In this issue:I BOUGHT A PROPERTY THAT HAS PROBLEMS, WHAT NOW?•

• PREVENTING ILLEGAL EVICTION WITH THE PIE ACT

• EXECUTOR’S FEE AND MARRIAGE IN COMMUNITY OF PROPERTY

• FIRST TIME BUYERS TAKE NOTE!

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Newsletter: October 2016

Esterhuyse Samuels Inc. Attorneys Conveyancers Notaries.

You Talk, We Listen

A seller’s protection under the “voetstoots” clause in a deed of sale for immovable property is not as “absolute” as some might think. It is still the seller’s duty to inform prospective purchasers about all latent (hidden) defects in a property. A seller’s failure to do so could cost the seller in the long run, as per a ruling by the Supreme Court of Appeal in Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 March 2013).

What are latent defects?

Examples of latent defects are a leaking roof or a faulty geyser. It basically includes any defects that cannot be seen with the naked eye. Prospective purchasers will, for example, not see water marks on a ceiling resulting from a leaking roof in the “dry” months.

In the above-mentioned case the sellers failed to inform the purchasers about the true extent of the damage to the property’s roof. The sellers were aware of the fact that the roof leaked and had some repairs done to it to try and fix the problem. On closer inspection by specialists it was found that the cause of the leaks was twofold.

Firstly, the wooden roof poles were inadequate to properly support the weight of the thatch roof and resulted in the gradual sagging of the roof. Secondly, the pitch of the property’s thatch roof was only 35 degrees and not 45 degrees as it should be, which would have at least ensured that rain water would run off the roof. The specialists testified that due to the pitch of the roof being 35 degrees, water ran into the roof and caused the thatch to rot faster. It was found that the initial repairs were therefore not sufficient to stop the roof from leaking in the future. The purchasers only discovered this after registration of the property and the sellers had to fork out to replace the roof, as the problem could not be permanently solved by doing repairs to it. Even though the sellers were not aware of the bigger problem, namely the incorrect pitch of the roof, they were still held liable because they were aware that the repairs which they had done were not adequate.

What are patent defects?

A patent defect is defined as “one which will be apparent on an ordinary inspection”. An example of a patent defect will be a crack in a wall which shows through the paint. It is a prospective purchaser’s duty to ask the seller about such defects and get all guarantees from the seller in writing. Patent defects are still the purchaser’s respon-sibility. Prospective purchasers cannot sit back and think that if any problems occur after occupation, the sellers will be held liable.

I BOUGHT A PROPERTY THAT HAS PROBLEMS, WHAT NOW?

PREVENTING ILLEGAL EVICTION WITH THE PIE ACT

You have property and have rented it out. The tenant has decided that he can no longer afford the rent, and no letters or threats seem to make any difference to his decision. The tenant not only refuses to pay the rent, but he also fails to vacate the property. To put icing on the cake, the law provides more protection to the tenant than ever before. As a landlord, you can’t run onto the premises and evict the tenant.

Conclusion

A mutual responsibility rests on sellers and purchasers regarding defects in a property. Sellers should be honest regarding latent defects and purchasers should be vigilant when viewing a property for any patent defects. It will be wise for sellers to rather negotiate a lower purchase price due to defects in a property, and to disclose them to the purchaser. Failing to be honest with the purchaser could have huge financial implications after registration of the property.

References:

Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 Maart 2013)

Dictionary of Legal Words and Phrases, 2nd edition, Claassen

It comes as no surprise that landlords feel that the current legislation enables the tenant to avoid paying rent and also offers much more protection to tenant’s interests and rights than to those of the landlord.

Times have changed, and to simply replace the locks of the premises will offer no quick solution. In reality it is very difficult to evict unlawful tenants from a property, and therefore it is very important for landlords to use the prescribed procedures as contained in the Prevention of Illegal Eviction from and Unlawful Occupation of Land (PIE) Act.

In short, the PIE Act is described as legislation that aims to protect both the tenant’s and the landlord’s interests and rights simultaneously. This legislation prohibits not only unlawful eviction, but also allows for legitimate expulsion of unlawful tenants.

PIE procedures

Firstly, it is important to cancel the lease due to non-payment, according to the notice period outlined in the lease agreement. Alternatively, it can be cancelled with a one-month notice, which is in-line with the common law.

An ex parte application (an application without notice to any party) must be brought to the appropriate court in order to obtain the necessary permission from the court to initiate PIE procedures. This application is brought by way of two notices supported by a sworn affidavit. The affidavit must allege the following:

1. unlawful occupation2. reasons for the requested eviction3. why it is just and equitable to evict the unlawful occupant

Once the application has been issued, the sheriff of the court serves notices warning of the intention to institute action. The notices are served on the local municipality, the unlawful occupier and on all those holding title under him. The local municipality and the unlawful occupant has to be given 14 days’ notice of this hearing.

On the day of the hearing, the tenant will be given the opportunity to show good cause as to why an eviction order should not be granted. The court will only grant an eviction order after considering the relevant circumstances as well as what is deemed as just and equitable. The tenant may rely on special circumstances to avoid immediate eviction.

EXECUTOR’S FEE AND MARRIAGE IN COMMUNITY OF PROPERTY

The Executor’s fee to which the Executor of your estate is entitled is regulated by law and is currently fixed at a maximum of 3.5% (plus VAT) of the total value of your estate. The Executor’s fee and the appointing of an Executor does, however, constantly pose a problem to many due to ignorance.

The application of an Executor’s fee in an estate of which parties were married in

community of property remains problematic. The question is why the Executor in the estate of parties who were married in community of property is entitled to a fee that is calculated on the total value of the assets of both spouses, or of their joint assets.

E.g. the husband as first deceased owns a property (registered only in his spouse’s name) and he and his spouse were married in community of property. His entire estate is inherited by his spouse. When the man dies his 50% interest in the property due to being married in community of property as well as his spouse’s 50% interest in the property are included in the estate, in other words the total value of the property is included as an asset in the husband’s estate.

The resulting bad news is that the entire estate is subject to the Executor’s fee, despite the fact that the property had already been registered in the name of the surviving spouse. The argument is that the Executors administer the entire estate when the deceased was married in community of property. Each party has half an interest with regard to each item. The Executors therefore administer and declare each asset in its entirety even though it was, for example, registered in the name of the surviving spouse. The Executor’s fee is thus calculated according to the tariff which is fixed by law on the entire joint estate. It is therefore advisable to be very careful when appointing the Executor of your estate.

Our recommendation is that the Executor’s fee that will be payable to your Executor be negotiated with the appointed Executor and clearly indicated in your will what the agreement was. A typical practice applied in many wills today is to appoint a family member as well as an outsider as Executors of your will. The contents of the stipulations in which such appointments occur should be studied carefully to ensure that the outsider is not entitled, according to the terms of the will, to impose the full remuneration allowed by legislation. The fact that a family member has been appointed as Executor together with an outsider then holds no advantage with regard to the Executor’s fee payable.

In practice, courts have regard for the following:

1. the rights of elderly persons2. children3. disabled persons 4. households headed by a woman

However, the court can use its own discretion to grant an appropriate date on which the unlawful occupant has to vacate the property, and a date when the actual eviction order is to be effected.

Conclusion In general, the PIE process is described as lengthy and, depending on the circumstances, it often takes a long time before the tenant actually vacates the property. During this time, the property owner does not receive an income from his/her property whilst still being required to pay the bond.

Sometimes landlords are faced with tough decisions that can seem hard at first. Instead of allowing the tenant to frustrate you to the point where you don’t know what to do, make use of PIE, and make it your first priority to evict the tenant from your property.

FIRST TIME BUYERS TAKE NOTE!

Buying your first property can be both an exciting and daunting experience. There are so many things to consider when making this major purchase. Therefore I have compiled a checklist that will assist first time buyers when moving towards this purchase.

1. Finances:

Check your credit score. You can contact a bond originator to do a pre-qualification for you with the different financial institutions. If you are not making use of a bond to purchase the property it will not be necessary to do a pre-qualification. Your credit score is very important when applying for a bond. If you don’t have a good credit-score you may not get a good interest rate and/or you may not even be able to qualify for a loan. Also remember to check the interest rates. Contacting your bank to find out which interest rate they will be prepared to give you is very important. Once your bank gives you an interest rate start shopping around and compare with the other banks.

It is very important to remember that this is a long term, year after year, month after month commitment. Check your budget and make sure you can afford what you are willing to spend. Also make use of our ESI costs calculator to calculate the transfer and bond registration costs of the property you are able to purchase. Remember to take costs into consideration when making an offer on a property!

2. Location! Location! Location!

When deciding on a neighbourhood take all the various factors into consideration i.e. schools, rates & taxes, re-sale value of the property; proximity to highways and shopping centres.

3. Choose professionals to assist you.

If you are buying a property privately make sure the sale agreement has been drafted by an Attorney and each paragraph carefully explained to you before signing. If you are not buying a property privately make sure you work with a reputable estate agency. They will have sufficient experience to guide and assist you through the sale process. Do not be embarrassed or afraid to ask the agent questions regarding the property and/or the process. Remember they sell property for a living and know the ins and outs of the property game and you do not, thus learn from them and ask if you are unsure about anything. Take note that when you are buying a property the seller has the right to choose the transferring attorney.

4. Before making that written offer…

When viewing your potential home check for the smell of mould or animal related odours. Also turn on the taps, check the walls for cracks and the cupboards for damage. Don’t be afraid to thoroughly inspect the property. You can also request that the estate agent provide you with a copy of the defect list before signing the sale agreement to make sure there are no hidden defects. Negotiate for a good purchase price and don’t be afraid to walk away if you feel that this deal is not for you! Remember the right property is out there, just be patient and follow your head!

References:http://money.usnews.com/money/personal-finance/articles/2014/05/23/a-checklist-for-first-time-homebuyers http://www.property24.com/articles/12-point-checklist-for-first-time-home-buyers/24330

THIS NEWSLETTER IS COMPILED IN-HOUSE BY LEONIE SAMUELS OF ESI ATTORNEYS

Please contact ESI Attorneys 021 943 5111 or Leonie Samuels : leonie@esilaw.co.za should you have anyfurther queries and/or would like to make suggestions for future property related articles!