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Property

Home Buyer loses R5.5m in Phishing Scam – Don’t Make the Same Mistake!

By | Criminal Law / Crime, Property

“[The buyer] must in the circumstances take responsibility for her failure to protect herself against a known risk” (extract from judgment below)

Cybercriminals absolutely love targeting property transactions because they provide the perfect mix of large money deposits, heavy reliance on email communication from trusted parties like attorneys, banks and estate agencies, and deadlines creating a sense of urgency and lack of attention to detail.

Let’s consider just one recent example of a high-value BEC (Business Email Compromise) attack on the purchase of a house.

A textbook case costs a pensioner R5.5m
  • A woman describing herself as “an elderly divorced pensioner without the knowledge, experience or resources to protect herself against sophisticated cybercrime of which she had no knowledge or experience” purchased a house for R6m.
  • She paid a R500k deposit to the estate agents, and then after an exchange of emails with her appointed conveyancers, she paid the balance of R5.5m into what she believed to be the conveyancing firm’s account.
  • In fact, her email system had been hacked and the criminals were intercepting and altering both her incoming and outgoing emails. In a typically sophisticated operation, they ensured that the mails and attachments looked genuine, deceived the buyer into paying the R5.5m into their fraudulent account, and then, via a further chain of back-and-forth emails, delayed detection of the fraud for long enough to give them time to withdraw the funds and disappear.
  • The buyer sued the conveyancers for her R5.5m loss, arguing that they had a legal duty to protect her from the BEC. The High Court agreed and ordered the firm to pay her back, but that was reversed on appeal to the SCA (Supreme Court of Appeal).
  • Critically, the SCA held that in cases of “pure economic loss”, creditors have no general legal duty to protect their debtors from the interception of payments, and there is no inference of “wrongfulness”. So, it is up to the client in such a claim to prove not only negligence by the business, but also wrongfulness.
  • In this particular case the Court found that the buyer had “ample means to protect herself”. It was not the conveyancers but the compromise of her email account that enabled the criminals to intercept her emails. She could have paid by bank guarantee but chose to pay in cash. Moreover, she had been warned by the estate agency about this very risk and had heeded the warning and verified the agency’s banking details before paying in the deposit. She could, and should, have taken the same precaution before paying the conveyancers.
  • Bottom line – the buyer “must in the circumstances take responsibility for her failure to protect herself against a known risk” and must bear her R5.5m loss herself.
How to protect yourself – 5 steps to take immediately
  1. Whether you are business or client, protect your systems from being hacked. Constantly update all your software and anti-virus/anti-malware programs. Use 2FA (two factor authentication) on your accounts. If it is your email system that is hacked and causes the loss, you have a problem! As a business you could also be in trouble for breaching POPIA (the Protection of Personal Information Act).
  2. Constantly warn everyone about the risks of email interception and fraud and remind them never to accept any change of banking details notifications without checking.
  3. Protect all attachments from alteration (including PDFs!).
  4. Before making deposits, phone to confirm all banking details you are given via email. Make sure to phone a number you have confirmed to be genuine – criminals regularly provide fake contact numbers in intercepted emails and documents.
  5. Carefully check all email addresses as scammers often make subtle changes – in this case for example the buyer failed to notice that the word “africa” in an email had been changed to “afirca”. Other common dodges are changing numerals or adding/removing hyphens.

Above all, treat all email communications as inherently unsafe and don’t let your guard down for a second!

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

Why an Oral Estate Agency Mandate Isn’t Worth the Paper It’s Written On

By | Property

“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)

Perhaps you are a seller marketing your property through an estate agency, or a buyer asking an agent to find you one, or a landlord employing an agent to let out your property. Whatever the transaction involved, make sure that the agency mandate is in writing.

The problem is that, because we have a human tendency to hear only what we want to hear, the parties to any verbal agreement can, quite genuinely, each remember the terms of their agreement quite differently. Even worse, if one party is determined to cheat the other, it’s a lot easier to challenge a verbal agreement than a written one.

Bottom line – oral contracts invite misunderstanding, conflict and protracted litigation, and for that very reason few agents will accept a mandate without requiring your signature on a written agreement.

But not always – let’s consider a recent High Court fight over a R450,000 commission claim.

Buyer must pay R450k for a cancelled sale
  • A property developer had previously employed an estate agent to source development property for it. No written mandate was ever signed.
  • The agent, relying on what she said was a verbal mandate to find a further development property, introduced the developer to a property which it decided to buy. An agreement of sale, including a clause confirming that the agent was entitled to R450,000 in commission, was signed by both buyer and seller. The agent had thus fulfilled her mandate and was the effective cause of the sale, the developer being willing and able to buy the property. In the ordinary course the agent would then have been entitled to her commission on fulfillment of all suspensive conditions (“conditions precedent”).
  • However, when the developer cancelled the sale, it refused to pay the agent her commission, denying firstly that any mandate had been given, and secondly arguing that in any event commission was only payable against actual transfer of the property from the seller to the buyer.
  • Long story short, the Court dismissed the developer’s attempts to convince it that there was no mandate at all, or that the suspensive conditions had not been fulfilled, or that the mandate included either an implied or a “tacit” term to the effect that commission would only be payable against transfer.
  • The developer was ordered to pay the agent’s commission and is left R450k (and legal costs) down, with absolutely nothing to show for it.
The lessons…

That is of course not only an expensive lesson for the developer, it’s also a clear wake-up call to anyone and everyone entering into a property deal of any sort with the involvement of an estate agent to ensure that you –

  1. Sign a written, clear mandate

    Both parties could have saved themselves all the aggravation, delay and cost of litigation had they only entered into a written mandate agreement with clear, simple terms accurately recording the terms and conditions they had agreed upon.

    As we said above, most agencies insist on written mandates anyway, but make sure you aren’t the exception!

  2. Specify that commission is payable against transfer

    Most sale agreements will provide that commission is earned on performance of the agent’s mandate and fulfilment of any suspensive or resolutive conditions (bond clauses and the like).

    But when is the commission actually payable to the agency? As it is normally deducted from the buyer’s deposit held in trust, both seller and buyer should check that it will not be paid out before transfer (or, in the event of a breach or cancellation of the sale, on that date). And whilst most standard mandates and sale agreements will provide exactly that, you must check because every agreement will be different. If there is a clause allowing payment of commission before transfer, don’t accept it without specific legal advice.

    From an agent’s perspective, further clauses are of course essential to protect your commission payment in the event that the sale is frustrated or doesn’t proceed – normally the agreement is that a defaulting party (buyer or seller) is liable to pay the full commission on default.

Most importantly of all, sign nothing property-related without asking us to check it over for you first!

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

Contracting with Trusts – Is a Majority Resolution Valid?

By | Contract, Property, Trusts

“Externally, trustees cannot disagree. In the external sphere the Trust functions by virtue of its resolutions, which have to be supported by the full complement of the Trust body.” (Extract from judgment below)

A recent Supreme Court of Appeal (SCA) judgment provides yet another reminder to tread carefully when contracting with trusts. Your agreements with a trust will be invalid and unenforceable if the trustees acting for the trust weren’t properly authorised to bind the trust.

But must trustee resolutions always be taken unanimously by all of the appointed trustees to be valid, or will a majority decision ever suffice? The SCA addressed that question in the context of a trust seeking to escape from a suretyship which had not been unanimously agreed to and signed by all three trustees acting jointly –

When a majority trustee decision isn’t enough
  • A creditor sued a property trust for payment under a suretyship given to it by the trust. The trust countered that the suretyship was invalid because the resolution authorising trustees to sign the suretyship was not authorised and signed by all three trustees, but only by two of them.
  • Indeed, only two of the trustees had attended the trustee meeting at which the suretyship was discussed. The third trustee had not been at the meeting and did not sign either the resolution authorising the suretyship to be signed or the actual suretyship.
  • The meeting itself was in order, in that the trust deed provided for two trustees to constitute a quorum for meetings. But the deed also provided that a unanimous decision was required for the trust “to conduct business on behalf of and for the benefit of the Trust, and to employ trust property in such business”.
  • In any event, as the Court put it: “…trustees must act jointly in taking decisions and resolutions for the benefit of the Trust and beneficiaries thereof, unless a specific majority clause provides otherwise” and “Even when the trust deed provides for a majority decision, the resolutions must be signed by all the trustees. (Emphasis added)
  • As it was neatly put in an earlier High Court decision: “A majority of trustees in office may form a quorum internally at a trust meeting, but can still not externally bind a trust by acting together … It is not the majority vote, but rather the resolution by the entire complement which binds a trust estate. A trust operates on resolutions and not votes.” (Emphasis added)
  • As only two of the three trustees had acted for the trust in this case, the Court held both the resolution and the suretyship to be invalid and unenforceable.
So, what does that mean for you in practice when contracting with a trust?

Internal trust matters: Internal matters (such as using trust income for the benefit of beneficiaries or administering trust assets) “may be debated and put to a vote, thereafter the voice of the majority will prevail.”

External trust matters: As an outsider however your dealings with the trust will relate to external trust matters (transactions relating to trust property with the outside world such as buying and selling property, signing suretyships and the like) and here unanimity is essential for the trust to be bound. Even when the trust deed allows majority decisions, all the trustees must still participate in the decision-making and all of them must sign a resolution to make it valid externally. Make sure therefore that all trustees signing for the trust have the power to do so per the trust deed and by a valid, unanimous resolution.

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

Rising Damp and Failed Waterproofing: How to Sue the Sellers

By | Property

“[w]here a seller recklessly tells a half-truth or knows the facts but does not reveal them because he or she has not bothered to consider their significance, this may also amount to fraud” … “a willful abstention from establishing the true facts does not constitute a lack of knowledge” (Extracts from the judgment below)

Consider this all-too-common scenario: You buy your dream house and happily move in. Only then do you discover that the house has major defects, which were never disclosed to you by the seller. You demand the seller pays the repair costs but the seller refuses. So off to court you go, claiming either damages or a reduction in the purchase price.

What must you prove to win your case? Let’s consider a recent High Court decision addressing just that question.

Concealing the damp with paint and Polyfilla
  • The buyer of a house only became aware of substantial damp problems in the ceilings and walls after taking transfer and when planning renovations. The damp was caused both by rising damp, and by water flowing down into the walls due to failed waterproofing.
  • The sellers (a divorced couple) refused to pay for the repairs (costing just under R245k) and the buyer sued them for either damages or a reduction in the purchase price.
  • Highly relevant – as we shall see below – was the fact that twice in the year of sale the ex-wife (living alone in the house and tasked with selling it after the divorce) had called in contractors to repaint and carry out “cosmetic repairs” – extensive repairs judging by the drum of paint and 24kg of Polyfilla involved.
What the buyer must prove

The matter ended up in the High Court, which considered what the buyer must prove to succeed in a claim of this nature.  –

  • Defects: That there were defects in the property at the time of the sale which “affected the use and value of the property”. The buyer had no difficulty in proving that the damp problems qualified as defects for this purpose.
  • Latent, not patent: That the damp was a latent defect, not “obvious or patent” to the buyer. That’s important because latent defects are defects that “would not have been visible or discoverable upon inspection by the ordinary purchaser” – so if the damp was a “patent” defect, the buyer should have picked it up. The buyer in this case was able to convince the Court that the damp was not discoverable by her at the time of sale because all traces of it had been concealed by the remedial work referred to above.
  • Fraud: That the damp as a latent defect was not covered by the voetstoots clause, a standard clause in deeds of sale which specifies that the property is sold “as is” and without any warranty. The effect of such a clause is that the buyer agrees to carry the risk of latent defects, but only if there was no fraud on the part of the seller. So the buyer had to establish fraud, by proving two things –
    • That the sellers were aware of the damp and its consequences.
    • That they deliberately concealed it with the intention to defraud.
Proving fraud – how relevant is the “property condition report”?

Fraud, said the Court, “is not lightly imputed [but] it may nevertheless be inferred when such inference is supported by the objective facts revealed by the evidence.” The following factors were central to the Court’s conclusion that both sellers had acted with fraudulent intent –

  • The sellers’ protestations that either they were unaware of the damp problems or had not intended to fraudulently conceal them found no favour with the Court on the facts – which included the extent and nature of the re-painting carried out.
  • The ex-wife’s claim to have been ignorant of the damp issues, despite the extent and nature of the “cosmetic repairs” she carried out, was rejected. As the Court put it: “At best for her, she remained willfully ignorant of the underlying cause of the issues in the paintwork; she could not honestly have believed that the core issue had been remediated.”
  • The ex-husband for his part admitted that he had known of damp issues in two rooms because of bubbling paint and a smell of damp, with the Court concluding that: “He appears to have taken no steps to ascertain how extensive or serious those problems were – but a willful abstention from establishing the true facts does not constitute a lack of knowledge.”
  • Perhaps most damningly of all, both the ex-husband and the ex-wife had signed the mandatory Property Condition Report (“defects disclosure form”), in which they specifically stated that there were no latent defects in the property, including “dampness in walls/ floors”.

The Court held that the buyer had proved fraud by both sellers and confirmed her award of R244,855 in damages for the repairs.

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: Why Do You Need an Occupancy Certificate Before You Buy?

By | Property

“…there is no obligation on the [seller] to obtain an occupancy certificate and to furnish it to the [buyers]” (Extract from judgment below)

Imagine this – you buy your dream home, pay for it, take transfer into your name, and move in. But then disaster strikes. The Municipality tells you no occupancy certificate was ever issued for the property and that you must vacate. Now.

Both buyers and sellers should take note of a recent High Court decision highlighting the importance to buyers of getting an occupation certificate from the seller before putting in any offer or insisting on a clause in the sale agreement requiring the seller to produce one before transfer.

What is an occupancy certificate and why is it vital to have one?

It’s confirmation by your local authority that the building complies with the approved building plans and that all other requirements have been met.

Without it, it is unlawful for anyone to occupy the building. You can be ordered to vacate, but that’s not all – other risks include your insurers declining any claims you make, municipal penalties for non-compliance, perhaps threats of a demolition order. You and your family could even be in physical danger if the non-compliance results in electrical hazards, fire risks, structural failure, or the like.

Although the municipality can “grant permission in writing to use the building before the issue of the certificate of occupancy”, that will be a temporary permission only, probably only for a short period and with stringent conditions.

The demolition threat and the court application
  • Having bought a property from the owner/builder’s deceased estate, the buyers took transfer and happily moved in.
  • To their horror, when a municipal building inspector was called in to inspect the building for defects, it came to light that although building plans had been approved 30 years ago, no occupancy certificate had ever been issued.
  • The municipality “suggested” that the buyers vacate immediately and threatened to demolish the building, citing a number of outstanding certificates – completion certificates for the structural and storm water, an electrical compliance certificate, a plumbers’ compliance certificate, a glazing certificate, a gas installation certificate, and a soil poisoning certificate.
  • The buyers demanded that the executor of the deceased estate obtain an occupancy certificate for them, and when she refused, they asked the High Court to order her to do so.
  • The buyers pointed out that, per a standard clause in their sale agreement, the seller was obliged to give them “vacant possession”. That, they argued, meant “lawful possession” requiring the seller to provide them with an occupancy certificate before transfer.
  • The seller (executor) replied that she was not bound by the sale or any other agreement to provide a certificate, that there is no general obligation on a seller to furnish a purchaser of an immovable property with an occupation certificate, that the buyers had been given vacant (“free and undisturbed”) possession, and that anyway the buyers as the new owners should now be the ones to apply for the certificate.
The seller wins, and a warning for buyers

The Court refused to order the seller to provide an occupancy certificate, finding that despite the fact that occupancy of the house was unlawful without the certificate, the buyers had “…clearly received vacant possession. [They] received what they purchased. They had no concerns about what they were purchasing and there is no indication in the papers that they enquired about the occupancy certificate at the time of the sale or prior to taking transfer. They have alternatives available to them … and failed to explain why, as the owner of the property, they have not taken any of the steps available to them.”

In regard to the voetstoots (“sold as is” clause) the Court quoted from a Supreme Court of Appeal decision: “…the absence of the statutory approvals for building alterations, or the other authorisations that render the property compliant with prescribed building standards … does not render the property unfit for the purpose for which it was purchased.”

Perhaps the outcome would be different if a buyer is able to prove that the seller knew of the lack of an occupancy certificate and concealed that, or if a buyer sues for cancellation of the sale agreement or for damages. But that is speculation.

What is clear is this: The occupancy certificate is a vital document and as a buyer you should insist that the seller gives it to you before you make an offer, or that at least a term in the sale agreement obliges the seller to give it to you before transfer.

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 Sales: “Conditional Acceptance” of an Offer is Not Acceptance, It’s Rejection

By | Property
“The conditional acceptance of an offer amounts to rejection of same and not the conclusion of a contract, but may be a counter–offer.” (Extract from judgment below)

A good offer comes in for your property, so you accept it. But you’re not happy with a few of the terms, so before you sign you make a few changes to the offer. Maybe they are big changes, maybe they seem inconsequential.

Either way, you are now effectively negotiating, not accepting the offer. You have in fact just rejected it. Unless the buyer now accepts your amendments in writing (by initialing or counter-signing against your alterations), you almost certainly have no valid sale.

Thinking that you have a valid sale when you don’t is a common and easily-made mistake, and a recent High Court decision shows just how important it is for both seller and buyer to be aware of this danger.

The property auction, the counter-offer, and the commission claim
  • A property on auction attracted a top bid of R1.85m and after some haggling the buyer put in a second offer of R1.9m.
  • The seller accepted this second offer, but critically with amendments. The parties could not agree on these outstanding issues, with the result that the seller sold the property to another buyer without the auctioneers’ involvement.
  • At which stage the auctioneers sued the seller for commission, arguing that a sale had been concluded at R1.9m because the amendments to that offer were “not material” ones (in other words, they weren’t important, significant or essential terms). The terms in question related to who was to receive the agreed occupational interest and to the issue of a gas compliance certificate. Neither amendment, argued the auctioneers, was material to the sale.
  • The Court however disagreed, commenting that “In principle, anything more or less than an unqualified acceptance of the entire offer amounts to a counter-offer and constitutes a rejection of the original offer.” It accordingly dismissed the auctioneer’s claim for commission on the basis that the seller’s amendments were material and amounted to a counter-offer which the buyer had never accepted. In other words, no sale agreement had ever come into existence.
So, do you have a binding sale agreement?

If the amendments to the offer have been accepted and signed by both buyer and seller, no problem – the counter-offer has been accepted and you have a binding sale agreement.

Otherwise, as our courts have put it: “When parties conclude an agreement while there are outstanding issues requiring further negotiation, two possibilities would follow: no contract formed because the acceptance was conditional upon consensus, or a contract formed with an understanding that the outstanding issues would be negotiated at a later stage.” Deciding which is which means trying to deduce the parties’ intentions from their conduct and other circumstances – a grey and specialist area requiring specific legal advice.

Bottom line

Making a counter-offer can be an excellent tactic for negotiating towards agreement, but be very careful with the concept of “conditional acceptance”. It is actually not an acceptance at all but a rejection of the offer and could well be a counter-offer requiring acceptance by the other party in order for there to be a valid sale. Avoid all doubt by making sure everything is signed and counter-signed.

As always, ask us 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

Why Buyers Should Ask for Building Plans (and Why Sellers Should Supply Them)

By | Property

“No person shall without the prior approval in writing of the local authority in question, erect any building in respect of which plans and specifications are to be drawn and submitted in terms of this Act.” (National Building Regulations and Building Standards Act)

Here’s a nightmare scenario for a buyer – you move into your new dream home, and only then find out that your lovely little office/spare bedroom extension has no approved building plans. The municipality says the seller’s building works were unapproved and unlawful – you must demolish the extension.

How can you guard against that happening to you?

Planning permission is legally required before building

Firstly, local authority planning permission is a legal requirement before any building works, renovations or extensions can take place. You will need to check with your local municipality what its particular requirements are, and what “minor” works are exempt from this requirement in your area.

Without municipal permission, you have an unlawful structure on your hands – a recipe for disaster.

The problem for a buyer is that, once the transfer is through and you are the registered owner, it is to you as buyer that the municipality will look to obtain any outstanding building authorities and plans, to pay any penalties for non-compliance, and possibly even to demolish the unlawful structures.

The seller isn’t obliged to supply proof (and plans) to you, unless…

Your risk as buyer is that the seller is only obliged to supply proof of planning permission and approved plans to you if that is specifically required by the sale agreement. Ideally ask for plans before you even put your offer in, otherwise insist on a clear clause in the agreement requiring the seller to produce the plans before transfer. It’s the only way to avoid the risk of having to rectify unlawful structures.

Make sure it is clear that the seller (not you) must get and produce the plans

A 2023 High Court decision addressed a claim by buyers who had at the negotiation stage noticed newly erected buildings in respect of which they were advised that building plans were at the ‘approval stage’ with the municipality. Accordingly, the sale agreement provided that the sale was subject to approval of building plans by the municipality.

What the deed of sale did not specify was who had to get the plan approval – was it the buyer, or the seller?

The Court ultimately declared the seller responsible for obtaining the plans on the basis that by default only a landowner can apply for approval and plans, but that victory for the buyer came only after a hard-fought court battle – avoid all that delay, cost and dispute with an upfront clause clearly putting the obligation on the seller.

When you have the plans, check them against all structures

Plans in hand, check that all the buildings and structures actually on the property tie in with the municipal approvals and plans. It’s not uncommon to find plans are outdated or inaccurate. Sometimes regulations have changed, sometimes owners chance their luck or have just overlooked the need to keep plans updated as renovations and extensions take place. And whilst the municipality may accept “minor” deviations from plans, you should be sure of what is acceptable and what isn’t before you take transfer. First prize here of course is updated “as-built” plans showing the construction as it exists after completion – you’ll probably need them anyway if you do renovations down the line.

Sellers – why should you have the plans ready to offer them to the buyer?

The other side of the coin of course is that as a seller, even though you aren’t legally required to do so, it makes a lot of sense to have on hand copies of all building approvals and plans before you sell –

  • As a sales tactic you can now reassure prospective buyers that all structures are lawfully constructed.
  • You will avoid delay if the bank granting the buyer a mortgage bond decides it wants copies of plans as part of its approval process. That’s exactly what happened in the High Court case discussed above, delaying transfer substantially.
  • You will also be reassuring yourself that all necessary approvals and plans were in fact obtained at the time of construction. If it turns out for example that you or a previous owner inadvertently dropped the ball in that regard, a disaffected buyer will try to pin all the blame on you.  You might even be accused of fraudulently concealing a lack of plans – in which event the standard “voetstoots” (“as is”) clause won’t protect you. There’s no risk of any of that if you have the actual plans on hand from the start.
  • In any event the “Mandatory Disclosure Form” that you must attach to the sale agreement specifically requires you to certify that the necessary consents, permissions and permits were obtained for any additions/improvements etc. Attaching the actual approvals and plans is the best way to cover you in the event of any dispute down the line.

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

“Pay Extra for My Generator or I’ll Cut You Off During Loadshedding”. Can a Landlord Do That?

By | Property

Loadshedding continues to plague us and our businesses, and when tenants are connected during power cuts to their landlord’s alternative power source – such as a generator – it is essential for both parties to understand their respective rights.

Lights out for a shopping mall gym
  • An upmarket gym had relied for years on its shopping mall landlord’s generator to get through loadshedding, without having to pay extra for it.
  • “Out of the blue” the landlord demanded a monthly “diesel recovery levy”, and a dispute arose over whether it was entitled to do so or whether the cost was already covered by an existing “all-inclusive monthly fee for all expenses related to the lease of the premises”.
  • The parties agreed to refer that dispute to arbitration but then the landlord decided to flex its muscles by cutting off the gym’s connection to the generator.
  • The gym obtained an urgent reconnection order from the High Court. Although that is only a temporary solution for the tenant (it must still win the arbitration or pay the extra levy), the Court’s decision is a significant one in that it has confirmed the principle that access to an alternative source of power does fall under the protection of the “spoliation” principle.
“Spoliation” – no one can take the law into their own hands

No one can go the self-help route and take the law into their own hands by removing property from someone else without a court order. Anyone deprived of possession like that can urgently obtain a “spoliation” order forcing an immediate return to it of the property.

At this stage, the court won’t be interested in who has the legal right to the property – all it will look at is whether –

  1. The possessor was in “peaceful and undisturbed possession” and
  2. It was unlawfully deprived of that possession.

That’s straightforward with possession of a “corporeal” thing like a car, or a house, or a parrot. But when it comes to an “incorporeal” like access to an alternative energy source, things become more complicated. Now you must prove that you had “quasi-possession” of the power supply.

As complicated as that may sound, what’s important on a practical level for both landlords and tenants is that this judgment has confirmed in principle that access to an alternative power supply such as a generator falls under the law’s protection as much as possession of a corporeal “thing”.

The bottom line

Whether or not a tenant has an enforceable right to its landlord’s alternative power supply – and if so whether it must pay extra for it – will depend on the wording of the lease.

But the landlord cannot just cut off an existing power supply without following legal process.

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

Can You Use Land Use Laws to Close Down a Neighbour’s Business?

By | Property

“A bad neighbour is as great a calamity as a good one is a great advantage”. (Hesiod, poet of Ancient Greece)

Your neighbour’s business is driving you to distraction. Perhaps it’s loud all-night music, or an invasion of your hard-earned privacy, or illegal parking in your driveway, but regardless of what the nuisance factor is, it really is untenable. You’ve tried everything you can think of to sort it out amicably – polite requests, offers of mediation, compromise proposals. Nothing has worked, and the nightmare continues.

So, it’s off to court you go. Legal action is never first prize when it comes to long-term relationships with neighbours, but if they leave you with no other alternative, take heart from two recent High Court cases. In both, businesses being operated by neighbours in contravention of land use laws were penalised for doing so.

Noisy nightclubs shut down … with some harsh words for the landlord
  • A university residence was subjected to noise from nearby nightclubs, with students complaining that loud music prevented them from sleeping and studying until the early hours of the morning.
  • The establishments were on property zoned “Use 6: Business 1″ which allowed for the use of the premises as a “Place of Refreshment”, such as a café or bar. But these particular businesses fell into the municipality’s definition of “nightclub”, which put them into the “Place of Amusement” category – for which they were not zoned.
  • They argued that their “tavern” liquor licences obliged them to provide entertainment and therefore allowed them a secondary use of the premises as a “Place of Amusement”. The Court disagreed: “the terms of the liquor licence can never override the provisions of the Town Planning Scheme”.
  • The premises were accordingly being used outside of their land use rights and were prohibited from continuing to do so, i.e. the nightclubs must close down. If they convert to just being “pubs” they are prohibited from making any noise in excess of the noise levels permitted by the land use rights of the premises.
  • Finally, the Court had a harsh word or two for the landlord of the premises in question, which had, it said, remained “supine” rather than enforcing a clause in the lease prohibiting the tenants from creating any nuisance to neighbours. The landlord was accordingly ordered to take “all reasonable measures” to stop its tenants from making a noise nuisance, plus it must pay a share of the costs. That’s a clear warning to all landlords that they risk liability for their tenants’ wrongdoing.
Approvals for a seaside guest house set aside
  • The owner of a seaside property realised that not only were her neighbours running a seven-room guest house without municipal permission, but that they planned to go double story with it. “There”, she thought, “goes my privacy”.
  • She also feared the negative impact of a guest house on the general character of the area, on traffic volumes and on stormwater management, particularly in light of the guest house’s plan to increase its size to eight suites with parking for sixteen cars.
  • The guest house owners had applied to the local authority for a permanent departure from the zoning scheme conditions (their house being zoned “single residential”) and for the removal of restrictive conditions attached to the title deed. The municipality refused to remove the title deed restrictions but granted a conditional approval for the operation of a guest house.
  • The homeowner was having none of that and took the matter to the High Court, which found that the local town planning scheme in force at the time (before a new scheme was adopted) did not empower the municipality to grant approval for building or running a guest house on the property. The Court set aside the municipal approvals.
  • Both the development and the operation of a guest house on the neighbour’s property were thus declared unlawful. The neighbour, if it still wants to operate the guest house, must now make new applications to the municipality under the “new” town planning scheme for the area. That’s Round 1 to the homeowner, and an expensive lesson for the neighbour.
Before you buy a property…

Whether you plan to run a business from the property you are about to buy or are worried that one of your new neighbours might do so in the future, check what zoning and land use restrictions apply to your respective properties before you put pen to paper!

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

Festive Season Sellers: Start Getting Your Compliance Certificates Ready

By | Property

“If you don’t like where you are, move. You are not a tree” (Jim Rohn)

It’s that time of year again – summer sunshine, happy holidaymakers in festive mode, and an upsurge in property sales.

Whether seller or buyer, be aware of the various compliance certificates that may be required for your transfer to go through smoothly. These certificates ensure that the property is up to standard in terms of safety, health and building regulations, and can also help prevent any unexpected costs or legal issues from arising later on.

In most cases the responsibility for obtaining these certificates lies with the owner of the property, and failure to do so can result in delays in the transfer process, or even legal action. Also, if remedial work is required, this could take time and delay the whole transfer process. For these reasons, it’s a good idea to obtain the necessary clearance certificates as early as possible (just keep an eye on how long each is valid for). 

So, sellers – here’s a checklist for you of the certificates of compliance you might (or might not) need –

  • Electrical: One of the key certificates required for property transfer is the Electrical Compliance Certificate. This confirms that the electrical installations (distribution boards, wiring etc) in the property meet safety standards and other requirements, and that any necessary repairs or upgrades have been carried out. It does not cover actual appliances like stoves, geysers and the like. The certificate must be issued by a registered electrical contractor, and you cannot agree with the buyer to waive this requirement.
  • Electric Fence System: Additional to and separate from the electrical certificate discussed above, this applies if you have an electric fence system installed (or modified) after 1 October 2012.  It can be transferred to the buyer. Only a registered electric fence system installer can issue it. Again. It can’t be waived.
  • Gas: A Gas Compliance Certificate is only required if you have gas appliances installed and confirms that the installations meet safety standards and are in good working order. A registered professional must issue it, and again it cannot be waived.
  • Beetle Infestation: Required by banks and perhaps insurers in some (mostly coastal) areas of the country, this certificate confirms that the accessible wood of permanent structures is free of wood destroying insects. You can agree with the buyer on whether or not a certificate is necessary, and if so, who must obtain and pay for it. Usually valid for 3 to 6 months.
  • Water Installation: Currently only required by the City of Cape Town and aimed at preventing illegal water connections and stormwater ingress, this certificate confirms that the water system installations comply with the City’s byelaws. It does not confirm that the whole plumbing system is in order even though it may be referred to as a “plumbing certificate”. Only a qualified and registered plumber can issue it. Again, you cannot agree with the buyer to waive this.

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