Property – KRUGER & CO

May 26

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Dodgy Deck: When a Property Defect is Your Problem, Not the Seller’s

By Kruger & Co | Property

“The buyer needs a hundred eyes, the seller not one.” (George Herbert)

A Marina Da Gama property. A collapsed wooden deck. A purchase price of R1.55 million and repair costs claimed of just over R100 000. The facts are not complicated. But the legal battle that followed lasted more than a decade.

What happened

The buyers purchased a residential property in October 2013 after the estate agent described it as being in stunning condition. They took occupation in January 2014. Seven months later, the upper wooden deck collapsed. Expert evidence subsequently confirmed that the decks had been constructed without approved plans and were not built to National Building Regulations standards. The defects were latent, meaning they were not visible to a layperson on inspection.

The buyers pursued the estate agent, his close corporation, and the seller across eight separate claims. At the close of the buyers’ case, the defendants asked the court to dismiss the matter on the basis that insufficient evidence had been presented against them. The court agreed and dismissed all the claims.

“Stunning” is not a structural warranty

The buyers argued that the estate agent’s description of the property as being in “stunning” or “beautiful” condition amounted to an actionable misrepresentation. The court disagreed.

Descriptive sales language of that kind is puffery. It reflects aesthetic opinion, not structural fact. It does not amount to a representation about the integrity of the building, compliance with approved plans, or the absence of latent defects. To cross from puffery into misrepresentation, a statement must assert a verifiable fact. Words like “stunning” do not do that.

The estate agent’s duty of disclosure, under the legislation applicable at the time, extended to material facts within his personal knowledge. It did not require him to conduct engineering or technical investigations to uncover hidden structural defects. The defects would not have been visible to a layperson. They were not within his knowledge. No actionable misrepresentation was established.

The voetstoots clause held

The sale agreement contained a voetstoots (as it stands) clause. To defeat it, the buyers were required to prove two things: that the seller had actual knowledge of the latent defect, and that he deliberately concealed it with the intention to defraud.

Neither was established. The buyers’ own evidence undermined the claim. Both buyers described the seller as a decent, honest person. One stated plainly that the seller did not know about the defects. Quick-fix repairs noted by the experts did not change that conclusion. Repairs may reflect ordinary maintenance. They do not, on their own, establish knowledge of a structural defect or an intention to deceive. Fraud is not lightly inferred.

Getting the damages calculation wrong

Even if the buyers had established liability, their damages claim faced a separate problem. The actio quanti minoris, a claim for a reduction in the purchase price, entitles a buyer to compensation for the property’s reduced value caused by the defect. The reasonable cost to repair may serve as evidence of that reduction, but no more. The buyers simply claimed replacement costs, which was entirely the wrong way of going about it.

In plain terms

Puffery is not a promise – in fact, it’s to be expected in real estate listings. A voetstoots clause is not easily defeated. And the burden of investigating a property before signing rests firmly on the buyer.

Nine court days. Twelve years. Presumably substantial legal costs. Every claim dismissed. Get advice before you sign, not after the deck collapses.

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 us for specific and detailed advice.

May 26

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Estate Planning: The Ambush Tax Lurking in the Wings

By Kruger & Co | Property, Tax, Wills and Estate Planning

“I can’t afford to die; I’d lose too much money.” (George Burns, comedian)

At the heart of any estate plan lies your will. Pair it with a file containing all the information and documents that your executor and heirs will need to wind up your estate, and you’ve laid a solid foundation for protecting your loved ones when you’re no longer around to do so.

Hopefully, most of us have already crossed those two essentials off our “to do” list. But there’s a third step which doesn’t always receive the attention it requires: planning for the costs your estate will have to pay, including a number of taxes.

As with all things to do with SARS and tax, there are many detailed requirements and grey areas involved, so what follows is a general guide only. It’s no substitute for specific professional advice.

The big costs you should plan for

Costs: Central to your estate planning will be understanding just how much each of your heirs will actually receive from your estate after costs, the most significant of which are usually executor’s fees and government taxes.
Taxes: There are two main taxes to consider: estate duty, and capital gains tax (CGT). In this article, we’ll focus on the CGT aspect for the simple reason that it’s often forgotten about, and even more often misunderstood.

CGT: The ambush tax lurking in the wings

CGT is one of those low-profile taxes that lurks around unobtrusively in the wings, being ignored and forgotten about until it suddenly pops out of the woodwork.

In this case, the “popping out of the woodwork” will happen when you’re no longer around to be ambushed by it. That’s because CGT is triggered by a taxpayer’s death, which is a “deemed disposal” tax event. In other words, your assets are deemed to have been sold at market value on the day you died. And that triggers a tax liability for your estate on the asset’s growth in value since you acquired it – the capital gain.

Before we get into the nitty-gritty of putting figures to that liability, let’s share a smidgen of good news.

The good news: 3 big exclusions, boosted by Budget 2026

Note firstly that no CGT at all is payable on “personal-use assets”, retirement fund benefits and most mainstream life policies.

Secondly, there’s “spousal rollover relief”: liability for CGT on assets left to your spouse is “rolled over” so that it’s payable not by your estate but later on by your spouse (on sale) or by their estate (on death). That, of course, can make a tremendous practical difference in ensuring that your spouse will be okay financially.

Thirdly, the annual exclusion in year of death, the primary residence exclusion and the small business disposal exclusion can all reduce CGT substantially. And as we note below, Budget 2026 has boosted them all. Good news indeed!

Annual exclusion in year of death: If you sell assets during your lifetime, your CGT liability is reduced by an annual exclusion of R50,000 (up from R40,000). In the year of your death, this exclusion is boosted to R440,000 (previously R300,000).
The primary residence exclusion: This is a big one for property owners in respect of their “primary residence” (the home you ordinarily live in), with the exclusion increased from R2,000,000 to R3,000,000.
The small business asset disposal exclusion: If you leave a small business with a market value of up to R15,000,000 (previously R10,000,000), your estate may qualify for a R2,700,000 exclusion (was R1,800,000) on the assets of the business, which are deemed to have been disposed of on your death. Many small businesses will also qualify for wear-and-tear on assets used in the business. Quantifying this requires professional assistance.

How to calculate CGT

Now for the actual CGT calculation, which will give you a rough idea of the final liability so you can plan for it:

Include all your assets (except those mentioned above as not being subject to CGT) at their current market value.
Deduct the base cost of each asset; that is what you bought the asset for plus allowable costs such as costs of acquisition and the cost of subsequent capital improvements.
Calculate the capital gain or loss by subtracting the base cost from the market value.
Deduct all exclusions from the capital gain to calculate the net gain.
Multiply the net gain by the 40% inclusion rate to give you the taxable capital gain.
Finally, apply your marginal tax rate to that taxable capital gain to give you the final CGT liability.

Putting together a comprehensive estate plan, anchored by your will, is essential to ensure that your loved ones are properly catered for after you’re gone. You know who to call if you need any 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 us for specific and detailed advice.

May 26

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Your Property Purchase Collapses: Can You Get Your Deposit Back?

By Kruger & Co | Property

“A creature with a big enough head to make a contract should have the sense to make one it can keep.” (Barbara Kingsolver)

A R1.725 million deposit. A bank guarantee that never arrived. A property that ultimately sold for significantly less than the original price. What happens to the deposit money?

A sale that fell apart

The seller agreed to sell an agricultural property in Kyalami for R17.25 million. The purchaser paid a deposit of R1.725 million into the estate agent’s trust account. The balance of the purchase price was to be secured by a bank guarantee on request.

The seller called for the guarantee and gave 14 days to comply. When it was not provided, a further notice gave five business days to remedy the breach. The guarantee was still not furnished. The seller cancelled the agreement and claimed the full deposit.

The purchaser attempted to recover it, but the claim failed.

Rouwkoop or penalty clause?

A true rouwkoop clause – from the Dutch for “regret-purchase” – allows a party to withdraw from a sale by paying a fixed amount. It is an agreed exit mechanism, not a consequence of breach. A forfeiture clause operates differently. It is triggered by breach and is subject to the Conventional Penalties Act. The clause in this case fell into the latter category. The purchaser’s only remaining recourse was section 3 of the Act, which allows a court to reduce a penalty if it is out of proportion to the prejudice suffered.

Why the deadline mattered

The purchaser argued that the word “timeously” meant within a reasonable time, not strictly within the five-day notice period. The court rejected that argument.

Read in context, the agreement created a clear notice-and-remedy mechanism. The five-day period was the operative timeframe. “Timeously” did not introduce flexibility. It referred back to the period expressly stipulated in the contract.

Once the guarantee was not provided within that period, the seller’s right to cancel arose. What the purchaser might have done after the deadline was irrelevant.

Can the court step in?

The purchaser invoked section 3 of the Conventional Penalties Act. That argument did not succeed.

The court looked beyond the arithmetic. It considered the broader consequences of the failed transaction, including the collapse of an onward purchase, the loss of a prior offer, bridging finance, and extended holding costs.

On that evidence, the seller’s prejudice was substantial. The forfeited deposit bore a reasonable relationship to that prejudice. There was no basis for interference.

The real lesson

Deadlines in property transactions are not flexible unless the agreement says so. A deposit is not a placeholder and sellers don’t have to play nice. The bottom line? Get advice before you sign.

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 us for specific and detailed advice.

Apr 28

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Bodies Corporate and HOAs: Apply Your Rules With Common Sense, or Else

By Kruger & Co | Property

The administrators of residential complexes tread a fine line. They must implement and enforce conduct rules for the good of the complex as a whole, but without unjustly impinging on the constitutional rights of individuals.
A recent Supreme Court of Appeal decision, granting a sight-impaired owner a limited right to exclusive use of a section of common area for his washing machine, has brought this balancing act into sharp focus. We discuss the reasoning behind that outcome, with some suggestions on how bodies corporate and homeowners’ associations should approach this sort of situation in future.

Mar 26

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Buying a House: What Costs Will You Pay, and When?

By Kruger & Co | Property

It’s a really exciting time, buying a house, particularly if it’s your first! Don’t forget, however, that you will have to pay a variety of costs over and above the purchase price. What are those costs and when must you pay them? Do they impact your ability to afford the house you have your eye on?
We’ll address those questions with a checklist of costs you should budget for. It’s a good idea to work these into a cash flow forecast so you aren’t ambushed by any unpleasant financial surprises during the transfer process.

Mar 26

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Considering Using Sequestration to Recover Levies? Think Again

By Kruger & Co | Property

Unpaid levies can leave body corporates out of pocket and out of patience. When conventional debt recovery feels too slow, sequestration may seem like the obvious next step. But a recent High Court judgment is a reminder that sequestration is not a debt-collection shortcut. The court refused an application by a body corporate that had failed to meet the strict statutory requirements. Before reaching for the nuclear option, body corporates should understand what the law actually requires.

Mar 02

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Budget 2026: How Much Will the Increased CGT Primary Residence Exclusion Save You?

By Kruger & Co | Personal Finance, Property, Tax

Phew! No major tax increases are planned, and taxpayers will benefit from zero “bracket creep” across a range of taxes. While property sellers and buyers will be disappointed that transfer duty thresholds have not increased, there’s reason to get very excited about the 50% increase in the primary residence CGT exclusion from R2m to R3m.

Read on for an illustrative calculation of CGT savings, some of the more important tax tables, and a calculator to show you how much more or less you will be paying in taxes.

Mar 02

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Choose Your Conveyancer with Care! A Cautionary Tale of “Fraud Unravels All”

By Kruger & Co | Property

Buying and selling a house is probably one of the most important financial transactions you will ever be involved in. Not to mention the emotional aspect of acquiring or letting go of your “home sweet home”.
This is why it’s vital to choose the right conveyancer. Case in point, a recent court battle which saw a couple losing ownership of what they had fondly believed to be their new house. A crooked attorney, in cahoots with her trustee husband, had defrauded both the original owner and the buyers at the end of the transfer chain. And in law, “fraud unravels all.”

Jan 27

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Love and the Law: Cohabiting? Get Your House in Order Now

By Kruger & Co | Family Law, Property

“All you need is love… and a good lawyer.” (Anonymous)

February, with its Valentine’s Day chocolates, roses and declarations of undying love, should be a month for romance, not legal niceties. But in the real world, love and the law are inextricably linked because any relationship’s structure and consequences are inevitably governed by legal principles. Losing sight of that can expose you to unnecessary angst, dispute, and litigation.

A recent High Court fight between an estranged couple over their jointly-purchased dream house illustrates this neatly.

Broken dreams, and a fall out over the house

A couple’s four-year romantic relationship saw them living together first in her mother’s house and then in his apartment. They then decided to buy a house together with the idea of making their relationship more permanent.

Unfortunately, that dream came to nought – their relationship ended a month after the property purchase, leaving only one of them to live in the house and to pay all the ongoing costs while they decided what to do next.

In due course they fell out over how to end the co-ownership and how to adjust their respective claims for past and future property costs.

Their dispute reached the High Court, which ordered firstly that the co-ownership be terminated. This was necessary, because no co-owner can be forced against their will to remain a co-owner where the relationship between the co-owners has deteriorated to such an extent that it can’t continue.

Then, using an old Roman law remedy still in use today (the “actio communi dividundo”) the Court dealt with both the division of the property, and the adjustment of the various financial claims between the parties. As is usually the case, these were complex and intertwined after years of cohabitation.

Importantly, the Court noted a modern move away from the traditional principle that the property should necessarily be sold by public auction to the highest bidder, towards a much more flexible approach based on the Court having a wide discretion to ensure a fair and practical outcome in each case.

Thus, having considered all the circumstances, wishes and claims of both parties, the Court ordered that the ex-partner living in the house has a first option (valid for 60 days) to buy the other’s half share at valuation. If he doesn’t, he must offer it for sale on the open market at a fair and reasonable market-related price. If there’s still been no sale after 6 months, the Sheriff of the High Court becomes a “receiver and liquidator” and has 4 months to auction the house. The bond, costs and parties’ related financial claims will be settled from the proceeds as directed by the Court.

“Co-ownership is the mother of dispute” – But it needn’t be

“Co-ownership is the mother of dispute” (“communio est mater rixarum”) is another old Roman law concept mentioned by the Court. It confirms that joint ownership has always, since ancient times, inherently provided fertile ground for instability and dispute.

But that needn’t be so. An upfront agreement between joint owners, whether their arrangement is grounded in a commercial or a personal relationship, can hugely reduce the risks of later uncertainty, disagreement and litigation.

Put as much detail into your agreement as you can, including a detailed process of how to end your co-ownership if required. Litigation – with its delay, expense, and uncertain outcomes – should never be embarked on lightly. As the Court wryly quoted from a previous decision, “a court cannot perform miracles”. It will of course do its best to craft the fairest possible outcome for both parties, but avoiding the dispute altogether is always a better option for everyone involved.

P.S. Don’t forget your cohabitation agreement

As a final thought, if you are living with your life partner, you should have a full cohabitation agreement to cover not only your co-ownership arrangement, but also all the other financial and personal aspects of your relationship that would normally be governed by our marriage laws.

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 us for specific and detailed advice.

Jan 27

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Parking Disputes and the “Reasonable Neighbour” Test

By Kruger & Co | Property

“Wouldn’t it be nice to get on with me neighbours?” (from “Lazy Sunday” by Small Faces)

Maintaining friendly relations with the neighbours, or at least an “I’ll ignore you if you ignore me” sort of neutrality, has probably been a primary aim of homeowners since the dawn of history. No doubt even our cave dwelling ancestors were as keen to get on with the Joneses next door as they were to keep up with them. But as we all know, it’s not always easy.

A recent High Court fight over parking rights is unfortunately pretty much par for the course when it comes to neighbourly relations deteriorating into open conflict, both inside and out of the courtroom.

“You can’t park here!” “Yes, we can!”

The setting for this fight: Higgovale, a small and affluent suburb on the slopes of Table Mountain in Cape Town. In one corner: a couple with the right to access their garage using a servitude road. In the other corner: the neighbours, alleged to have impeded the couple’s garage access by parking in the road.

At the heart of the dispute: the road servitude. Servitudes involve a balancing act between the right of the “dominant owner” to exercise the servitude and the right of the “servient owner” to have the servitude exercised in such a way as to impose the “lightest burden” on their property. The tensions inherent in such a relationship can easily escalate into conflict – exactly what happened here.

The garage-owning couple’s initial stance was to ask the Court for a blanket interdict against all parking by the neighbours in the road, but they later softened that to ask only for an order against their garage access being obstructed.

The Court had no hesitation in ordering that the neighbours “are interdicted and restrained from parking vehicles on the servitude area at … Higgovale, in such a manner as to unreasonably obstruct the applicants from entering and exiting their property and exercising their right of way.”

In doing so, the Court took the parties to task for failing to settle their dispute out of court, and urged them “to engage with each other in a manner that promotes the spirit of ubuntu, and the constitutional vision of a caring society based on good neighbourliness and shared concern” (emphasis supplied), and to consider demarcating parking bays in the road as a short-term solution.

The parties now have to pay their own costs (except for the costs of one interim application), and they’re effectively back to square one: having to engage with each other to try to find a fair solution.

What’s a “reasonable neighbour”?

Per the Court (emphasis supplied): “While the common law requires that neighbours act reasonably, the Constitution shows what a reasonable neighbour looks like. She is not only concerned with advancing her own private interests but cares also for the needs of her neighbours. She seeks mutually beneficial solutions. The mindset of the reasonable neighbour is one of collaboration, not competition. She sees herself not as an isolated individual, but a partner in an interdependent community of persons, all of whom are to be respected and valued.”

First prize: Settle!

Courts want us to settle these sorts of disputes in that collaborative spirit, without recourse to law. But if a friendly discussion over a cup of coffee doesn’t resolve the situation, more robust action might be unavoidable – we’re here to help if you need us.

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 us for specific and detailed advice.