CPA and Long Term Leases

THE CONSUMER PROTECTION ACT AND LONG TERM LEASES

from MF ATTORNEYS INC

As we get closer to the end of the year we hear estate agents say increasingly that rentals are becoming the preferred choice. Thus, we decided to have a look at what the Consumer Protection Act 68 of 2008, says in this regard.

The Act provides that fixed-term consumer agreements must not exceed a certain maximum period. The current set of draft regulations prescribe this maximum period as a period of 24 months.

Section 14, which deals with expiry and renewal of fixed term agreements, confirms that it applies only to individuals and not juristic persons, i.e. companies or entities. There is currently some uncertainty as to whether an individual landlord who, lets premises to another, in addition to his main business, that is not in the course and scope of business,  falls within the definition of ‘service provider’ or 'supplier’  in order for the Act to apply.  It appears that such transactions do fall under the provisions of the CPA if the activity occurs on a continuous basis, and is not once-off as not to constitute a constant activity.

Debt Counseling versus Sequestration

Our attorneys regularly update us on the latest legal matters.  Here is some information that we believe is valuable and informative.  This table outlines the differences between debt counseling and  sequestration.  Due to the newer legislation around debt counseling, it is currently a far more viable option than sequestration.

Debt Counseling	Sequestration
Regulated by the National Credit Act 34 of 2008	Regulated by the Insolvency Act 24 of 1936
Protection procedure – meant to prevent you from losing your assets whilst paying debt	Procedure that liquidates all your assets to pay the debt
Protects debtor (you)	Protects creditors (the people that you owe)
Creditors cannot harass you for funds once you are under debt counseling	Creditors can and will make claims against your estate once insolvency proceedings are entered
Credit providers receive monthly payment in order to pay off debt	Credit providers receive funds if assets are sold and if sufficient proceeds are accumulated from the sale of assets
Consumer may not incur further debt whilst  under debt counseling unless it is shown to be affordable	Insolvent will we unable to incur debt or obtain credit for a period of 10-15 years after obtaining the court order.
Does not cause an actual black listing on your credit report, merely a flag note	Will cause a blacklisting which will remain on the credit report for a period of 15 years
Cheaper procedure and fees are capped and Regulated by the National Credit Regulator	Costly procedure as it is involves litigation

For further information in this regard, please contact Allison.
These FastFacts are distributed as a matter of courtesy to enlighten all our valued clients of recent and interesting developments in the world of Law by MF ATTORNEYS.

Keep your eyes open...

Earlier this week we published an article aimed at equipping you to make sound and wise decisions when signing an Offer to Purchase.  With such an important contract in hand, you need to ensure that your signature binds you to an agreement that is reasonable and protects both you and the other party.

There are many things to take into account and we encourage you to take your time to read the contract in its entirety before signing it.

To help you know what to look out for – here are some more prudent points:

1. Faults, renovations and defects:  the days of buying ‘voetstoets’ – what you see is what you get – are now in the past (Since the effect of the Consumer Protection Act, April 2011).  If you are buying through an agent or developer, the seller needs to state all and any faults, renovations and defects of the property.  If they agree to fix these, then that needs to be stated in the Offer to Purchase as well as the date by which the jobs should be completed.  Without a deadline, if they are showing intent to fix the problems, you will have a hard time tying them down to a completion date.  If you are able to, taking photographs of the areas in question will help you ascertain if they have been sorted out properly.

Going in with eyes wide open

Contracts can be daunting – especially if you don’t deal with them in your normal course of work.  Signing an Offer to Purchase is a complex agreement that has many facets to protect both the buyer and the seller.  At Rivigan Property Group it’s our job to know these contracts and know how to communicate them to our clients in a way that is clear, honest - and in their best interests.  Many people run into exciting purchases with their eyes wide shut – hoping for the best.  Unfortunately, if you’re not going to read and understand the contract, you may encounter severe problems later on.
 
Before even getting to the point of signing an Offer to Purchase, we strongly advise that your finances and pre-approved bond details are organised and ready.  It is essential that your financial position be as stable as possible, should it change after signing the contract and if it was signed in good faith, it will not be a reasonable and legal consideration to renege on the contract.

Once you get to the point where you have checked out the property, or the developer, and are happy to sign an Offer to Purchase you are well on your way to a smooth and beneficial transaction.  A signed offer constitutes a Deed of Sale; it sets the precedent for all further legalities around the ownership of the property so it’s important to know all the details.

Here are the first five considerations to take note of in your Offer to Purchase:

Semigration - what's the deal?

 Whilst the term ‘semigration’ may be relatively new, the process is centuries old.  It refers to the translocation of people from one region to another region within the same country.  Emigration is one of the buzzwords in most social circles in our country as we struggle to regain ground within the context of economic and political turbulence.

However, for those who have chosen to stay in this beautiful country and tap into the potential that it offers, semigration is a very likely possibility. 

Reasons for relocation may include factors of security and crime, traffic and infrastructure or family and friends, but according to a study done by FNB the primary driver for semigration is work and financial opportunities. 

"Approximately 7% of all sellers sell in order to relocate within South Africa."

This means that most semigration is in the direction of the City of Gold – Johannesburg, the number one in business opportunities.  Despite the allure of the ocean, mountains and lifestyle, Cape Town falls far behind as number two, with KZN following closely behind in third place.

With this reality, you may very well find yourself needing to move to an area that you’ve never been to and have no idea what questions to ask and what to consider.  The Rivigan Property Group is the expert in the Krugersdorp/Ruimsig area and is perfectly situated to help you in finding a home to purchase or rent if you are planning to relocate.

We have a strict code of excellence that we adhere to in every deal and are focused on achieving the best outcome for our clients.  Contact us today for more information.

Storm Damage!

Our JHB offices will be temporarily closed due to excessive storm damage caused by the heavy wind and rain that we experienced over this past weekend (28 October).


Our Telkom landlines will be intermittent, all our computers are being dried and serviced, the printers are damaged and the general office is flooded after many of the roof sheets were blown clean off.  We will be attempting to dry everything as quickly as possible and will perform a test-start late on Monday evening.

All our agents will be available on their cellphones, so please don't hesitate to contact us should you need anything.

For any urgent matters, my cell number is 082 491 1621 and Stirling is available on 083 6555 005.

Thank you for your support and patience, we apologise for any inconvenience!

Kind regards
Allison
(send me an email)

The seller is the seller...

...not the agent.

At Rivigan Property Group, we believe that communicating openly and honestly with our clients is the only way to conduct our business and build long-term relationships.

It is equally important for our clients who are selling property to communicate with us, as effectively and extensively as possible, throughout the sale process so that we can deliver the best service when securing a mutually beneficial deal for both the seller and the buyer.

Although we act as an agent to help and facilitate sales, we are not the actual seller.  The new Consumer Protection Act (CPA) that came into effect in April 2011 has tighter restrictions on real estate sales and calls the seller to higher levels of accountability when engaging in the sale process.

One of our biggest concerns has been in the disclosure of defects.  As an agent, it is impossible for us to know all the defects of a property since we do not live in it and are not privy to all of the plumbing, structural and aesthetic features.  We have seen more than one sale fall through because of defects that were not listed on the defect sheet and encourage our clients to disclose every defect that they are aware of.

We are the experts in selling and want our clients to have the best experience when selling and buying property, and, build into a relationship that will have long-term benefits.

For more information on the revised CPA and how it will affect you, contact us today and we’ll make sure that your questions are answered.  Choose the Rivigan Property Group, it’s the smart choice.

CREDIT REPORTS

Understanding your credit report in more detail

from MF ATTORNEYS INC

 

You can obtain one free credit report from each credit bureau every 12 months. We would like to explain to you the information kept on a credit report and how to check whether there is a blacklisting. We will deal with the main sections in a credit report and also explain the listings that can be found and how they can be dealt with.

1. Personal information
This section sets out full names, identity number, residential address, postal address and contact numbers. This section usually also sets out past addresses and past employers.

2. Credit score
This section sets out what the applicant’s personal score is based on the information held on the credit report at that moment in time. This score can range from 0-1000. A score between 1- 649 is considered below average. A score between 650 -749 is considered average and a score between 750-999 is good. It sometimes happens that there is no score on a report. This occurs either because the person is not credit active; alternatively they are under debt review or administration.

The effect of debt

Debt can be used most efficiently in order to grow an investment portfolio and purchase items that we need before we have acquired the full purchase amount.  This is only possible, however, if debt is managed properly and wisely.  Debt can have positive effects, but it can also have severely negative effects.

There are two types of debt: good and bad.  Good debt, quite simply put, is manageable and sustainable.  When you have what you need and are staying on top of your monthly repayments, you are in a good credit position, i.e.  you manage your debt well.  This is a common situation for many people who buy houses, cars or perhaps a few other expensive items, for which they can afford the repayments.  Affordability of debt refers to monthly repayments that are due in order to pay back the amount that you borrowed.

Bad debt is the opposite: you over-extend yourself and are unable to maintain repayments to your creditors.  This means that the debt that you have incurred is unaffordable.  This is typically caused by bad spending habits when people buy too much too soon, but it can also happen in the case of a hike in the interest rate or the tragic and often unavoidable loss of employment.  In order to manage your debt situation you need to manage your lifestyle.  There is an old idiom “cut your coat according to your cloth” - a basic budgeting principle to ensure that your costs do not exceed your income.

BONDS: How to get one smoothly...

You’ve saved for a deposit, you’ve cut clippings and searched the top websites to know what you want in your dream house.  Now, you need to get a bond.  Statistics show that nearly nine out of ten buyers* finance their homes with a bond, which means that virtually all buyers require home loans.

The good news is that obtaining a loan is not that difficult – but getting the best loan for you, that’s the potentially shaky part.

In recent years, good bonds have been harder to get as banks have tightened the loops that you need to jump through.  But getting a bond doesn’t need to be a difficult process – not only are banks once again offering 100% loans, but we can also guide you with a few tips to being a smooth operator when it comes to applying for a home loan.

Can I afford it?
One of the best reasons for acquiring a pre-approved loan is to find out which market you are able to buy in.  Although house-hunting can be exciting, it’s made far more enjoyable when you know that the house that you like is actually in your price-range and that you have a pre-approved bond, with all credit checks done, waiting for you.

You also need to consider that there are upfront costs of transfer and registration fees, which usually have to be paid outside of the bond.   Monthly repayment affordability is commonly calculated at around 30% of your gross income, but there are further factors that are considered that will determine the size of the bond that will be granted.

Rental Management – the key to a good investment.

Property will always be an investment option – sometimes it’s up and sometimes it’s down, either way, the long-term investment potential is dependent on a few factors:

• the securing of a good investment
• the placement of a quality tenant
• the sustainable management of that property

When buying to rent, one must always remember that no matter how good an investment the purchase was, if it isn’t managed well, it will never be a good investment.

TPN recently published a report that showed a sustained consistency in rental payments over the last four financial quarters (2010-2011).  This is good news for owners as it means that, although the first quarter is typified by an increase in non-payments on rent, the percentage of good standing tenants (81%) remained the same from the second quarter 2010 through to the end of 2011’s first quarter.

Make the smart choice

When selling your home, there are many ways to go about it, but there are measures that one can take in order to ensure that you get the best deal; right from price through to overall experience.  As industry leaders in our area, we are confident that we can help you in this. 

Here’s how:

• We will help you prepare your home for showing
• Determine the right selling price to ensure that the home sells in the shortest time and for the best price
• Expose your home to potential buyers
• Qualify and screen buyers before exposing your home to them
• Help people make decisions by providing data and the opportunity to make comparisons
• Negotiate with professional integrity
• Arrange financing once the documentation has been signed, in order to speed up and not hinder the sales process
• Provide information regarding the area to out-of-town buyers
• Prove a track-record of sales transactions and marketing ability
• Make use of company's reputation to attract buyers
• Give feedback to you throughout the mandate period (click here to find out about sole mandates)
• Follow-up every potential buyer until we conclude a satisfactory agreement

You will find that too many estate agents offer tired and cliche benefits of using their services and then wonder why they were unsuccessful in securing the mandate.  We elevate ourselves above our competition to earn a sole mandate on the strength of promises fulfilled.  Rivigan Property Group is the smarter choice.

Buying to rent – what’s the best category?

TPN is a registered credit bureau that conducts ongoing research into consumer patterns and behaviours regarding debt repayment.  Rivigan Property Group works closely with this information in order to give the best advice to their clients and stay in touch with market trends.  

When considering the purchase of a property as a residential rental investment, the following information is extremely useful:

• The rental bracket of R3000 – R7000/m holds the best performance for rental payment with 84% of tenants in good standing
• The next rental bracket is R7000 – R12000/m with a performance of 82%
• Rentals for under R3000 and over R12000/m have the lowest performance at around 74.5% - almost 10% lower!

(figures at June 2011)

You need to plan and research your options in order to make the best property investment, so evaluate the long-term return of a property in a strong-performing market bracket.  The current trends in rent payment (as shown above) are a valuable guide to making this decision and will help you make a wise choice in property, as well as in your managing agent.

When dealing with a reputable and trusted agency, you are on the right track to sustaining a viable and profitable investment in your property.  If you want to buy a property to rent, let our agents know so that we can advise you accordingly.  Make the smart choice, choose Rivigan Property Group.

SOLD! Now what?

Congratulations! You have a happy buyer, but the process is far from over!  We want you to be fully ready and prepared for the steps that are common to every sale to make sure that you have no surprises.

Selling your house is a stressful process.  We work to reduce that stress by communicating with our clients throughout the deal because we value long-term relationships and want to invest in you, not only now but also for the future.  We strive to communicate as often and openly as possible, without compromise.  Rivigan Property Group have staff employed for the sole purpose of managing all the paperwork and dealing with the legal beagles so that you can relax!  

Once an offer to purchase is signed, the process continues as follows:

• You will receive a copy of the sales agreement from your agent
• Your agent sends another copy and instruction to the conveyance attorney on your behalf
• Your agent assists the buyer in obtaining the necessary finance (if applicable)
• Th bank will inspect the property for valuation
• Once your bond is granted the bank instructs bond attorneys to proceed with registration of the sale
• Your agent will assist with electrical wiring and borer beetle inspections, and certificates where applicable
• The conveyance attorney then requests title deeds and prepares documents for signature by both parties
• Your agent will ensure that the buyer's transfer costs have been placed with the conveyance attorney
• The conveyance attorney applies for cancellation requirements of your existing bond and transfer duty receipt from the deeds office
• The conveyance attorney applies for rate/levy clearance certificates from municipality or managing agents
• The conveyance attorney will request a guarantee from the bond registration attorney
• Finally, the conveyance attorney lodges all necessary documentation with the deeds office
• The sale will be registered into the buyer's name approximately 7 - 10 days after lodgement has taken place
• The conveyance attorney pays out the nett proceeds of sale to you

Phew, a process that is designed to ensure that you receive optimal service and the best deal for your home.  Make the smart choice and do it right the first time with the Rivigan Property Group.

Does the new CPA affect me?

You’ve heard all the hype around the new Consumer Protection Act (CPA), but how will it affect you when it comes to buying or selling a property?

Patrick Bracher, financial services lawyer and senior director in the commercial department at Norton Rose South Africa (formerly DeneysReitz Attorneys), outlines just who is protected:

“The ‘consumer’ as defined by the Act includes all companies with a turnover or asset base of R2 million at the time of the transaction, as well as all individuals.” (From thinksales)

What this means is that the act protects the end-user from being duped by purchasing defective property – even if bought through an agent or reseller.  This means that much of the responsibility lies in the hands of the seller and is not the sole responsibility of the agent.

As Real Estate agents, we value our clients’ needs to sell or to buy and want to make sure that all transactions are smooth, efficient and beneficial to the parties concerned.  Here are two main points in the new CPA legislation to be aware of:

Cooling-off period
A five-day cooling-off period is now available to the buyer, from the date of transfer.  This only applies to property that is bought through direct marketing and is not applicable to show houses and conventional print advertising (this does not included fliers that are delivered to mailboxes).  It is important to note that the cooling-off period is from the date of transfer, and not from the date of signature.  This process can take between three to six months; a delay of this length can be seriously problematic for all parties concerned if cancellation does occur during the cooling off period.

“Voetstoots” is no longer valid
If the sale is in the ordinary course of business: ie. sold by someone who regularly sells property, the CPA will prevent the voetstoots sale of property.  Developers, speculators and investors with property portfolios can no longer rely on this Roman Dutch Law clause to exclude their liability from defects. 

It is crucial that the seller do all that they can to eliminate any potential issues that might arise from failure to disclose defects of their sold property.  At Rivigan Property Group, we want to try and protect all of our clients – both sellers and buyers.  Contact us today and let us help you make the best purchase or sale.

Securing the Mandate

If you’ve ever sold property through an agent, or agency, you will probably know that sellers are often warned not to give sole mandates to agents, but in fact, sole mandates reduce the chance of obstacles and problems in an already-complex transaction.

A sole mandate is a mutually beneficial contract – to both the seller and the agent. If a seller is not happy with an agent's performance during the marketing of their property, the seller can report the agent to the agency Principal. This brings a high level of accountability into the relationship that keeps things both professional and ethically sound.