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Property

Warning: Property Email Scams Surging

By | Criminal Law / Crime, Property

“Forewarned is Forearmed!” (Wise old saying)

Why yet another warning about cyber-scams in the property industry? It’s because the hard fact is that the criminals are winning this war. In fact we are now reportedly the “second most targeted country in the world with regard to cyber-attacks” (Law Society of South Africa).

Hence, no doubt, the Legal Practitioners Indemnity Insurance Fund report of “over 110 cybercrime related claims with a total value of R70 million” in the period July 2016 to August 2018.

The scammers are using more and more sophisticated techniques to lull their victims into complacency, and your best protection is your own vigilance – forewarned is definitely forearmed!

And remember that property transactions will always remain a firm favourite with online fraudsters for two simple reasons –

  • Property sales usually involve large amounts of money. 
  • Electronic communication between attorneys and clients is a fertile ground for interception and deception.
A seller’s or a buyer’s nightmare – every cent stolen! 

As a seller, you’ve sold your property for R5m, transfer to the buyer has been registered but the money doesn’t show up in your bank account (let’s call it “account A”). You phone your conveyancer only to be told “but we did pay you, we followed your instruction to pay into account B.” Of course account B was set up by a fraudster and your R5m is long gone. 

Or as a buyer, you have paid the full purchase price into the transferring attorney’s “new bank account C” and are shocked to be told by the attorney that you have actually paid nothing at all to anyone – except to a scamster. Good-bye both money and property!

What happened?

How your money gets taken – 2 main scenarios

Cyber criminals are resourceful, creative and constantly updating their methods so this is by no means an exhaustive list of your risk areas. To date however the two main categories of scam remain –

  1. Your attorney’s payments to you: As a seller, when you give the transfer instruction to your attorney you will nominate a bank account – account A in this example – to receive the sale proceeds. Before transfer however (often at the very last minute) the conveyancing firm receives a genuine-looking email “from you” changing your banking details to “my new account, account B”. Your emails to and from your attorney have been intercepted, and your details cleverly spoofed. Your money is gone – forever. Of course if you chose the right attorney to attend to your transfer in the first place this shouldn’t happen to you – but, as we shall see below, the scammers are so sophisticated now that you can never ever let your guard down, no matter how trustworthy the firm.
  2. Your payments to the attorney: The main risk here is to the buyer paying the whole or a large portion of the purchase price to the transferring attorney. Of course transfer duty and other costs of transfer can also add up to a tidy sum, whilst as a seller you will be paying for things like bond cancellation costs, rates, agent’s commission and so on.

    The scam here is that once again emails are intercepted, and this time you receive an authentic-looking but entirely fraudulent email asking you to pay into “account C”. The email appears to come from the conveyancing firm but of course it is again a clever (often very sophisticated) impersonation, this time of the firm’s branding, details and email address.

    The false account details might be in the email itself or in a falsified attachment – nothing is safe. The email may be in the form of a “we’ve changed our banking details” notification, or the criminal may work on the basis that you just won’t notice the change. And of course account C isn’t the conveyancer’s trust account at all, and the minute you make a payment into it your money is – once again – gone forever.

Who can you recover your stolen money from?

By the time you realise you have been scammed, the criminals are long gone and your chances of catching up with them are remote to say the least. 

So could the attorney possibly be liable? A recent High Court judgment deals with that very issue…

Court: Attorney negligent, must pay almost R1m

In this case a transferring attorney was ordered to pay her client damages of R967,510-53 for negligence.

In a nutshell, the attorney had attended to a property transfer for the sellers, and a scammer intercepted emails between the sellers and the attorney’s secretary. This was a classic “Scenario 1” operation, and seemingly a sophisticated one – the scammer persuaded the secretary to accept an emailed “my bank account details have changed” instruction and to pay the proceeds into the scammer’s account. 

The sellers sued the attorney for damages, the attorney denied any negligence whatsoever, but the Court found that she had indeed failed to carry out her mandate with the “due care, skill and diligence expected of a reasonable attorney and a conveyancer in the circumstances.”

What is important for you is that the Court reached this conclusion on the particular facts of this matter. There were specific factors present here such that a “diligent, reasonable attorney” would, said the Court, have taken steps to verify the information in the fraudulent emails. 

That suggests that there are many possible sets of facts which would have left the seller unable to prove any failure of duty by the attorney. Your risk is that if you try to hold the attorney liable you will have to prove that your loss resulted from his/her fault and not from yours – that’s never going to be easy and if you fail, you are left high and dry.

Protect yourself. Be vigilant!

So prevention really is much better than cure here. Litigation will be expensive and risky, and even if you succeed in your damages claim the attorney’s normal indemnity insurance excludes these types of claims so your victory could be a hollow one.

Fortunately there are several common sense steps you can take to minimise your risk – 

  • If you have the choice of transferring attorney (which you normally would have if you are the seller), choose an attorney you trust to do the job properly, carefully and professionally.
  • Having said that, no matter how much security your attorneys have put in place on their side, if it is your system that is vulnerable that is what the criminals will exploit. So keep all your anti-virus, anti-malware and other security software updated, learn all about protecting yourself from malware/spyware/phishing attacks, and generally treat all electronic communications with caution – even those appearing to come from a trusted source like your attorney.
  • Read “Is That Sender For Real? Three Ways to Verify the Identity of An Email” on FRSecure’s blog. All the tips given there are important, but at the very least use the methods given to find out where the email really comes from. Then check back to see that it matches in every detail the email address you were given at the start of the transfer process.
  • Be suspicious if anything in an email just feels “not-quite-right” – perhaps only a cell phone number is given, or a free generic email address (like Gmail) is used, or the wording is somehow “off”. If the email makes you even the slightest bit uneasy, err on the side of caution and investigate further.
  • Most importantly, never accept notification of any supposed change in your attorney’s banking details without visiting or phoning your attorney to check all is in order (don’t of course use the contact details given in the suspicious email, they could also have been doctored!). 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Unlawful Occupiers: Eviction Is Possible, but Neither Quick nor Easy

By | Property

“It is only once the court concludes that there is no defence to the claim for eviction and that it would be just and equitable to grant an eviction order that it is obliged to grant that order” (Extract from judgment below)

“Buy land” said Mark Twain, “they’re not making it anymore.” With the first green shoots of a property market recovery supposedly now showing through perhaps this is indeed the time to take his advice.

Just be sure, if the property you have your eye on is occupied by anyone, to seek proper legal advice on the occupiers’ legal position before you put pen to paper.

We all know that unlawful property occupiers enjoy substantial constitutional and statutory rights, and a recent High Court case provides a good example of the fact that whilst it is certainly possible to evict unlawful occupiers, it could well be neither quick nor easy.

The family that lived rent free for two years 
  • A buyer bought an apartment from the previous owner’s liquidators and took transfer on 31 March 2017.
  • The new owner advised the family occupying the apartment that it must vacate by 14 April or face eviction proceedings.
  • The family refused to budge, and the owner, after complying with the many formalities required of it by PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act), applied to the High Court for an eviction order.
  • The family defended the application, firstly on the basis that it was, it said, in lawful occupation in the form of a lease agreement. The Court rejected this defence, finding that the family was in unlawful occupation even on its own version of the facts, because the “lease” (which the owner denied was ever validly entered into) had lapsed at the end of May 2017. The family’s attempt to persuade the Court that the lease had been “tacitly” renewed was doomed to failure because of the owner’s unrelenting insistence that the family’s continued occupation was unlawful.
  • Secondly the Court considered the all-important question “Is it just and equitable to evict?” 

    Per a 2017 Constitutional Court judgment which dealt extensively with the constitutional and statutory rights of unlawful occupiers, the High Court’s starting point was this: “that no one may be evicted from their home without an order of court made, after considering all the relevant circumstances”, having regard to the interests and circumstances of the occupier/s, and paying “due regard to broader considerations of fairness and other constitutional values, so as to produce a just and equitable result” (emphasis added).

    This is where questions of indigence and the risk of homelessness arise, and this is the hurdle at which many a property owner has stumbled in the past.

    In this case however, the owner triumphed, the Court finding on the facts that the family was financially able to pay rental but had paid nothing whilst enjoying free occupation for over two years. It had also had legal representation and could not be regarded as economically vulnerable or unable to obtain alternate accommodation.

    Critically, perhaps, the Court commented that the father (in whose name the eviction application was brought and fought) “has known of the real risk of eviction for a period in excess of two years and as such, he ought reasonably and responsibly to have made contingent plans in the event that an eviction order is granted … The professed risk of homelessness is not borne out by the undisputed facts of the matter and [the father] cannot be characterised as indigent by any means”.

  • Finally, the Court, having decided to grant the eviction order, had to consider when to make the order effective from. It’s an important enquiry because as an owner you could find yourself successfully holding an eviction order, but with an expensive delay before being able to implement it. The Court must consider “what justice and equity demand in relation to the date of implementation of that order and it must consider what conditions must be attached to that order.  In that second enquiry it must consider the impact of an eviction order on the occupiers and whether they may be rendered homeless thereby or need emergency assistance to relocate elsewhere.”

    Fortunately for the property owner in this case the Court did not provide for too long a delay, giving the family eight weeks to vacate (slightly longer than requested because a minor child’s interests were involved). 

    The family also has to pick up the tab for all the legal costs.

Buyers – some final advice

First prize is always to have a solid agreement in place with any occupiers before you buy an occupied property. 

So sign nothing – not an offer to purchase, nor a lease, nor any form of occupier contract – until you have your lawyer’s advice! 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Property Transfers and Trust Account Theft: A R720,000 Warning

By | Property

“The issue of whether a conveyancing attorney receives the money as the agent of the seller, or of the purchaser, or of both, or as trustee for both to await the event, is a somewhat vexed question … and each case must be considered in the light of its own facts and the particular contractual terms under which the conveyancer received payment” (Extract from judgment below)

A lot of money changes hands in property sales, and for many of us buying or selling a house is the largest single financial transaction of our lives. 

A recent High Court judgment involving a theft of R720,000 by a dishonest conveyancer (transferring attorney) provides a timely warning to both buyers and sellers to proceed with extreme caution. And as always, the core message to both is this: Sign nothing without your lawyer’s advice!

The conveyancer who stole from her trust account
  • A seller sold a sectional title unit to a buyer for R720,000. The sale agreement provided for payment in full by the buyer to the conveyancer, the funds to be held in trust in an interest-bearing account until transfer, interest to accrue for the buyer’s benefit.
  • The conveyancer had, as is usual unless otherwise negotiated, been nominated by the seller. In this case the buyer asked to use her own attorneys but the seller “vehemently” insisted on nominating his attorney. 
  • On request from the conveyancer, the buyer paid the R720,000 (plus R16,700 towards the transfer costs payable by her) into the conveyancer’s trust account.
  • When later it became clear that the conveyancer had stolen these funds, the buyer demanded transfer from the seller. The seller refused – the money was gone and he wasn’t prepared to lose both his property and the purchase price.
  • At the same time however he (the seller) lodged a claim with the Legal Practitioners Fidelity Fund, which was at that time still called the Attorneys Fidelity Fund and is referred to below as “the Fund”. In the event of such a theft, the Fund will in its own words “assist you with the reimbursement of your monies if your claim is valid.”  
  • However, the Fund refused to pay the seller’s claim because of its view that the loss was sustained by the buyer, not by the seller.
  • The buyer disagreed. It wasn’t, she said, her loss, it was the seller’s. She wasn’t going to now pay the purchase price over again and then have to claim from the Fund. So she asked the High Court to order the seller to pass transfer to her.
  • What the Court had to decide is whether or not the conveyancer was the seller’s agent to receive payment of the purchase price from the buyer. If so, the buyer had paid and was entitled to transfer. If not, the buyer had not paid and had no right to transfer. 
  • The danger for both seller and buyer here is that as the Court put it “the issue of whether a conveyancing attorney receives the money as the agent of the seller, or of the purchaser, or of both, or as trustee for both to await the event, is a somewhat vexed question … and each case must be considered in the light of its own facts and the particular contractual terms under which the conveyancer received payment.”
So whose agent was the conveyancer?

In the end the Court ordered the seller to pass transfer to the buyer, finding on the facts and on the Court’s interpretation of this particular payment clause that – 

  • The conveyancer in this matter had acted as agent for both the buyer and the seller – as agent for the buyer in investing the funds pending transfer, but as agent for the seller in receiving payment of the purchase price.
  • Accordingly the buyer “complied with her obligation in terms of the deed of sale by making payment of the purchase price to the [conveyancer] who was nominated by the [seller] to receive payment of the purchase price on the latter’s behalf”.
  • “In addition, the Deed of Sale provided for the mode of actual payment of the purchase price and once this was done, the [buyer] had discharged her obligations.  She did what was required contractually in respect of the purchase price and had no control of the process thereafter.”

The seller is therefore down R720,000 plus costs, and will be hoping that the Fund will now pay out his claim without further ado.

Sellers

Choose a competent and trustworthy conveyancer. Don’t ever be railroaded by anyone into appointing someone else! And if your attorney isn’t also an admitted conveyancer, ask him/her for a referral to a trusted colleague who is.

Buyers

As we saw above, the wording of the sale agreement is central to the level of risk you run – it should be clear that in paying the purchase price to the conveyancer you are paying the seller in complete discharge of your obligations under the sale agreement. 

Bottom line – as always, ask your attorney for advice and assistance before you sign anything!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Airbnb Owners and Buyers – Should You Be Worried About the New Regulations?

By | Property

“While travel on our platform accounts for less than 1 in 8 visitors to South Africa, those guests boosted the economy by R8.7 billion and helped create 22,000 jobs last year alone” and “Regulation is a useful and necessary tool of good policy, but policy comes first. Sadly, the current wording of the draft Bill is very vague and unclear. It indicates the creation of specific regulatory approaches without any explanation of what they are trying to encourage or solve.” (Airbnb)

Firstly, there is no doubt that Airbnb can be highly profitable for you if you have – or buy – the right property in the right place at the right time. 

Just be sure to comply with all municipal zoning and other by-laws and (if you are in a community housing scheme) any Body Corporate or Home Owners Association requirements. There is also a host of other legal, tax, financial and practical concerns to consider – proper legal advice (and a short-term letting contract tailored to meet your particular needs) will pay handsome dividends. 

A new factor to take into account now is government’s proposed new regulation of short-term rental schemes like Airbnb and its accommodation booking platform. The news has sent shivers down the spines of both existing and prospective Airbnb owners.

But is there actually anything to worry about? It’s much too soon to be sure but there may be grounds for optimism. Let’s start with a look at what has actually happened to date.

Here are the facts so far
  • Government’s declared intention is to regulate short-term home rentals because, it says, of perceptions that it may be hurting the tourism sector. Like other digital disruptors – Uber springs to mind – Airbnb has literally thrown a cat among the pigeons, and we are no doubt now seeing the fallout.
  • The proposal is contained in the Tourism Amendment Bill, published on 15 April 2019 with a 60 day window for public comment which has now been extended to 15 July.  The Bill includes a provision for “the determination of thresholds for short-term home sharing”.
  • The relevant new definition in the Bill is: “‘short-term home rental’ means the renting or leasing on a temporary basis, for reward, of a dwelling or a part thereof, to a visitor.” 
  • Reaction from stakeholders has been varied to say the least, with media reports suggesting a heady mix of both strong support for, and bitter opposition to, the new proposals. Perhaps most pertinently Airbnb has met with the Minister of Tourism and reportedly supports “fair and proportional rules that are evidence-based, benefit local people, and distinguish between professional and non-professional activity taking into account local conditions.” 
So where to from here?

Time alone will tell what the final Amendment Act will actually look like, but the majority opinion does seem to be that in the end result a fair and workable balance will be struck between the need to regulate the industry on the one hand, and the need to encourage entrepreneurship and grow tourism on the other. 

Expect an outcry and court challenges if that doesn’t happen.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

You Signed a Property Sale Agreement, Can You Still Accept a Better Offer?

By | Property

You put your property on the market and an acceptable but not-perfect offer comes in. On the “a bird in the hand is worth two in the bush” principle you want to accept the offer even though it’s not ideal.

Perhaps it’s not perfect because it’s subject to a suspensive condition – common ones give the buyer time to sell his/her current house or to obtain a bond. In both scenarios your sale will fall through if the buyer is unsuccessful within the stated time, and if that happens you are back to square one after a long and fruitless delay. Bear in mind that that delay could be a protracted one depending on what your sale agreement actually provides – normally no less than 30 days to get a bond, sometimes several months to sell an existing house. That’s a lot of very valuable marketing time lost – and you’ll never know for sure whether you just missed out on that “perfect offer”.

The “72-hour clause” and what it does

This is where the “72-hour”, “continued marketing” or “escape” clause comes in handy. 

In a nutshell, it allows you to continue marketing your property until suspensive conditions are met. If your marketing pays off and an unconditional offer does come in, you can give your existing buyer 72 hours’ notice to match it. So the buyer would have an opportunity to make the sale unconditional – either by waiving (abandoning) the condition or by fulfilling it.

If the buyer fails to do whatever the clause requires within the 72 hours, you are clear to accept the new offer. If on the other hand the buyer does perform in time, the existing sale immediately becomes fully binding and the transfer process can get underway.

A note for buyers

The clause is usually there for the seller’s benefit so perhaps avoid it when you can. But if it’s a choice between your offer being accepted or not, bear in mind that having a signed sale agreement at least gives you a solid base for a full bond application and/or a concerted effort to finalise your own house sale.

Just be ready to react quickly if the seller does indeed give you the 72 hour notice – you don’t want to be rushing around in a last-minute panic.

Buyers and sellers – check the wording!

Although 72-hour clauses are common in standard sale agreements, the exact wording can vary substantially, and may need tailoring to meet your specific needs. You might for example want to be given proof of availability of funds together with a bond clause waiver, or proof that the sale of the buyer’s house is a viable one – every situation will be different. 

Apart from everything else, make sure that – 

  • The 72 hour period specifically excludes Saturdays, Sundays and Public Holidays (religious holidays too if important to you), 
  • You can extend the 72 hours by mutual agreement if you want to, 
  • There are clear requirements for the method and timing of giving notice and of waiving conditions, and 
  • You aren’t binding yourself to anything else that could turn around and bite you down the line. 

Delete the clause if it doesn’t apply. 

As always, have your lawyer check it all for you before you sign anything!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Security Estates: Can You Fine Speedsters?

By | Property

“When the [property owners] chose to purchase property within the estate and become members of the Association, they agreed to be bound by its rules” (extract from judgment below)

There are many advantages to buying in a security estate or other community scheme, including quality of life and increased potential for growth in your property’s value.

As a buyer just be aware that you will almost certainly be binding yourself to a set of rules and regulations imposed by the Homeowners Association (HOA) or Sectional Title Body Corporate. Check that you are happy with them before you sign anything! Our courts have regularly confirmed the general principle that you are bound by what you agree to, and a recent high-profile Supreme Court of Appeal (SCA) decision provides an interesting example.

HOAs and Bodies Corporate on the other hand will be particularly pleased with the outcome, the High Court having originally held that the speed limit rules imposed by the estate in question were an unlawful attempt to usurp State powers over public roads and therefore invalid.

Speeding fines in a golf estate
  • A large golf estate (comprising some 890 freehold and sectional title properties with extensive common areas and facilities) is serviced by a network of roads and pathways. It has imposed a speed limit of 40km/h on its roads, with penalties for speeding. 
  • A property owner was fined R3,000 for his daughter’s repeated speeding contraventions, but he refused to pay, and the dispute has since then been grinding its way through the courts.
  • The High Court originally held the speed limit rule to be invalid on the grounds that the estate’s roads were “public roads”. 
  • But the SCA overturned this ruling, holding that the estate is a “private township” and its roads are (and were from inception) “private roads”. The “general public” has no right to access the estate’s roads, admission being restricted by electrified perimeter fencing and strict control at gated access points to owners, tenants, employees, guests, invitees and other “duly authorised persons”.
  • Even if the roads had been “public”, said the Court, owners had voluntarily agreed to bind themselves contractually to use the estate’s roads subject to the conduct rules. And because invitees are only allowed into the estate with the owner’s prior consent, the rule making the owner responsible for any breach by them of the rules is valid. 
  • Moreover, the estate’s imposition of a speed limit is not unreasonable, especially given the presence of children, pedestrians and animals (wild and domestic) in the estate.

The end result – the estate’s speed limit is valid, it is entitled to impose penalties for breaches, and the owner must pay his daughter’s speeding fines together with some (no doubt substantial) legal costs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Estate Agents: Securing Your Trade Secrets (and Your Commission)

By | Property

“In short, it [a Fidelity Fund Certificate] is a licence to practice without which you cannot practice.” (Extract from judgment below)

As an estate agent you will know that without a valid Fidelity Fund Certificate (FFC) you are not entitled to any commission for the successful sales or leases you put together. All your hard work in fulfilling your mandate will come to naught. Your client need pay you nothing. 

As a recent High Court case warns, you will also be unable to enforce any restraints of trade you enter into with your employees. And that’s a major risk if your trade secrets are as valuable to you as they are to most agencies.

The company that converted from a CC without changing its FFC
  • A close corporation (CC) trading as an estate agency held an FFC.
  • It converted to a company, retaining the same name so that the only change was the “CC” at the end of its name becoming “(Pty) Ltd”. 
  • The agency’s fatal mistake was that for 5 years after the conversion it continued to hold FFCs in the CC’s name. During that period it employed an intern agent in terms of an Intern Agency Agreement which included a restraint of trade clause prohibiting the employee “from engaging or participating in the property industry for a period of six (6) months after the termination of the agreement”. 
  • When the intern agent resigned and joined another agency, the company approached the High Court for an order interdicting and restraining her “from utilising and/or communicating confidential information relating to its business affairs, property listings, pricing, valuations etc” and “from operating in any capacity in the residential property market” in a list of named suburbs for 6 months. 
  • In the 18 months she had been with them, said the agency, she had “gained knowledge of valuable importance pertaining to the business of the [agency]. To that extent this matter was of cardinal importance to the [agency].” 
  • The agency argued that the FFC issued to the CC should be deemed to have been issued to the company “because it is the ‘same’ entity”. Rejecting this, the Court said the FFC had been issued for 5 years to a different, non-existing entity. Moreover an agency must if operating in a corporate entity have separate FFCs for all its directors (if a company) or members (if a CC) in addition to its own.
  • Accordingly, said the Court, the company could not act as an estate agent and its internship agreement incorporating the restraint of trade was “null and void thus unenforceable”. 
A final thought for agencies

Check and double check that all your FFCs are in order and in the correct names. Change nothing in your holding structure without having a plan in place to update all your FFCs immediately.

Take into account possible administrative delays, the Court here specifically warning that “It is not enough that the application is being processed or some other hiccup is in the process of being solved. The provisions are clear and peremptory.” Either you have a valid FFC in place at the critical time or you don’t.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Property Buyers: There’s a New Deduction from Interest Earned on Your Deposit

By | Property

When you buy property, the sale agreement often provides for you to pay a deposit (normally 10% of the sale price) to the conveyancer (the attorney transferring the property into your name), to be kept in trust until transfer.

Don’t lose out on earning interest on your deposit money – check that the sale agreement’s deposit clause says that the deposit must be invested in an interest-bearing trust account with interest to accrue to you. Also an instruction to the conveyancer to do this is normally in the standard documents you sign at the start of the transfer process. A good tip here is to have all your FICA documents in order as the investment can only be opened after you are FICA’d.

After transfer the conveyancer accounts to you for net interest accrued after bank charges, handling fees and the like, plus – a new charge – a fixed 5% deduction in favour of the Legal Practitioners Fidelity Fund.

That new 5% deduction is mandated by the new Legal Practice Act, it kicked in on 1 March 2019, and it boosts funding for the Fidelity Fund. In most cases it will be only a small amount, and it’s a bit like paying an insurance premium to make sure that your money is safe and secure. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Neighbours Building? Know Your Rights Re Plan Approval

By | Property

“You can be a good neighbour only if you have good neighbours” (Howard Koch, “Invasion from Mars” author)

Your neighbours apply to the municipality for approval of building plans. You object strongly – if allowed, you say, the new building/addition/alteration will seriously impact on your property’s appeal and value. It will be unsightly and objectionable. It will ruin the neighbourhood.

How must the municipality’s “decision makers” assess the plans in light of your concerns? A long-running legal fight over just that question has finally been resolved by the Constitutional Court.

The Court’s decision is a vitally important one for all property developers and owners planning to build, as well as for their neighbours, for the simple reason that no construction work can proceed without municipal approval of the building plans (although note that some categories of “minor work” may not require plan approval – ask your local authority for details).

Passed plans and blocked off balconies 
  • The owners of a seventeen story city building had been allowed to build balconies right up to the neighbouring four story building’s boundary.
  • The neighbouring building’s owners applied for approval of plans to add another four stories. The problem was that the balconies on three floors of the first building would touch the top stories of the new additions.
  • Predictably, strenuous objections to the building plans were lodged, but in the end result the municipal decision makers approved the plans, and building commenced.
  • Had the plans been properly approved? A string of court battles later, the highest court in our land has had its (final) say on the matter.
3 disqualifying factors and the “legitimate expectation” test

Central to this decision is a statutory protection for buyers and neighbours in regard to various “disqualifying factors”. The proposed building cannot be (our emphasis) “erected in such manner or will be of such nature or appearance that–

  1. The area in which it is to be erected will probably or in fact be disfigured thereby;
  2. It will probably or in fact be unsightly or objectionable;
  3. It will probably or in fact derogate from the value of adjoining or neighbouring properties”.  

The Court’s decision – the building plans had not been properly approved. They must go back to the municipality for re-assessment, and the developer is accordingly back to square one. Presumably a demolition order will be on the cards if they are ultimately unsuccessful in having their plans passed.

A decision maker must, held the Court, in assessing the 3 factors above consider the impact of the building proposal on neighbouring properties, from the perspective of a “hypothetical neighbour”. In a nutshell, will it probably, or in fact, be so disfiguring of the area, objectionable or unsightly that it would exceed the neighbour’s “legitimate expectations”? 

And whilst it has always been clear that neighbours have to be considered in regard to the “derogation of value” (i.e. reduction of value) aspect, this decision for the first time confirms that their viewpoints are relevant, and must be considered, in regard to all three aspects. 

Stronger rights – but not for “sensitive neighbours”

That certainly doesn’t mean however that neighbours can willy-nilly object to plans and expect the municipality to back them regardless of the facts. On the contrary, the Court made it clear that “The legitimate expectations test is not a subjective test determined by the whim of a sensitive neighbour.  The test is objective and based on relevant facts, which would, in the ordinary course, be placed at the disposal of the decision maker”.

The important thing remains that your rights as the “non-building neighbour” just got a lot stronger. Protect them!  

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Property Buyers: Beware Unlawful Occupiers!

By | Property

“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell” (Sir John Templeton, billionaire investor)

You are it seems in good company if you view times of depressed property prices and general uncertainty as a great buying opportunity. 

Just be aware that if it is a house you are after, whether as an investment or to live in, you should do your homework if the property is (or might be) occupied. Generally speaking, buying a property with occupiers is fine if you know about them and have a binding deal in place with them (see the end of this article for more on that). 

But, as a recent High Court decision illustrates, if you aren’t aware of occupiers and/or don’t have a proper agreement in place with them, you could find yourself unable to evict them even if you buy the property “free of lease”. 

Before we discuss the case itself, it is important to know that to get an eviction order from a court, you need to prove in terms of PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act) both – 

  1. That the occupants are “unlawful occupiers” and
  2. That it is “just and equitable” to grant such an order after considering all the relevant circumstances.
The Bo-Kaap flat, the sale in execution, and the occupiers
  • A property investor bought a flat in a sectional title development on a sale in execution. As we shall see below, the history of the flat’s ownership, and its location in Cape Town’s historic Bo-Kaap area, were relevant to the outcome of this matter.
  • The Sheriff of the High Court sold the flat for R375,000 “free of lease”, but also with “no warranty that the Purchaser shall be able to obtain personal and/or vacant occupation of the property or that the property is unoccupied and any proceedings to evict the occupier(s) shall be undertaken by the Purchaser at his/hers/its own cost and expense….”
  • The people living in the flat refused to leave or to “legalise … their rights to the property”, and the investor applied to the Court for their eviction.
  • The eviction order was refused firstly because the investor was unable to prove that the persons it was trying to evict were “unlawful occupiers” for lack of information as to –
    • Who the occupants of the flat actually were, with the result that “the court has scant knowledge of essential details of the occupiers of the property in circumstances where these are material to the exercise of the court’s discretion under the provisions of PIE”. Crucially, there was nothing before the court as to the ages or circumstances of the occupiers, so it was unable to consider “all the relevant circumstances including the rights and needs of the elderly, children, disabled persons and households headed by women”.
    • When and under what legal right the occupiers originally took occupation (lease, right of habitation, usufruct etc), when that right was terminated and under what circumstances. Note that timing is important here because once unlawful occupation has lasted for more than 6 months, the question of relocation to land supplied by the municipality or government becomes relevant.
    • Whether or not the occupants had any form of written or verbal lease. That’s important because of our law’s “huur gaat voor koop” principle – literally “lease goes before sale”, meaning that you are generally bound to honour an existing lease (there are a few exceptions – take specific advice). 
  • Secondly, the investor failed to convince the Court that it was “just and equitable” to grant the eviction. 

    Again, the lack of information as to the occupiers was relevant, and the Court’s comments on the particular facts of this matter are worth noting in full (our emphasis): “The residents of the area are, generally speaking, not wealthy and Bo-Kaap is home to many poor and working-class people. An eviction of the type sought in this matter, in which a group of related persons appear to occupy a family home that was acquired from the City of Cape Town some time ago, might well render them homeless or at the very least require them to relocate to one of the outlying suburbs that are now home to the many who fell foul of the Group Areas Act. If those circumstances obtain, a court would be required to think long and hard about the justice and equity of ordering people to vacate a dwelling, long occupied, which has been snapped up by a buyer distant to the neighbourhood for investment or development potential. Certainly, it is to be expected of such buyers that when they seek to move established families out of their homes, they do their homework properly and place all relevant facts before the court.”

Do your homework, and do it properly!

Investor or not, the Court’s warning to do your homework applies to you. Establish whether anyone is living in the house, exactly who they are, how long they have been there, and on what basis. 

Bear in mind that because leases need not be in writing, you could find yourself battling occupiers who claim to be tenants under a verbal lease. Without a written record they could well claim to be entitled to pay minimal rent and to have many years left on their “verbal lease”. 

So first prize will always be to reach a written, water-tight deal with any occupants before buying – ask your lawyer for help.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews