, but the husband has recently passed away. Unfortunately, his wife and one of their children took it upon themselves to go to the property, empty it out and arrange for a long-term tenant to take occupation. According to the reader, this was not agreed upon or consented to by the other members of the CC. He says there was, however, an existing arrangement that the other members were to have access to the home from time to time and also that a few holiday tenants could rent the house. Regrettably, no association agreement exists between the members, which would’ve regulated the relationship between the members and the administration of the property owned by the CC. The reader would like to know what remedy, if any, the affected members of the CC have against those who acted on a whim of their own. Schalk van der Merwe from Rawson Properties Helderberg says it is important to remember that the CC is considered a legal person. “Therefore, it is the CC that owns the assets, not its members.” Van der Merwe says the members, unless otherwise agreed, have equal rights to administer and represent the CC in its business dealings. “In this instance, its business is to administer and rent the property owned by it.” Where the members have differing ideas regarding the manner in which the business is administered, Van der Merwe says the matter must be put to a vote. “Each member’s representation will be weighted according to his or her interest in the CC.” Until the deceased estate is wound up and the husband’s interest transferred or sold, the executor will vote on behalf of the estate, says Van der Merwe. “All members have a fiduciary responsibility to act in the best interests of the CC.” When a member acts outside of his scope of authority, it is typically the CC that acts against the offending party, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. Should a member’s actions result in damages to the CC, he or she may be liable to the entity for these damages, says Geldenhuys. “In this case, an example would be if the CC were held responsible for breaching tenants’ leases.” Geldenhuys says a member can take legal action against another on the basis that that member acted in an unfairly prejudicial manner and a court would then remedy the unfair conduct. “Such a remedy may be required by those being deprived of their rights to use the property in the agreed manner.” Geldenhuys says it should not be taken for granted that the members of a CC will always act in the manner envisaged by its founding members. “As with any property owned either by multiple persons or by an entity controlled by multiple persons, a set of rules should be established to prevent disputes.” Send your property related questions to pr@fullstopcom.com or visit www.propertyposer.co.za. Laying blame at owner’s door Alan — Wed, 30 Nov 2011 14:46:00 +0000 This week our panel assists a reader who has been fined for alterations he made to his unit in a sectional title complex. Before starting these alterations he submitted the plans to the municipality and the trustees of the body corporate. The changes he wished to effect were not only aesthetic, but also had practical implications to prevent rainwater from flooding the interior. The building took two months to complete. About a month after completion he received a communication from the trustees stating that the glass doors installed did not meet with their approval. Admittedly, the reader says the specifications had to be changed during installation due to manufacturing constraints. When he received this communication, he submitted the information from the installer to the trustees. Another month later, the reader was told that the revised specifications were not acceptable and that a monthly fine of R1 000 would be imposed until such time as the required changes were effected. In addition, the trustees informed him that had he submitted a drawing of the installed doors, it would have been rejected. However, he had no idea that this should have been done. Understandably, the reader is unhappy with the situation. To make the required changes will mean destroying a portion of the garden he re-established as well as ruining interior tiles. He therefore questions whether the fine could be imposed. An important fact to consider is that the reader submitted plans to the trustees before starting with the alterations, says Schalk van der Merwe from Rawson Properties Helderberg. “We can accept that these plans were approved as he then began the alterations and met no resistance.” Van der Merwe says the reader is clearly of the opinion that since everything happened in plain sight, the trustees had plenty of opportunity to raise their concerns while the alterations were underway. Unfortunately, says Van der Merwe, one of the prescribed management rules states that an owner shall not do anything to his section or exclusive use area which is likely to prejudice the harmonious appearance of the building. “This is probably the provision the body corporate is now relying on to force the reader to make the necessary changes.” Whether the trustees are entitled to impose a fine will depend on whether they have been granted the necessary authority to do this, says Van der Merwe. “Normally such an authority would be contained in the scheme’s rules.” Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says there are appropriate remedies under the standard rules relating to sectional titles, such as preventing the offending owner from participating at meetings. “The trustees can also effect changes and recover the costs from the owner, should he or she not adhere to the demand for repairs.” Geldenhuys says the reader may choose to oppose any disciplinary action by stating that there was tacit consent for him to make the changes to the original specifications. “However, the trustees may argue that since the plans were originally submitted in writing any substantial changes had to be formally submitted for approval.” In addition to this, says Geldenhuys, the standard conduct rules prescribe that any alterations or additions to the common property may only be made with the prior written consent of the trustees. “Taking these factors into account, an argument for tacit approval will most likely not hold water.” According to Geldenhuys, this may be an instance where the parties wish to pursue arbitration to resolve the dispute, if indeed a dispute is declared. In suspense over sale conditions Alan — Wed, 23 Nov 2011 16:31:39 +0000 Our panel often receives questions about suspensive conditions linked to property sales. These conditions affect not only the buyers and sellers but also the estate agent involved in the sale and, very often, third-party buyers and sellers who are waiting on fulfilment of a deal on which their own property transaction depends. This week we take a look at a set of facts presented by someone who appears to be a principal and is concerned about the actions of another agent within his organisation. He tells us that this agent regarded a sale agreement where the bond had been successfully granted, but the deposit unpaid, as a fully concluded sale. He is, however, concerned about whether the unpaid deposit affects the validity of the sale or not. According to Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch there are two main classes of conditions that may be attached to any contract: suspensive and resolutive. “When a contract is subject to a suspensive condition, it only comes into full effect when the condition is met. The operation of the contract is suspended until the condition is fulfilled or, in some cases, waived.” Geldenhuys says a common example of this would be that the purchaser must qualify for a bond of a certain amount and/or sell his own property. “If one or both of these conditions are not met within a specified timeframe, the contract simply never becomes fully operative.” Certain provisions may, however, be effective from signature and could, for example, prescribe that the seller take certain steps towards fulfilling the conditions, says Geldenhuys. “A resolutive condition, on the other hand, brings a contract to an end retroactively if the condition is fulfilled.” Geldenhuys says it is almost as if the contract were never concluded at all, save that restitution of performance may be required of the buyer. “An example of this would be an offer to purchase for a sectional title scheme that is not yet registered. If this registration does not take place on or before an agreed upon date, the agreement will simply come to an end.” In most instances the payment of a deposit is not phrased as a suspensive condition, says Schalk van der Merwe from Rawson Properties Helderberg. “If the deposit is not paid timeously, the purchaser may be in breach and the seller may put him or her on terms to perform.” Should the purchaser fail to perform, Van der Merwe says the seller may have the choice of taking action for specific performance or cancelling the sale, and possibly claiming damages. “This is different from the bond clause where the agreement is conditional on the purchaser obtaining the bond in time.” What this means, says Van der Merwe, is that the sale is “hanging in the air” until the purchaser actually obtains the required bond. “Should this not happen, the agreement lapses automatically and cannot be revived. There is no breach and the seller cannot place the purchaser on terms to perform, as there is simply no longer a contract under which to perform.” Van der Merwe says the reader may therefore rest assured that his agent is quite right in concluding that a valid sale has taken place. “The fact that the payment of a deposit still has to take place does not, in this instance, point to the contrary.” Send your property related questions to Property Poser. Splitting the marital bond Alan — Wed, 16 Nov 2011 14:45:52 +0000 Regular readers of our column may be aware that the impact of a marital regime on property ownership is often a burning question. This is even more so, it appears, when creditors are laying claim to outstanding debts from either one or both of the joint owners. One such reader writes that he and his wife are married out of community of property, with the exclusion of the accrual system. They are however the joint owners of the home in which they live. Unfortunately, being pensioners, they have fallen on hard times and could no longer afford the bond repayments on the property. The house was consequently sold on auction. The selling price realised was however insufficient to cover the outstanding bond amount together with the accrued interest and the auctioneer’s commission. The bank has insisted that the reader and his wife sign a document stating that they will jointly repay the outstanding amount still owing to the bank. This concerns the reader as their marital regime dictates that any other assets are owned in their separate capacities. He thus feels that he and his wife should have signed these documents separately and be held individually accountable for any amount still owing to the bank. In simple terms, a marriage out of community of property, excluding the accrual system, results in each person holding his or her own estate, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. “No provision is made for a sharing of assets or the growth in assets, as is the case where the accrual system is applicable.” Geldenhuys says one major exception to this rule is found where assets are owned jointly – such as fixed property registered in both spouses’ names – and the couple has assumed joint and several liability for any related debt. “Such an agreement will take precedence over the proprietary consequences of the marriage out of community of property.” Therefore, the house is owned in undivided half shares by the couple, assuming there is no agreement to hold shares in different proportions, says Geldenhuys. The standard type of mortgage loan agreement relating to a bond over immovable property specifically stipulates that co-owners are jointly and severally liable to the bank for the indebtedness, says Schalk van der Merwe from Rawson Properties Helderberg. “This means that the bank can typically claim any outstanding monies from both owners, jointly or severally.” Should one of the owners have sufficient assets in his or her own capacity to settle any outstanding claim, the bank could proceed against that person alone, says Van der Merwe, even if it means that the other party pays nothing due to a lack of further assets in his or her name. “The owner who ends up paying more than his or her half of the outstanding amount has the right to take action for recovery of this ‘overpayment’ against the other co-owner.” Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Buyers must know complex rules Alan — Thu, 10 Nov 2011 05:25:20 +0000 This week our reader’s letter deals with the management and conduct rules in a sectional title complex. He understands that, while these rules are absolutely necessary, prospective buyers do not always know what they are getting themselves into when buying in a complex. As a trustee of the body corporate in charge of the complex where he resides, he has devised a way to ensure that all parties concerned in the sale process are fully aware of the complex-related rules and facts. In his view, the seller and estate agent are both responsible for informing a prospective buyer of the set of rules applicable to a complex. He feels, however, that if the new owner only receives a copy of the rules from the transferring attorney, he or she may be in for a bit of a surprise at this late stage. In light of the above, the reader and his fellow trustees have determined that the estate agent representing the seller should obtain a copy of the relevant conduct rules from the managing agent of the complex. These rules can then be made available to the potential buyer for inspection and consideration even before signing an offer to purchase. It is important for the rules to be presented to a prospective buyer as they generally regulate both conduct and obligations, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. “Conduct rules not only regulate the behaviour of owners and occupiers with regard to the scheme’s common property, but also their behaviour within their respective sections.” Geldenhuys says the rules are not only applicable to the owner of a unit, but also to tenants and even their guests. “A standard set of rules can be found in the annexure to the Sectional Title Act, but it is possible to amend these.” The conduct rules deal with issues ranging from the keeping of animals, refuse disposal, vehicles, signs and notices to letting of units and alterations to the common property, says Geldenhuys. When a prospective buyer is thinking about investing in a sectional title complex he or she should consider a number of factors, says Schalk van der Merwe from Rawson Properties Helderberg. “Some of the questions that should be asked include what exactly the unit will comprise and what the monthly levy will be.” According to Van der Merwe, the buyer should also inspect the financial statements of the scheme, check its insurance policy and examine the management and conduct rules applicable. “It is clear therefore that a substantial burden rests on the prospective buyer to make sure that he or she knows exactly what lies in store.” It is commendable that our reader and the other trustees have taken certain steps to ensure that the new owners are fully aware of the conduct rules, says Van der Merwe. “However, the responsibility does not lie squarely on their shoulders. The ‘buyer beware’ principle is equally applicable.” Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Capital gains taxing on seller Alan — Wed, 02 Nov 2011 14:27:58 +0000 This week the panel considers the tax and other financial implications of selling a property that is not your primary residence. The question comes from a reader who has been renting out such a property for a decade and now wishes to sell it. He has obtained a valuation but is uncertain as to what the costs will be on his side. The reader asks firstly about the tax situation and secondly about the recommended commission payable to an estate agent with a sole mandate to sell the property. The second question is the more difficult one to answer, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. “This is a very negotiable aspect of the agreement between seller and estate agent and is affected by various aspects.” As long as the parties are clear as to what their expectations are, says Geldenhuys, both are free to accept or refuse the specific negotiated terms of the mandate, including the commission scale. “Factors to consider include the selling price of the property and the ease with which it may be sold. The parties could also agree to a fixed commission sum.” Geldenhuys says the more non-negotiable aspect of the sale relates to the tax implications, as the disposal of certain assets has been subject to capital gains tax (CGT) since October 1, 2001. “In other words, the growth in value of an asset is taxed when the asset is sold or disposed of in another way.” Geldenhuys says the starting value from which the growth is taxed is called the base cost and one of its main components is the value of the asset at the above-mentioned date. “In terms of the provisions of the Income Tax Act relating to CGT, this value could have been determined by a valuation done within a specified period, or by using a formula called the Time Apportioned Base Cost.” Once the base cost has been determined and the selling price set, the owner can get an idea of the potential tax payable, says Schalk van der Merwe from Rawson Properties Helderberg. “CGT is not a tax in itself. Instead, a portion of the gain realised when disposing of the asset is included in your normal income tax calculation.” Van der Merwe says this means that 25 per cent of any gain is included with your other taxable income and is taxed along the normal marginal rates. Before this is calculated, the net capital gains or losses are reduced by R20 000 based on an annual exclusion allowed by the Act. “This only applies however if you are a so-called ‘natural person’ and not a ‘juristic person’ such as a company, trust or close corporation. For such entities, 50 per cent of the gain is taxable.” According to Van der Merwe, the other implication of this system of tax is that the CGT due is not necessarily payable at the same time that the property is sold. “The taxpayer will account for the transaction only at the end of the tax year.” For individuals, the tax year ends on February 28, says Van der Merwe, therefore, should the property be sold during April for instance, the tax will only become payable the following year. “This is a very important implication if the proceeds of the sale are to be used in another transaction.” Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Fixing a shaky chair Alan — Thu, 27 Oct 2011 02:47:04 +0000 What role the chairperson of a body corporate plays and the nature of his or her responsibilities are the subject of this week’s column. Our experts have been approached by a reader who recently purchased a sectional title unit and was subsequently elected as trustee at the annual general meeting. The group of trustees is quite small, numbering just four members including the chairperson. The reader is, unfortunately, concerned about some of the chairperson’s actions and decisions. He feels that the chairperson acts according to his own whims and does not consult properly with the other trustees when decisions are made. He is also quick to rule that there are no funds for certain matters without, it appears, good cause for saying so. A sectional title scheme is managed by a body corporate, says Schalk van der Merwe from Rawson Properties Helderberg. “It is responsible for the control, administration and management of the common property for the benefit of all owners in the scheme.” Van der Merwe says the trustees are appointed to handle the finances and running of the complex on behalf of the body corporate. “They are elected by the owners at the annual general meeting.” The trustees, in turn, appoint a chairperson at their first meeting says Van der Merwe. “A chairperson is, ultimately, merely one of the trustees and as such must act honestly and in the interests of the body corporate.” According to Van der Merwe, the chairperson’s main function is to chair the meetings in accordance with the general rules for meetings. “The only additional power he or she may have is a casting vote when trustees are deadlocked on an issue.” Van der Merwe explains that once all trustees have voted and there is an equal number of ballots for and against, the chairperson may vote a second time to break the deadlock, except if there are only two trustees. An even number of trustees, as in the reader’s instance, does lend itself to potential deadlock, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. Should the trustees be unhappy with the actions of the chairperson, says Geldenhuys, they have a couple of options open to them. “The rules under Annexure Eight of the Sectional Titles Act provide that a chairperson will stay in office for a period of one year.” Geldenhuys says the rules also state that a chairperson may be unseated before the end of his or her term in one of two ways. “The trustees can remove the chairperson by a majority vote at a trustees’ meeting or the body corporate can do so by a majority vote at a special general meeting.” In both cases, the notice calling the meeting must disclose the intended removal of the chairperson from office, says Geldenhuys. “To avoid conflict, and if there is no immediate crisis, there is always the option of simply not voting the chairperson into power again after the next annual general meeting.” Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Till debt us do part Alan — Wed, 19 Oct 2011 15:10:49 +0000 The panel has had a question from a reader faced with the “for richer or poorer” aspect of her wedding vows, as she grapples with the issue of property ownership and debt under her particular marital regime. She explains that she and her husband acquired a property jointly before they got married but after their antenuptial contract was drafted. They married out of community of property with the inclusion of the accrual system. Unfortunately, it appears that her husband is involved in a legal wrangle with certain of his creditors. The result is that the jointly owned property is under threat to be sold on auction. The reader would like to know whether this is possible, since she is a co-owner and it is only her husband who is liable for the outstanding debt. The husband and wife who are married out of community of property (with or without the accrual system) each has his or her own estate, says Schalk van der Merwe from Rawson Properties Helderberg. “The accrual system merely assigns a sharing of the growth in the respective estates should the marriage be dissolved in the event of death or divorce.” Irrespective of how a couple is married, Van der Merwe says other legislation or common law rules may impose a different ownership with regard to certain assets. “So certain assets may be owned exclusively by one spouse, regardless of a marriage in community of property. An example would be if a property were bequeathed to a person with the stipulation that it should not form part of any joint estate that may exist between the heir and his or her spouse.” Likewise, certain assets may be owned jointly by virtue of the specific way in which the asset was acquired, says Van der Merwe. “The case under discussion is an example of this. When the couple acquired the property in their joint names, they became joint owners in undivided half-shares of the property.” Van der Merwe says this can be likened to unrelated parties owning a property together for commercial purposes. “As our reader correctly points out, she cannot be held liable for a debt owed by her husband.” Even so, it may very well be that his creditors obtained judgment against him with regard to the outstanding debt, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch. “Once judgment is obtained, the creditor may attach and sell goods belonging to the debtor in order to satisfy the judgment.” This is usually first attempted in terms of movable goods, says Geldenhuys. “However, should there be none, or if they are insufficient to satisfy the debt, the creditor may take action against the immovable property belonging to the debtor.” Geldenhuys says the creditor’s claim will nevertheless be limited to the debtor’s interest in the property. “In other words, should the property be sold, he or she cannot claim more than the debtor’s half-portion ownership.” According to Geldenhuys, a creditor can only sell the debtor’s undivided half-share in the property should the creditor have obtained a court order authorising such a sale. The reader may interpose and offer to purchase her husband’s share in the property, says Geldenhuys. “Should the creditor consent, this would provide her spouse with the necessary cash to satisfy the outstanding debt.” It must be noted, says Geldenhuys, that if one of the spouses has been sequestrated, the assets of the solvent spouse may be affected even if they are married out of community of property, by virtue of the provisions of the Insolvency Act. Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Agent lets owner down Alan — Wed, 12 Oct 2011 14:32:09 +0000 One of our readers is unhappy with both a recent tenant of her property and the letting agent who initially secured and handled the tenant. It appears that the agent introduced the candidate and assured the reader that she was suitable and that all credit checks had been properly performed. The reader was satisfied with this and signed the lease agreement. At first everything went smoothly. The rental was paid on time and the reader had no other issues with the tenant. However, from the third month problems arose. The rental payments were made on the seventh of the month or even later and the reader soon realised that a few thousand rands worth of damage had been caused to the property. The agent was not very helpful in recovering the late rental payments. After doing some investigation of her own, the reader discovered that this tenant had judgments against her name and was in fact not suitable, despite the agent’s initial claims to the contrary. The reader then decided to take steps of her own to rectify the situation. The tenant eventually vacated the premises of her own accord, but left the last month’s rental unpaid and the damage to the property unrepaired. The reader issued summons against the defaulting tenant, but the sheriff could not find any goods to attach to satisfy the judgment that had been obtained. It transpired that the ex-tenant was now also unemployed so her salary could not be garnished to repay the outstanding amounts. The whole experience has left the reader out of pocket and she would like to know where her remedy lies. We are not told what exactly the terms of the agreement between the reader and the letting agent were or whether a written contract was concluded, says Schalk van der Merwe from Rawson Properties Helderberg. “Nevertheless, it does appear that certain representations were made by the agent. The landlord acted upon these representations and suffered damages as a result.” Van der Merwe questions whether the reader would have concluded a rental agreement with any tenant who did not have a clean credit record. “It appears that creditworthiness was a clear requirement set by the reader and that she would not have entered into an agreement with someone who did not comply.” Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says there may therefore be scope for a contractual claim for damages against the letting agent. “This would most likely be for breach of the terms of the agreement, which involved finding a creditworthy tenant.” The proof of the breach is quite clear in the tenant’s subsequent misconduct despite the agent’s false assertion of her good standing, says Geldenhuys. “Alternatively, our reader may have a delictual action against the agent, based on the misrepresentations that were made. When the reader acted on these misrepresentations, it led to the damages that were incurred.” Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook. Common ground for special levies Alan — Wed, 05 Oct 2011 13:53:02 +0000 This week the panel tackles a reader’s question about the calculation of levies and explains how special levies are divided between owners in a sectional title complex. The reader describes her complex as consisting of nine units, all of which are roughly the same size, give or take a few square metres. She would like to know whether this means that all owners should pay approximately the same amount with regard to levies. Extensive renovations are being done to the complex and, as a result, special levies are now also payable. The reader would like to know how these amounts should be divided between owners as some units are occupied by only two people, while others are home to more, causing greater wear and tear. Schalk van der Merwe from Rawson Properties Helderberg says owners’ levies in a sectional title complex are used for the repair, maintenance and replacement of common property. “Common property is that part of the scheme that does not form part of any section.” Van der Merwe says the participation quota of each unit is used to quantify the sectional owner’s share in the common property and corresponding say in the management of the scheme. “The formula used in the Sectional Titles Act is based on the size of a section in relation to the aggregate floor area of all the sections. In essence, this means that units of a similar size will pay similar levies.” On the other hand, says Van der Merwe, the Act does not specifically mention special levies. “These are addressed in the rules set out in the Regulations to the Act and form part of the management rules.” Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says the rules give trustees the power to raise special levies from time to time provided that two requirements are met. “Firstly, the expense must be necessary and, secondly, it must not form part of the budget approved by the owners at the last annual general meeting.” In resolving to raise a special levy, the trustees may decide that it is payable as a lump sum or in as many instalments as they deem fit, says Geldenhuys. “Remember, a special levy extends only to the maintenance of the unit on the outside, which is part of the common property. The inside is solely the owner’s responsibility.” Geldenhuys says it does not matter therefore how many occupants an owner permits in his or her unit when it comes to responsibility for payment. According to Geldenhuys, this issue may well be addressed under a separate rule and the reader would be wise to make enquiries in this regard if it becomes problematic or negatively impacts on the other owners’ use and enjoyment. Send your property related questions to pr@fullstopcom.com or join Property Poser on Facebook.

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