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.”

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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.

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.”

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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.”

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Some time ago, a reader signed an offer to purchase on a property that formed part of a deceased estate. The previous owner had passed away two years before and the deceased’s sister appeared to be dealing with the property.

The reader explains that the sister was in fact the beneficiary of the property, but decided to sell it out of the estate.

Although the reader understands that this transaction may be slightly different from a normal property transfer, she feels there are certain aspects that are cause for concern.

Firstly, she asks whether she is entitled to a copy of the offer to purchase.

Secondly, the reader would like to know what her daughter’s legal position would be should anything happen to her before the transfer is completed.

According to her, she has already paid the full purchase price and all related costs to the transferring attorney.

Lastly, the reader questions whether the attorney is allowed to “hold back double his fee and that of the agent”.

Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says a purchaser is most certainly entitled to a copy of the offer to purchase. “The agent or transferring attorney should be in possession of the documents.”

The purchaser is, after all, a party to the agreement, says Geldenhuys, and there is nothing untoward about supplying him or her with the relevant document.

“Without more detailed information regarding the transaction, it’s difficult to determine why the transfer has taken such a long time to be finalised.”

Regardless of the circumstances, Geldenhuys says an offer to purchase has been signed and presumably accepted, because a conveyancer was appointed and the purchase price paid.

If anything were to happen to the reader, and assuming that the sale agreement was final and binding at the time, Geldenhuys says the executor of her estate would be obliged to complete the transaction and take transfer.

Typically, the property would form one of the assets in the deceased estate of the reader and her heirs would eventually become owners of the property, says Schalk van der Merwe from Rawson Properties Helderberg.

“If her daughter is her only heir, she will become the sole owner.”

Van der Merwe says the final matter of the monies being held back by the attorney does seem strange.

“If the purchaser has paid the transfer costs and agent’s commission, there seems to be no logical explanation for the attorney wanting to secure further funds.”

According to Van der Merwe, the purchaser is entitled to a statement of account regarding the monies paid by her and any unorthodox actions by the transferring attorney should be questioned.

“It may be wise to address formal correspondence to the firm concerned, requesting a full explanation for the transaction and the appropriation of funds.”

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The reader says that, despite the HOA members having voted unanimously for her removal, she is continuing in the role. The chairperson contends her dismissal is merely temporary until a current dispute with her neighbour is settled.

In such instances – where an HOA is formed as a non-profit company – the Companies Act will apply, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch.

Each owner of an individual property in the development is automatically a member of the HOA and various documents will regulate its running, says Geldenhuys.

“The constitution, for example, sets out guidelines for the effective management, operation and maintenance of the common property.”

As with any other company, one should also examine the memorandum and articles of association, says Geldenhuys. “These may deal with the appointment and removal of a director or chairperson.”

According to Geldenhuys, the chairperson is usually elected from among the directors and the holders of all positions should be reconfirmed at each annual general meeting.

“A director shall be deemed to have vacated office for a number of reasons, including a resignation, conviction of an offence involving dishonesty and sequestration of his (or her) estate.”

Geldenhuys says the new Companies Amendment Act, which came into effect on May 1, has brought major changes to company-related structures.

An existing company’s articles of association will become its memorandum of incorporation, says Geldenhuys, and such companies will be given two years to align with the Act.

“During this time, should the memorandum be in conflict with the Act, the provisions of the former will prevail over the latter.”

Schalk van der Merwe from Rawson Properties Helderberg says the reader has indicated that the voting procedure was carried out in accordance with the articles of association.

“If the chairperson continues to take action and make decisions, it raises the question whether these are valid.”

A further issue is whether she needs to accept her removal as chairperson or if it is sufficient merely for the correct procedure to have been followed, says Van der Merwe.

“Of course, it doesn’t make sense that the person being affected (in this case the chairperson) has to accept the action for it to become valid. In many instances, it would then become nearly impossible to remove a person from office.”

Van der Merwe says any actions of the chairperson may therefore be challenged as invalid and a new chairperson should be elected as a matter of course.

“If necessary, the ‘current’ chairperson can be prevented, by way of interdict, from taking any further actions. This is unfortunately a rather costly route and hopefully the matter can be resolved amicably.”

A useful step, says Van der Merwe, might be to advise any third parties dealing with the chairperson of her removal. “They should be informed that any decisions made on behalf of the association are invalid, as she is no longer mandated to represent the body.”

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The lady in question lives in a sectional title complex and some time ago had the balcony of her unit enclosed. Now – a full 15 years later – the management company has ruled that an additional levy is payable on this alteration.

Understandably, the reader is upset over this decision as no mention of an extra levy had been made prior to this.

According to Schalk van der Merwe from Rawson Properties Helderberg, the levy paid by the members of a sectional title scheme provides for the complex’s maintenance and administration costs.

“These expenses relate to the repair, maintenance and replacement of common property. Some examples include painting the exterior walls, taking care of the pool and paying salaries to maintenance staff.”

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 that is 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 the scheme.”

A balcony is one of the grey areas that could be considered either part of an owner’s section or part of the common property, whether exclusive or non-exclusive use, says Van der Merwe. “It is advisable for the reader to go back and examine his in-law’s documentation regarding the ownership of her unit and find out exactly what is included.”

There is little doubt that, if the balcony has always formed part of his mother-in-law’s unit, she should have been paying her levy based on the total area all along, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch.

“In the case of an exclusive-use area, the owner is equally obliged to keep it in good order and maintain it as if it were her own property, either personally or by way of an extra levy for the area.”

Geldenhuys says it could be the case that the body corporate set the levy in order to make it easier for residents – so that they are no longer directly responsible­ for the maintenance of such an area.

“It may be a good idea to discuss the imposition of this ‘new’ cost with the management company in order to determine the exact reasoning behind it.”

Any decision regarding the calculation and imposition of the levy would have been discussed at the annual general meeting, says Geldenhuys. “It would be wise to make some enquiries and gain more insight into the decision that was taken before contesting it further.”

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A reader writes that his mother passed away some 30 years ago, leaving her fixed property to be shared equally between him and his brother.

He says that his brother never once used the property, whereas the reader used it as a holiday home.

It appears that no agreement was ever reached between the brothers concerning the payment of running expenses and maintenance costs.

As is often the case in a situation like this, the reader’s brother now wishes to sell his half of the property and has asked that it be valued to determine what his share is worth.

The reader is frustrated that he has had to carry all the property-related expenses over the last three decades and, on top of that, is now expected to pay out his brother’s half-share.

Joint property ownership can be somewhat problematic if the rights and obligations of each party are not set out contractually from the start, says Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch.

“As the reader mentions, there is a continuous stream of running expenses that have to be paid in order to maintain the property.”

However, says Geldenhuys, one should not forget about the other side of owning property – the use and enjoyment thereof.

“Remember that joint ownership means that the two (or more) owners each have an undivided proportionate share in the property. In practice, of course, the reader uses the whole property when he stays there over holiday periods.”

Because a portion of the property belongs to his brother, Geldenhuys says he has technically had the use and enjoyment of someone else’s property for almost 30 years.

“The theoretical result of this is that he may be liable for ‘rental’ for the portion of the property he used that did not belong to him.”

According to Schalk van der Merwe from Rawson Properties Helderberg, neither owner has ever laid claim to maintenance expenses or rental earned. “The issue of prescription (legal claims founded on the basis of long-standing use) should therefore be kept in mind when establishing their respective rights.

“A joint owner can at any stage sell his undivided share in the property. It would make sense that he offers it to the other owner first, but there is also nothing stopping him from offering it to a third party.”

Practically of course, says Van der Merwe, it is doubtful that a third party would purchase such a share because of the minefield of issues that comes along with it. “In this instance, it is also doubtful that our reader’s brother could force the sale of the entire property.”

Van der Merwe says the reader should therefore consider his position carefully. “Perhaps a proper valuation of the property, along with a discussion relating to each person’s respective claim for rental and expenses, could lead to an amicable settlement of the situation.”

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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 - Rawson Properties

“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

“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.”

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

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.”

Schalk van der Merwe - Rawson Properties

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.

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

“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 - Rawson Properties

“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.”

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

Lucille Geldenhuys

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.”

Schalk van der Merwe - Rawson Properties

“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.”

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

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.”

Schalk van der Merwe - Rawson Properties

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.

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 - Rawson Properties

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

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.”

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

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

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.”

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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.

Schalk van der Merwe

“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.”

Lucille Geldenhuys

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.”

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