The question posed to our panel this week deals with the age-old issue of latent and patent defects.

Upon moving into his newly acquired house, our reader discovered that there were several defects that were possibly hidden by the seller.

The reader says he had asked specific questions regarding dampness upon his initial inspection, all of which were answered in the negative by the seller.

However, after moving in, he discovered dampness behind the fridge and washing machine as well as in the cupboard below the sink, where a leaking pipe was dripping into a container previously hidden by cleaning products.

It also appeared that the skirting boards were affixed with bath sealant, but this interim solution proved unsuccessful.

Schalk van der Merwe from Rawson Properties Helderberg says one can quite easily assume that the agreement of sale would have contained the so-called “voetstoots” clause, meaning that the purchaser buys the property as it stands.

“This ostensibly frees the seller from any liability in terms of patent and latent defects that the purchaser may find when taking occupation of the property.”

Van der Merwe says a patent defect is one that should be identifiable upon any inspection that is carried out in a reasonable manner.

“Examples include wall cracks, broken windows, missing tiles and so on. Such issues are usually dealt with by the parties at the time of the sale, unless merely accepted by the purchaser.”

Van der Merwe says it is important to remember that the test is objective, in other words what could or should have been seen, not only what the purchaser in fact did see.

“Latent defects my not be apparent upon an ordinary inspection. These include faults that are not immediately obvious or are hidden from view, such as dampness behind a piece of furniture.”

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says a seller is liable for defects to the property that are not apparent upon a careful inspection if he or she had knowledge thereof.

“In that case, the voetstoots clause in the agreement will not negate the seller’s liability.”

The fact that the reader asked pertinent questions relating to dampness, which were all answered in the negative, seems like a deliberate attempt to conceal the truth, according to Geldenhuys.

“Furthermore, measures taken by the seller to repair the skirting boards and the placement of a container underneath a water leak make it difficult to assume that the seller wasn’t aware of the defects.”

Geldenhuys says there are remedies available to the buyer, such as instituting a claim for a reduction of the purchase price to reflect one that he would’ve paid had he been aware of the defects.

“If the defects are material and if the parties cannot resolve the matter otherwise, this may lead to the cancellation of the transaction or a claim for damages.”

A reader has posed an interesting question, relating to the transfer of a property at the owner’s death, to our panel of experts.

Her parents owned a property and when her father passed away it was never transferred to her mother, the legal heir. She apparently could not afford the transfer fees.

Even though it was not formally transferred into her name, the reader’s elderly mother has now drafted a will in which she nominates the person that will next inherit the property.

The reader wants to know how the “transaction” will be affected.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says all deceased estates have to be reported to the Master of the High Court and an executor has to be appointed in those with a value of more than R125 000. “Estates under this threshold are dealt with in a simplified manner, as prescribed in the Administration of Estates Act No 66 of 1965.”

Geldenhuys says if an executor is not nominated in the will, the Master will appoint one from those nominated by heirs and family.

“It is the executor’s task to make sure that the wishes expressed in the deceased’s will are exercised, that liabilities are settled and that assets are transferred to the heirs. To this end, one of the main tasks of the executor is to produce a Liquidation and Distribution Account, which sets out how the estate has been distributed.”

At various points in this process the executor has to report to the Master – firstly by lodging the above account and, once the process has been finalised, by providing proof of liabilities paid and assets transferred to heirs, according to Geldenhuys.

“If there is fixed property in the estate, proof that it has been transferred to the relevant heir must also be provided.”

The Master, says Geldenhuys, will not regard the estate as finalised until all these requirements have been met and, as such, the estate will remain “open”. “This may have been the case in respect of our reader’s matter.”

Schalk van der Merwe from Rawson Properties Helderberg says the Deeds Registries Act of 1937 provides in Section 14 that “transfers of land . . . shall follow the sequence of the successive transactions in pursuance of which they are made . . .”

“Therefore, in the event of the mother’s death, the property will first have to be transferred to her estate before it can be transferred to the new beneficiary. Similarly, if you buy a property and sell it before the transfer has been registered, the transfer into your name has to be finalised before the transfer to the next purchaser can take place.”

Van der Merwe says certain fees are payable to effect the transfer from the estate, although it is important to remember that no transfer duty is payable in a deceased estate. “Transfer duty is the tax portion relating to the value of the property and is payable to SARS.”

The attorney doing the transfer from the estate to the new owner will be entitled to charge a predetermined fee, according to Van der Merwe.

This week’s reader question is from a pensioner who had to let her unit in a sectional title complex to overseas visitors for a period of eight weeks to supplement her income.

She says this not only helped her to make ends meet, but also gave her the necessary funds to maintain the unit.

The reader has unfortunately now been informed by the body corporate that the conduct rules provide that units may not be let for a period of less than three months.

She wants to know what her rights are and whether she is liable to pay a fine imposed by the trustees.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says the annexures to the Sectional Titles Act of 1986 contain a set of so-called management and conduct rules.

“The management rules deal with the control, management and administration of the sectional title complex, while the conduct rules deal with the use and enjoyment of the sections.”

Geldenhuys says some of the issues dealt with in these conduct rules include the keeping of animals, the parking of vehicles on common property and alteration to common property.

“It is important to note that these rules as set out in the legislation provide only a framework and can be amended by both the developer and the body corporate.”

The developer has limited freedom to change the prescribed management rules, but the conduct rules can be amended or repealed in any way the developer wishes, according to Geldenhuys.

“The rules can also be amended or repealed by virtue of a unanimous or special resolution of the body corporate at a later stage.”

Schalk van der Merwe from Rawson Properties Helderberg says one aspect that can specifically be regulated in terms of the rules, relates to the letting of units.

“In this manner, the length of short-term leases of a section can be restricted to, say, three or six months. In the same way, holiday letting for shorter than a month may be prohibited.”

Van der Merwe says this situation again emphasises the importance of being aware of the rules of a sectional title complex when purchasing a unit.

“This will prevent a situation where the owner only realises at a later stage that he or she may not keep pets, that no form of business may be conducted in the complex or, as in the present case, that short-term leases are not allowed.”

Van der Merwe says the unfortunate reader may still address the trustees on her specific situation.

“They may however feel that no exception to the rules is allowed in order to deter other owners from doing exactly what the rules are prohibiting – letting out units for very short periods of time and thereby possibly disturbing other owners’ enjoyment of their units.”

This week’s question posed to our panel of experts is from a reader who intends to purchase fixed property with a friend.

He wants to know how they can protect themselves by way of regulating their relationship in this transaction.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says there are various aspects to be considered by the two potential buyers.

“The relationship between them can be merely a partnership, which does not have to be reduced to writing to come into existence. However, as with most legal relationships, it is preferable that the aspects thereof are put on paper to avoid future confusion or misunderstandings.”

Geldenhuys says depending on the parties’ respective exposure to business risk and their intention with the property they wish to acquire, a partnership may be the simplest relationship to establish.

“Alternatively, they can formalise their relationship by setting up a legal entity such as a close corporation or company (as a trust functions differently, it will be left aside for the purposes of this article).”

This entity, says Geldenhuys, will become the sole purchaser of the land and the members’ relationship will be regulated internally, in other words, by virtue of their interest in the legal entity.

“The members must decide in which proportions they will own and pay for the land. Their member’s interest (in the case of a close corporation) or shareholding (company) will reflect their agreed proportions of ownership.”

In this case, says Schalk van der Merwe from Rawson Properties Helderberg, the seller of the land will be dealing with one purchaser, not with both parties. “Once the financing of the purchase price is determined, each party’s contribution can be recorded by means of a loan account.

“Should a bond have to be registered, further determinations must be made regarding the contribution to regular bond payments as well as other expenses such as property taxes and utilities.”

Van der Merwe says a written partnership, association (close corporation) or shareholders’ agreement (company) is of vital importance when one of the parties wishes to extract himself from the relationship.

“Typically the remaining party would like to have some control over who enters into the property ownership with him. It is therefore a common provision that the party wishing to sell his portion is obliged to offer it to the remaining ‘partner’ first.”

The co-owners should also make provision for dispute resolution, possibly by means of arbitration, to avoid a deadlock situation, according to Van der Merwe. “Think of the dispute that could arise if one person wishes to sell the property and the other wants to hold on to it.”

Our panel has received a lengthy question from a reader regarding the sale of a property where the rights of several creditors come into question.

The reader landed in financial difficulty after trying to assist a family member with his debts and, in the process, fell behind with his own bond repayments. He also has various other creditors knocking on his door.

He decided to sell the house in order to pay his creditors. A buyer – who had no knowledge of the outstanding debts – appeared on the scene and an agreement of sale was entered into.

During the transfer process it however emerged that several creditors had obtained interdicts against the owner and the sale transaction had to be suspended to rectify the situation.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says even though there are other creditors threatening to take action against the reader, the bank, as first bondholder, is a so-called secured creditor. “In other words, the bond over the property secures the outstanding debt owed to the bank.”

This, says Geldenhuys, is in contrast to a preferent creditor (SARS being a good example) who does not hold security in respect of any outstanding monies owed to them, yet receives special treatment in terms of certain legislation – especially when it comes to the transfer of property.

In terms of Section 92(1) of the Deeds Registries Act 47 of 1937 a transfer of land shall not be registered unless accompanied by a receipt or certificate from a public revenue officer that confirms that taxes and duties on the property have been paid, according to Geldenhuys.

“It should further be noted that SARS has the power to declare the conveyancing attorney an agent for the purpose of collecting outstanding taxes in respect of a party to a conveyancing transaction and that certain obligations flow from such an appointment.”

Referring to the above, Schalk van der Merwe from Rawson Properties Helderberg says the conveyancer has a positive duty to uphold the revenue legislation and to ensure that what is due to SARS, is paid.

The other aspect that needs to be explored is the protection by the Debt Council that the reader refers to in his letter, says Van der Merwe.

“The National Credit Act of 2005 provides for a debt counselling process for over-indebted consumers. Such persons can enter into this process voluntarily or be referred by the court or a credit provider such as the bank.”

Van der Merwe says consumers are deemed to be over-indebted when they cannot meet their monthly debt repayments from their available income. “Once a consumer is placed under debt review, credit providers may not take legal action.”

However, a debtor will not automatically be protected by the provisions of the act, says Van der Merwe. “The debtor may be found not to be over-indebted and will then not qualify for the debt review process.”

Van der Merwe says some form of referral is required before the process starts, even if it is by the debtor himself.

This week’s reader question comes from a pensioner who owns two apartments, one of which he has decided to let out during and after the 2010 Fifa World Cup.

He lives in one and therefore regards it as his primary residence. It further appears that he has chosen to move into the other apartment and to let out the one which has served as his primary residence until now.

The reader says he has already received a deposit in respect of the rental (in December last year) and will receive further rental income during the current tax year.

Referring to the potential impact of Capital Gains Tax (CGT), he asks whether he needs to provide the South African Revenue Services (SARS) with a valuation in respect of what was initially his primary residence.

Other questions revolve around the declaration of the rental income already received and the income due.

Schalk van der Merwe from Rawson Properties Helderberg says the provisions relating to CGT do not compel the taxpayer to provide SARS with a valuation before the asset is disposed of.

“Only once a sale or alienation of the property takes place does the onus rest on the taxpayer to provide SARS with proof of how its base cost was calculated.”

Van der Merwe says this cost can be proven not only by means of a valuation, but also, for example, by using the time-apportioned base cost calculation as provided for in the relevant legislation

“Provision is also made that a primary residence will not simply lose its status as such for being subject to rental for a short period of time.” In fact, says Van der Merwe, a residence will still be treated as having been used for domestic purposes during any continuous period of absence if it was not let for more than five years.

“From the reader’s question, it appears that he will not be entering into a long term lease agreement. Therefore his apartment should still be regarded as his primary residence should he decide to sell it at a later time when he is again occupying it permanently.”

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says the reader further wants to know whether he has to register as a provisional taxpayer in respect of the rental income he will now be earning.

“The provisions of the Income Tax Act provide that any taxpayer whose income from sources other than remuneration exceeds a certain level, must apply to SARS for registration as a provisional taxpayer within 30 days after the date on which he or she qualified.”

Geldenhuys says remuneration is defined as any amount of income that is paid or is payable to any person by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument pension, superannuation allowance, retiring allowance or stipend, whether in cash or otherwise.

“Rental income above the threshold set by SARS falls outside of this definition and could thus compel our reader to register as a provisional taxpayer.”

Provisional tax is not an additional form of tax, but just another way in which tax is paid over to SARS, according to Geldenhuys. “It means that interim payments are made to SARS and the final tax liability is not only payable after the end of the tax year.”

The question posed to our panel this week revolves around the issue of the liability to maintain the various areas that a sectional title complex consist of.

Our reader states that he understands the maintenance in respect of the outside area of the complex to be the responsibility of the body corporate.

He specifically raises the issue of ants infesting the paving in respect of the patio and pathway of his unit and wants to know what the position will be should they come into his unit and cause damage.

Schalk van der Merwe from Rawson Properties Helderberg says each owner in a sectional title complex is responsible for his/her section and the maintenance and repairs required in terms thereof. “This is therefore the part of the sectional title scheme over which there is exclusive ownership.”

Van der Merwe says this exclusive ownership must be compared to the so-called common property of the complex.

“This is essentially the rest of the property in the sectional title scheme. A simple definition will include the outside shell of the building, the roof, foundations as well as gardens, courtyards, parking areas and so on.”

However, says Van der Merwe, one further distinction one has to draw is that of “exclusive use areas”.

“This is really just a part of the common property that is exclusively used by the owner of a section in the scheme. Again, gardens and parking areas are a good example of such an exclusive use area.”

In terms of the liability of maintenance, says Van der Merwe, it becomes clear that anything on the outside is to be maintained by the body corporate and this includes the exclusive use areas.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says ants infesting the paving outside the reader’s unit fall within the ambit of that which is to be maintained by the body corporate on the same basis upon which it is obliged to tend to the mowing of the lawns.

“As the infestation of ants is already causing some damage to the paving by removing its substrate, possibly eventually resulting in its partial collapse, it is foreseeable that the same ants, if not checked, could cause similar damage to our reader’s unit.”

Geldenhuys says the reader’s recourse could be strengthened if he presents his concerns regarding the ants – and potential consequential damage should the problem not be addressed timeously – to the body corporate in writing.

“In fairness, with ants being a natural occurrence, the infestation should be in reasonable proximity to the reader’s unit in order for it to be accepted that the same infestation is causing problems and that the ants are an extension of this initial infestation,” says Geldenhuys.

“Ants marching in from outside the scheme with the sole intent of settling, and subsequently doing so, on the reader’s unit could not fall within the scope of the body corporate’s responsibilities.”

Send your property related questions to coetzee@fullstopcom.com.

A concerned reader has contacted our panel to find out more about the duties and responsibilities of the trustees of a body corporate.

More specifically, she wants to know how meetings of the trustees should be documented. In her experience, the minutes are not necessarily a true reflection of what was actually discussed.

She would further like to know to whom these minutes should be distributed.

Her concerns also turn to the role of the chairperson of the trustees and specifically what his/her duties and responsibilities are.

“As we have seen before, the management of a sectional title scheme to a large extent lies with the trustees,” says Schalk van der Merwe from Rawson Properties Helderberg. “Such trustees are appointed for one year at a time during the annual general meeting of the members of the body corporate.”

Van der Merwe says the reasoning for electing trustees is obvious. “It is not always practically possible to have all the members of the body corporate available and present to make decisions regarding the management of a sectional title complex.

“Many decisions have to be made regarding the day to day functioning and maintenance of the complex and the trustees represent the other members in doing so.”

Various protection measures are however built into the provisions that deal with the powers of the trustees, according to Van der Merwe.

“Although the power to sign instruments on behalf of the body corporate lies with the trustees, a further provision has been incorporated that no such instrument shall be binding unless it has been signed by a trustee and the managing agent or by two trustees.”

The chairperson, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch, is elected from among the trustees.

“Once elected, this chairperson shall remain in place until the end of the next annual general meeting of the body corporate. At this meeting, the trustees and chairperson can be re-elected.”

Geldenhuys says determinations are made by means of a majority of votes of the trustees present at a meeting. “One of the important functions of the elected chairperson is that he or she has a so-called ‘casting vote’.

“This means that if the votes are evenly divided, the vote of the chairperson can make the final determination. This power can prevent meetings from turning into an endless fight among trustees.”

It therefore also makes sense, says Geldenhuys, that one of the duties imposed on the trustees in terms of the regulations of the Sectional Titles Act is that of keeping minutes of their meetings.

“These minutes should be made available for inspection to any owner or bondholder of a unit upon written application.”

Geldenhuys says the minutes should be kept in such a way to prevent anyone tampering with it. “This information, after all, provides a record of the decisions made by the trustees.”

Send your property related questions to coetzee@fullstopcom.com.

The scenario presented to our panel of experts this week relates to a tenant who has not paid rental for some time.

Our reader, the landlord, has given him some breathing space, but has now put the tenant on terms and insisted that he pays at the end of the month.

The question he now asks is what happens if the tenant still does not pay. Can our reader demand that he moves out immediately because he is in breach of the lease agreement?

Schalk van der Merwe from Rawson Properties Helderberg says a lease agreement should contain a provision saying what constitutes a breach of contract.

“For example, if the tenant does not pay the rent on time and what the landlord’s rights would be in such a case. This may include cancelling the lease without further notice.”

Unfortunately we do not know whether a written lease exists between the parties, as such a contract could contain the procedure when giving notice to a tenant for non-payment, according to Van der Merwe.

“It is possible that the landlord and tenant agreed verbally on terms for termination of the lease, in which case these would apply.”

Van der Merwe says another common provision often contained in lease agreements provides that the party in breach has time to rectify the situation by, for example, paying the overdue rental.

“In such instance, the provisions of the breach clause must be followed before the lease may be cancelled. If the lease does not contain a cancellation clause, it is good practice to write a letter giving the tenant seven days to pay, failing which the lease may be cancelled.”

Once the lease has been cancelled, the question turns to how our reader can go about evicting the tenant, assuming the tenant does not leave voluntarily. The answer, says Van der Merwe, lies in the so-called PIE Act or, more formally, the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act of 1998.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys says in terms of the provisions of this act, no one may be evicted from a property without a court order. “Even if our reader turns to the Rental Housing Tribunal, he will not circumvent the requirements set out in the PIE Act.”

The impression is often gained, says Geldenhuys, that unlawful tenants are offered more protection than the landlord in terms of this act.

“Its provisions do not remove the landlord’s remedy of eviction. It simply provides for a procedure to be followed, giving notice to various parties of the intended eviction.”

A landlord wishing to evict an unlawful occupier has to institute action to initiate the procedure to evict, according to Geldenhuys. “A notice authorised by a magistrate must be served on the unlawful occupier as well as the municipality – at least 14 working days before the hearing in respect of the eviction.

“This obviously allows the tenant to possibly oppose the action. At a hearing the court will determine whether the landlord is entitled to evict the tenant.”

Geldenhuys says the PIE Act contains reference to issues to be considered by the court, including the rights and needs of children, the elderly and households headed by women.

“If the court does find that the landlord is entitled to an eviction order, it will assign a date upon which the unlawful occupier must vacate the premises. The landlord may call in the assistance of the sheriff to remove the occupiers.”

Send your property related questions to coetzee@fullstopcom.com.

A reader has asked several interesting questions relating to the voting rights of owners in a sectional title complex.

It appears that an annual general meeting was convened and that the managing agent of the complex held that certain owners who attended this meeting were not entitled to vote.

Schalk van der Merwe from Rawson Properties Helderberg says the managing agent can be seen as a delegate of the body corporate, or body of owners.

“Once appointed, such agent assumes many administrative tasks relating to the management of the scheme, including the collection of contributions, the payment of accounts and expenses and assisting the trustees in enforcing the rules of the scheme.”

Van der Merwe says the reader questions the fact that two of the owners were banned from voting because their levies were a few days late. “The managing agent has to act in terms of the Management Rules as contained in the regulations to the Sectional Titles Act.

“In terms of these provisions, an owner shall not be entitled to vote at any general meeting if contributions payable by him in respect of his section and his undivided share in the common property has not been paid.”

Even though it appears to the reader that this provision should not be applicable to owners with good track records, the provisions do not distinguish between “serial defaulters”, as the reader describes them, and someone who is just merely a few days late in paying, according to Van der Merwe.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says the further issue the reader takes exception to relates to the payment of a special levy.

“A decision had been taken that a special levy shall be paid by the owners over a period of six months. Certain owners requested that they pay this levy over a longer term of 12 months.”

Geldenhuys says the managing agent requested that each such owner applies individually to the trustees for approval to do so. “The reader now questions whether the trustees do in fact have any decision-making power in respect of this issue.”

Special levies are calculated and apportioned to owners according to a prescribed formula and such levies are imposed by the trustees and not by the members of the body corporate, according to Geldenhuys.

“As always, we have to refer to the Management Rules and there we find the reference to the trustees being able to call upon owners to pay special levies ‘in one sum or by such instalments and at such time or times as the trustees shall think fit’.”

Therefore, says Geldenhuys, for the trustees to properly perform their duties in seeing to the maintenance and proper functioning of the scheme, it is vital that the payment of levies be administered correctly.

“This will allow the trustees to budget appropriately and to make adequate provision for planned and unexpected expenditure in order to manage the scheme to the benefit of all residents.”

Send your property related questions to coetzee@fullstopcom.com.

Our experts have received a question from a couple who had purchased a plot some four years ago.

Having decided to build on the plot in stages, they requested a quotation from their neighbours – who happen to be builders – for a foundation and one room with a bathroom. A price was agreed on, the amount was paid and the work comleted.

The couple also enquired as to a price for a three-bedroom, timber-frame house, but no deal was struck in respect thereof.

Some two years passed and the builder then, with the knowledge of some of the couple’s family members, took it upon himself to build the house as a “present”.

The couple were kept from their plot by the family members during construction and the house was presented as a surprise upon its completion.

The builder now wants them to sign an agreement whereby they will pay interest on the price charged and also allow the builder to take a mortgage bond over the property.

The couple do not have the funds to pay for the work, the price of which has also increased substantially from their first enquiry.

The couple own the plot and the principle applicable is, according to Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch, that which is attached to the land accedes to the land (the principle of accessio). “The structure on land therefore generally belongs to the owner of the land (inaedificatio).”

Geldenhuys says from the readers’ instructions there was clearly no contractual basis upon which the builder could rely in order to claim the building fee and expenses.

“The mention of the house being built as a ‘present’ is also interesting, but it appears the word was used in the context of a surprise and that they always expected payment. A mere expectation is however not sufficient.”

Geldenhuys suggests that this be clarified as the true intention of the builder may be relevant in establishing whether his action, should he bring one, is valid in law.

Schalk van der Merwe from Rawson Properties Helderberg says the fact that a family member was aware of the process would not necessarily be sufficient to bind the couple to a contract unless that family member acted as their agent.

“This could not be the case as the couple were not aware of the building. It seems the builder’s remedy would be in the realm of unjustified enrichment.”

This principle, says Van der Merwe, applies when one person has been enriched to the detriment of another without there being any contractual or legal basis upon which the enrichment and impoverishment took place.

“For purposes of this examination it is assumed that the house is not removable and that the intention of the builder was that the house would become part of the land.”

Should the builder be successful in a claim based on unjustified enrichment, he would probably not be entitled to profit and could thus only claim those expenses actually incurred in respect of both necessary and useful improvements to the plot, according to Van der Merwe.

Send your property related questions to coetzee@fullstopcom.com.

Our panel of experts has received a letter from a reader who is very concerned about the actions of the chairperson of the trustees of the body corporate in her sectional title complex.

This chairperson has taken independent financial decisions relating to certain suppliers of services in respect of the complex, notwithstanding the proper decision-making process having been followed.

Usually, says Schalk van der Merwe from Rawson Properties Helderberg, the trustees of a body corporate are appointed at the annual general meeting of the body corporate.

“The trustees, who represent the body of owners of the units within the complex, hold their respective posts until the next annual general meeting, at which time they may be re-elected. Once the trustees have been selected, they will nominate a chairperson at their first meeting.”

The trustees are responsible for exercising the powers and performing the duties of the body corporate, according to Van der Merwe. “As such the trustees have to take decisions relating to the day-to-day management of the complex.”

In our reader’s case, says Van der Merwe, a specific decision was taken at a meeting of the trustees not to contract further with a certain supplier.

“The reader, who is also a trustee, requested the financial statements some time later and discovered that this supplier had, in fact, been used. When this was queried, our reader discovered that the chairperson had given the instruction of payment to the supplier.”

The chairperson’s actions were therefore in direct contravention of the voting at a meeting of the trustees, says Van der Merwe, and steps are being taken to remove the chairperson from office.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says that even though the reader has not supplied a copy of the management rules specific to her complex, rules 18 and 19 provided for under Annexure 8 of the Sectional Titles Act are applicable.

“Rule 18 provides that a chairperson will stay in office for a period of one year, during which time the chairperson shall have both a casting and deliberative vote.”

Rule 19 provides for the removal of a chairperson in one of two ways, says Geldenhuys. “The trustees can either remove the chairperson by majority vote at a trustees’ meeting, or the body corporate can remove him by majority vote at a special general meeting.”

Geldenhuys says it is further provided that, in both cases, the notice calling the meeting must disclose the intended removal of the chairperson from his office. “Our reader also wants to know whether the offending conduct of the chairperson has to be set out in the notice, but this is not necessary under the act.”

In the reader’s case, says Geldenhuys, a special general meeting of the body corporate has been arranged to decide the position of the chairperson. “The normal rules will be applicable and the removal of the chairperson can be passed by means of a majority vote in favour of the motion.”

Send your property related questions to coetzee@fullstopcom.com.

Our panel has received an e-mail from a frustrated reader who has been experiencing endless problems with a noisy neighbour in the security complex in which she resides.

She has also attached an extract of the conduct rules applicable to her complex.

In her letter, she states that she has taken the issue up with the chairman of the body corporate, but no action appears to have been taken against the culprit.

Schalk van der Merwe from Rawson Properties Helderberg says the extract from the rules clearly states that owners and tenants have a responsibility to other inhabitants to keep the noise down.

“The rules provide that musical instruments, television sets and music systems may not be used in such a way as to cause a disturbance, and party noise after certain times is prohibited.

“She unfortunately does not expand on what exactly her neighbour does to disturb her, but let’s assume he is transgressing one of these rules.”

The general conduct rules are set out in the regulations to the Sectional Titles Act, says Van der Merwe.

“These rules can initially however be amended by the developer to make provision for certain relevant issues that will affect the use and enjoyment of sections. Noise is one such factor that can interfere with the peaceful occupation of a section by its owner or occupant.”

Van der Merwe says neither the Sectional Titles Act nor the rules set out in the regulations contain effective sanctions against sectional owners who fail to fulfil their obligations.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says provision is made, for example, that an owner is not entitled to vote at a general meeting if his levy contributions are in arrears or if he persistently breaches the conduct rules.

“This is however not necessarily the end result our reader had in mind.”

Typically, says Geldenhuys, provision should be made for the complaint to be delivered in writing and the offending owner or tenant should be allowed to submit a written reply.

“In the event of a dispute, both parties may be given the opportunity to discuss the matter at a meeting of the body corporate, whereafter any findings are referred to the trustees with a recommendation as to any action to be taken.”

Geldenhuys says a good result may be achieved if the trustees are empowered by the rules to impose appropriate fines in the event of contraventions.

“Since we do not know what the rest of the rules in respect of this specific complex provide for, it is difficult to ascertain why the chairman has not taken action. It may be that the rules are silent on the matter of recourse.”

It is possible to add to, amend or repeal the conduct rules as well as, to a limited extent, the management rules in place (either as provided for by the act or in terms of any amendments made by the developer), according to Geldenhuys. “This is done by means of a special or unanimous resolution of the body corporate.”

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A reader, who bought a house with her partner, finds herself in a predicament as a result of the relationship having broken down.

Her former partner now wishes for her to take full ownership of the property.

Lucille Geldenhuysenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says there are various aspects the reader has to consider when making a decision regarding this problem.

“One must first look at how she will acquire full ownership. There has to be an underlying transaction, that is, either a sale or a donation.”

In other words, says Geldenhuys, her partner has the option to sell or donate his half share in the property to her.

“Should she choose to buy her partner’s share, a fair market value must be determined and she will have to pay him out.

Should her partner however choose to donate his share to the reader, he may be liable for donations tax, according to Geldenhuys.

“Currently an individual may only donate R100 000 per year free of donations tax. If the value of the half share exceeds this amount, he will be liable for donations tax at the rate of 20% of the value exceeding R100 000.”

Geldenhuys says either option may have transfer duty implications for the reader, who will be seen as the party acquiring the half share. “Transfer duty is calculated on the market value of the full property and divided by two.”

Schalk van der Merwe from Rawson Properties Helderberg says there are various financial implications for her to consider.

“It appears that there is a bond registered over the property. If the reader wishes to take ownership of the whole property, a new bond will have to be registered.”

Before this can happen, says Van der Merwe, her ability to pay the instalments in respect of the new bond will be considered all over again.

“Whereas before she would have had the benefit of her partner contributing, she will now carry the full responsibility.”

If her partner decides to sell his share to her, Van der Merwe says she should also not lose sight of the fact that she will have to pay him out somehow.

“She may choose to increase the bond facility to do so, but this will place additional demands on her ability to obtain such bond.”

This prompts the question whether it is not possible to draft a contract whereby her partner acknowledges that he no longer has any rights to the property, says Van der Merwe.

“Unfortunately, this may pose problems. One’s ownership, and therefore rights, to a property can only be changed via a formal transfer process.

“Broadly speaking (there are contracts creating limited rights), a mere contract will not change the parties’ rights of ownership and interest in the property.”

Van der Merwe says an option she may consider is to “rent” his half.

“This may be a temporary solution until she can pay him out. It will be advisable that a proper rental agreement is entered into to protect both parties.”

Send your property related questions to coetzee[at]fullstopcom.com.

A couple, who purchased a property without a boundary wall, wants to know if the previous owner can be forced to erect one if he has verbally agreed to do so.

Nothing has come of his promise and they are now building the wall themselves, but want to know whether they have any recourse.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says in order to comply with the provisions of section 2(1) of the Alienation of Land Act 68 of 1981, the whole contract of sale of land, or at any rate all the material terms thereof, must be in writing and signed by the parties.

“The material terms are not confined to those prescribing essential terms such as the parties, the property description and purchase price, but include all other material terms.”

Geldenhuys says it is not easy to define what constitutes a material term, but what has emerged from South African case law is that a material term is not necessarily one of the essentials of a contract of sale.

“If the boundary wall was a material term of the contract between the reader and the seller, the contract would not comply with the terms of the Alienation of Land Act, and as such would be of no force and effect.”

However, says Geldenhuys, it is most likely the case that the obligation to build the wall was not material to such an extent that it could affect the validity of the contract. “If one assumes that the contract is valid, the next step would be to examine its contents.”

If the contract includes a term stating that it is the whole agreement between the parties, the reader would not be able to hold the seller to his promise, according to Geldenhuys.

Schalk van der Merwe from Rawson Properties Helderberg says it may be that the seller undertook to build the wall after the contract was signed, and the parties accordingly varied the contract by adding this additional obligation on the seller.

“The general rule is that parties to a contract are free to vary their contract as they deem fit, but this is subject to certain limitations.”

Similarly, says Van der Merwe, the parties may impose restrictions of subsequent variations by incorporating a non-variation clause. “This may be done with the object of achieving certainty and avoiding disputes about whether a variation has been agreed upon.”

Van der Merwe says a non-variation clause would typically state that no variation will be enforceable unless in writing and signed by both parties. “If the reader’s contract contains such a clause, the reader will not be able to depend on the subsequent verbal variation as agreed upon in the contract and as is required by the act.”

The possibility exists that the seller made a separate verbal contract with the reader after the conclusion of the contract, says Van der Merwe.

“Such a verbal contract may fall outside the ambit of the contract for the property, and may be enforceable, and the reader may consider obtaining legal advice if such a possibility exists.”

Van der Merwe says if one excludes the above possibility, the seller appears to have merely made a verbal promise and the reader will not be able to hold him to it as it is not part of their written contract.

Send your property related questions to coetzee[at]fullstopcom.com.

One of our readers finds herself in the midst of a dispute with her landlord regarding alleged arrear rental.

She says she has signed a written agreement whereby she agreed to pay R3 200 per month. An equal amount was provided as a deposit.

The reader says she has made her payments regularly, and on time, for a year before the landlord’s letting agent informed her that the actual amount was R3 300 and that she was therefore in arrears.

The landlord is also threatening to use the deposit to cover any “outstanding monies”.

Schalk van der Merwe from Rawson Properties Helderberg says the relationship between a landlord and tenant is mainly contractually driven. “Unfortunately, despite requesting it, our reader does not have a copy of the contract that she originally signed.”

He says the Rental Housing Act of 1999 provides that the lease agreement does not have to be in writing, but the landlord has to reduce it to writing if so requested by the tenant.

Van der Merwe says a lease would typically set out the monthly rental agreed upon, when it is payable and the landlord’s remedies should the tenant be in arrears.

“Failure to pay the agreed amount constitutes a breach of the agreement. In this instance, the amount is in dispute.

“Let us assume that the rental agreed upon was in fact R3 300 per month and that our reader mistakenly paid the incorrect amount for a year,” says Van der Merwe.

“She could make out a strong argument that by accepting the lesser amount for that length of time, the landlord had tacitly agreed to amend the agreement. Otherwise he probably would have raised an objection after the first month of receiving the incorrect payment.”

Then again, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch, the written agreement concluded between the parties will assist in determining what the position will be regarding this aspect of tacit acceptance.

“The landlord may benefit from the typical inclusion of a non-waiver clause in the agreement, which would permit him to claim the higher amount despite the lower payment.”

Geldenhuys says another typical clause provides that any changes to the agreement should be in writing and no tacit acceptance of any changes will be valid.

“On the other hand, if it transpires that the monthly rental was only R3 200 and the landlord continues insisting that our reader has to pay the alleged arrear rental, the landlord will be put to the proof of his allegation.”

In such an instance, says Geldenhuys, the written contract will favour the tenant and the landlord will of course not be entitled to use her deposit in lieu of the arrears.

“The Rental Housing Act provides for a Tribunal to assess complaints relating to unfair practices, which are defined as being any ‘practice unreasonably prejudicing the rights or interests of a tenant or a landlord’.”

Geldenhuys says if the landlord therefore wrongly uses the reader’s deposit in respect of so-called arrear rental, which is not in fact due, the tenant may make use of this forum or proceed through normal legal channels to claim back any amounts unjustly taken.

Send your property related questions to coetzee[at]fullstopcom.com.