Rivigan Group: Property Ι Real Estate Ι Investments: 2012

HOME OF HOPE

We recently had the special privilege to make a donation to a local home that performs an amazing, generous and much needed service to our Tableview community. The Home of Hope establishment aims to protect, educate and support abandoned, abused, neglected and HIV infected children. They are a registered Child Protection Organization with the goal to break the cycle of abuse.

They are a light on the hill that hopes to teach our children that if they live with security they learn to have faith. If children live with approval they learn to have confidence and to like themselves. If children live with acceptance and friendship they learn to find love in the world.

At Home of Hope they are constantly trying to create and reinforce a positive environment so that our children can learn these invaluable lessons and experience the love they so desperately deserve.

Their mission is:

Care for and support children in community based foster homes.
Raise awareness through information and education of the plights and needs of children.
Provide special needs education for FASD and neurologically challenged children who are not coping in conventional schools.
Create an environment where children can be nurtured holistically to develop to their full God given potential.
Partner and network with relevant stakeholders, other organizations, businesses and individuals to be more effective in creating a brighter future for these children and families in need.
Cultivate a shared responsibility with relevant stakeholders and the community towards the continually changing socio-economic problems which affect children.
Define the specific needs of each community, and ensure the correct application and division of supplies to enrich and assist that community in achieving their own goals (Robin Hood Principle).
Continue to build a credible and sustainable support operation through transparency, honesty and accountability, within a framework of Christian ethics and principles.

Not only do they support their own children and foster homes, but they also pass on surplus donations to other NGO's and households in poverty pockets. If you would like to support them in any way, here's their wishlist. You can also sponsor a child, volunteer or get involved in their buddy system.

CC PROPERTY HANDED OVER TO STATE

ANNUAL RETURNS NOT FILED, CC DE-REGISTERED AND PROPERTY GOES TO THE STATE

Outstanding paperwork can carry hefty consequences! STBB recently released this case summary...

The case summary pertains to: ABSA Bank Ltd v Companies and Intellectual Property Commission of South Africa and Others, ABSA Bank Ltd v Voigro Investment 19 CC (8250/12, 6601/2012) [2012] ZAWCHC 182 (14 November 2012)

Both the old and the new Companies Acts, read with the Close Corporation Act, provide for the deregistration of corporations that fail to file annual returns. One consequence is that a CC’s assets, including its immovable property, become bona vacantia and vested in the state.

However, unlike before, there is no express provision for the reinstatement of a deregistered company by way of an application to Court. The holder of the bond over such property will need to apply to the Commission and provide the necessary CC’s outstanding information before reinstatement can be achieved.

The full Judgment may be viewed here.

FACTS
Absa obtained default judgment against Voigro Investments 19 CC (‘the CC’) in respect of a mortgage debt, and, on 13 December 2011, caused the mortgaged property to be attached in execution.

SIGNING INTO AN OWNERS ASSOCIATION?

AGREEING TO BECOME A MEMBER OF THE OWNERS ASSOCIATION HAS CONSEQUENCES

In a recent case summary compiled by STBB, a purchaser was not happy to pay the same levies as everyone else due to the benefits that he felt he was not receiving. It’s an interesting read and holds fair warning to those about to purchase within a membership of an owners association.

The case is: Kingsmead Office Park Owners Association v Shasri Investments CC [2012] JOL 29586 (KZD)

Where a purchaser agrees in a sale agreement to be bound to the provisions of an owners association, he cannot later on refuse to pay levies merely because his property receives less benefit from the communal benefits (such as fencing and garden areas) than other owners. This is because he is contractually bound to comply with the association's rules and regulations.

Are you buying or selling a property with electric fencing?

We have received important news from our conveyance attorneys regarding the implications and requirements when purchasing a house with an electrical fence.

RUNNING FOR FUN!

running with rivigan and the king’s school westrand

At the end of August (25th) we were proud to be a sponsor of the Discovery KSWR’s Fun Run. The event was listed on sa-active.com and drew in a great crowd! It was a stunning day at the school and all the entrants and supporters had a fantastic time.

As one of the contributors to the event, our Rivigan Group Team had a refreshments stand and were able to congratulate the noble efforts of every runner. An added bonus was a well-earned medal that was issued to each runner upon completion – a total of 877!

Two courses, that meandered through the streets of Ruimsig, took the runners and spectators passed some of the more picturesque areas of JHB and drew great community support from the local residents who popped their heads out to cheer and encourage.

The grand prize of R800 went to a very deserving E Malepo (Diepsloot), breaking the tape at a magnificent 31m24s, almost a full minute ahead of second-place W Mutai. Thank you to all our team and friends who made this day such an awesome memory!

ARE YOU A DIRECTOR?

HOW DOES THE NEW COMPANIES ACT EFFECT COMPANY DIRECTORS?

Many of our clients own their own businesses and are affected by the changes that were introduced with the new Companies Act, 71 of 2008. In particular, those relating to the appointment, termination and removal of directors. In a recent notification from our attorneys, Smith Tabata Buchanan Boyes, they gave a great summary of these changes and we thought they’d be of use!

What exactly is happening in our economy at the moment? With the drastic slides in fuel prices, one tends to think that everything is dropping in the wrong direction. However, some good news came a fortnight ago when The SA Reserve Bank left the repo rate unchanged at 5.5%, governor Gill Marcus announced at the end of September. In addition to this, the prime rate will stay at 8.5%.

The word from economists is that they expected the South African Reserve Bank to be cautious and not to trim interest rates further as a result of market volatility prevailing partly on the back of the Marikana crisis.

In its previous meeting, the MPC rang a surprise 0.5 percentage point interest cut, which brought much needed relief to many economic actors, mainly heavily indebted consumers.

CC, COMPANY OR TRUST - THAT IS THE QUESTION

what's the best way to buy a property?

One of our attorney’s recently shared with us that they are receiving a significant increase in questions around property taxes. The biggest question seems to be; “Should I buy my property as a CC, Company or as a Trust”.

As a standard suggestion, we always advise our clients to run these sorts of questions by their tax advisors as there are often many qualifications and legal loop holes that apply to different setups, but here is a general overview from one of our attorneys – hope it helps!

This is an interesting judgment in which the Court found in favour of owners of a sectional title scheme, inexperienced as they may be in managing a body corporate, rather than extending the appointment of an inefficient Administrator.

This, despite the fact that the scheme's finances were still in an unsatisfactory state. The Court confirmed that the Legislature prefers self administration in schemes and it should exercise its discretion accordingly, where circumstances allow.

INTRODUCTION TO THE SUMMARY OF THIS CASE

The plaintiff was appointed as an Administrator of a sectional title scheme, in terms of the provisions of section 46 of the Sectional Titles Act 95 of 1986 (“the STA”). The application was, at the time, brought by the local municipality because of the high amount of the outstanding rates and taxes due to it.

NO FFC, NO GAIN.

make sure you aren't losing out

Are you an estate agent or receiving part commission for assisting an agent? If so, do you have a valid fidelity fund certificate (FFC)? In 2010, IEASA released an article informing all agents of the need to have and FFC and we recently received this update from one of our legal advisors.

This judgment deals with a claim for commission by an estate agent who was not in possession of a valid fidelity fund certificate at any time, although employed by an estate agency. The Court a quo (the court from which an appeal has been taken) held that the prohibition against claiming commission in such circumstances was not relevant in the relationship between the agent and the agency, only where such agent sought to claim commission from a member of the public. The present Court disagreed.

SUMMARY INTRODUCTION

Venter was employed by Warren Jack Property Brokers (“the estate agency”) and performed work as an estate agent, although he never was in possession of a valid Fidelity Fund Certificate. His contract of employment provided that he would be entitled to 50% of all commission received by the estate agency in respect of transactions he successfully facilitated on behalf of the agency.

from our legal team

A 'rouwkoop' clause included in a sale agreement provides for the purchaser to pay a deposit to the seller which may be retained by the seller should the purchaser decide to withdraw from the agreement.

This does not constitute breach of the agreement, but is a mechanism whereby the purchaser legally buys his way out of the agreement.

be subject to both transfer duty and vat?

In a recent article from our lawyers, the answer is a resounding “NO!”

Here’s why:
The Seller determines whether the transaction will attract VAT or transfer duty and VAT takes precedence over transfer duty.

LANDLORD & TENANT

electricity blues

It is common practice, in lease agreements, that the Landlord and Tenant contractually arrange which party will be liable for the costs of electrical consumption on the leased premises.

However, this arrangement applies between the parties only: the 2010 Electricity Supply By-Law of the City of Cape Town municipality regulates the relationship between the “consumer” of the electrical supply and the municipality, as supplier thereof.

Read the details of the By-Law here.

Landlords, make sure you are not caught out of pocket as a result of your Tenant's failure to pay the municipality for the electrical supply: Contact us at allison@riviganpg.co.za to review your agreement where necessary.

OBLIGATIONS OF LANDLORD AND TENANT

This article covers the rights and obligations of landlords and tenants, including any effects from the Consumer Protection Act (CPA).

Both parties have rights and obligations in terms of common law as well as statutes. Common law is law which has developed over time through various cases presented in courts; in essence it is law made by the courts of this country.

The following are some of a landlord’s rights and obligations:

Landlord must not discriminate against prospective tenants
Landlord may charge a reasonable rent amount
A landlord does not have to supply a written lease unless requested so by a tenant.
A landlord must place deposits paid by the tenant in an interest bearing bank account. Statements must be provided to the tenant where requested.
Landlords have a right to regular payment of rent. If not the landlord has legal remedies which can be used. This off course ties in the tenant’s duty to make payment on time.
A landlord must allow the tenants privacy in the property and allow them undisturbed possession and enjoyment.
A landlord is responsible to carry out repairs to the property when problems have been pointed out by the tenant.
A landlord may inspect the property but must give the tenant reasonable notice.

MARITAL REGIMES AND PROPERTY

<MF LEGAL>

Under South African law there are various ways in which a marriage can be governed. This includes particular reference in the conveyance of a property as a marital regime may determine who the owner of the property actually is.

Where parties are married in community of property the parties own the property jointly. This is also the case where a person owns a property prior to getting married and thereafter marries in community of property. In this instance the new spouse’s name will not be on the title deed but by virtue of the marital regime will still own half. Where parties wish, their new marital status can be endorsed on the title deed to show this, however, this is not a necessity to prove joint ownership in this circumstance.

Where death occurs one spouse may acquire the entire property, meaning that the surviving spouse will retain their 50% of the property and the deceased’s share could be bequeathed to them in terms of a will. On divorce, however, each party will own 50% of the property, unless a court directs otherwise.

With marriages out of community of property it is important to note that there are two ways in which a person can marry out of community of property, that is, either with accrual or without accrual. A without accrual scenario occurs where parties have an ante-nuptial contract and state that each person’s assets remain that person’s own, irrespective of what happens in a marriage. This is probably the safest way to keep a property.

cater for a delay | organize in advance

<MF LEGAL>

An increasing amount of our sales are for clients who are moving overseas with more people who have moved abroad, or are in the process of, are selling their properties in South Africa. In many instances the parties involved in the transfer process, i.e the sellers, the purchasers and agents, are unaware of the challenges and reasonable delay that may be caused where the sellers need to sign transfer documents when they have already left the country.
Rule 63 of the High Court Rules states that:

Seller/s must

sign the documents abroad in the presence of one of the following officials. (see below)
and The official will confirm its status and attach its seal to the documents.

WHO CAN AUTHENTICATE DOCUMENTS SIGNED OVERSEAS?

WHAT IS A TRANSFER BY ENDORSEMENT?

<MF LEGAL>

Recently, on our blog, we looked at transfer duty exemptions. One of these exemptions refers to the condition where a spouse, married in community of property, gets divorced and receives the joint property as part of the settlement.

REQUIREMENTS FOR A SECTION 45BIS(1)(A) (DEEDS REGISTRIES ACT) TRANSFER:

Parties must be married in community of property
One party must receive the entire property on divorce from the other spouse in terms of a court order
Where the property is bonded, the acquiring party must qualify to carry the bond on their own (naturally this last requirement falls away where the house has been paid in full)

WHY SHOULD I KNOW ABOUT THIS?
This type of transfer (transfer by endorsement) is done in order to speed up the process of transfer of property between parties in the divorce process. The one spouse obtains full ownership of the house and the procedure should be financially feasible. Please note that an ordinary transfer in these instances may be done, however there are higher fees, as a normal transfer will attract transfer duty.

WHAT DO THEY MEAN FOR YOU, THE OWNER?

<MF LEGAL>

Owning a home is a wonderful privelege, but there are times when it can be quite scary - especially if you don't know the relevant laws. Our lawyers, Masilo Friemond, recently sent out this great article on expropriation. In a political climate of land-reforms and massive urbanisation, this is an excellent topic and well-worth read!

Expropriation is a process whereby the government aquires your property from you. This is usually not a process of negotiation and can occur in instances where land is taken for public benefit or, in certain instances, wher land is needed for land reform purposes.

Public benefit (or public purposes) includes any intention connected with the administration of the provisions of any law by an organ of state. For example; Eskom may require your piece of land to put up a tower, or the Gautrain can expropriate your property to build on it for public benefit.

giving back to the community

Ever since the 1902 bear-hunt incident in 1902 in which Theodore ‘Teddy’ Roosevelt sparked the imagination of local toy maker Morris Michtom, teddy bears have been a favourite children the world over. On Sunday 17 June, the Rivigan Group was privileged to sponsor the Featherbrooke Estate’s Father’s Day Teddy Bear drive.

Stirling Spengler, Allison Airey-Spengler, Michelle Neill, Lynne Goodwill & Ray Kirby (Featherbrooke Agents) are pictured here with the magician, Winnie-the-Pooh and some of the children who partook in the fun activities!

A beautiful JHB winter’s day was warmed by the sincerity and generosity of the families that joined us. Michelle Neill, the Social Manager for the estate, had asked us to supply cupcakes, colouring-in activities and crayons; we managed to rope in Winnie-the-Pooh and had a carousel for the little-ones too! All of the residents brought their own picnic baskets and each family donated a new teddy bear for the drive.

TRANSFER DUTY

when is it not payable?

image source - property24

Firstly, according to our law, transfer duty is payable to the Receiver of Revenue in terms of the Transfer Duty Act 40 of 1949. It is important to note that the act also provides for exceptions when transfer duty would not be payable.

Transfer duty is payable when a transfer of property occurs. However, under certain circumstances a transaction may be exempt from transfer duty because another tax is payable.

In terms of section 9 of the Transfer Duty Act the following transactions do not attract the payment of transfer duty:

Transactions between, or to, Government bodies
Transfer of property for religious, charitable or educational institutions
Transfer to a body that is acquiring property for a public hospital
An heir who inherits property. In this case, estate duty (another form of tax) becomes payable.
A surviving spouse who acquires property from a deceased spouse or a divorced spouse acquiring from divorced spouse.

SEQUESTRATING AFTER EXECUTION SALE: CAN PURCHASER DEMAND TRANSFER?

Our STBB Property Law Update Issue 11 reported on the recent South Gauteng High Court Ruling of Edkins v Registrar of Deeds Johannesburg and Others in terms of which it was ruled that the Sheriff may effect transfer even though the debtor, subsequent to the execution sale but before the transfer, published a notice to surrender his estate.

Deeds Registries and Courts have previously required transfer from the debtor’s trustee which in most cases delayed the transfer significantly.

Here's the full summary of the judgment.

The Cape Town Deeds Office requires, as a result of the above decision, an affidavit from the Sheriff confirming that the Sheriff was unaware of the sequestration or a notice to surrender that was published by the Debtor, at the time of the sale in execution.

A Deeds Office Circular to this effect will be issued in due course.

TENANT-LANDLORD RIGHTS

IN WHOSE FAVOUR DOES THE SCALE TIP?

(STBB Attorney's)

In this ground-breaking judgment, the Constitutional Court affirms the rights of tenants to challenge the contractually valid termination of their leases, if it constitutes an unfair practice as provided for in the Rental Housing Act.

The circumstances here were that the landlord upgraded the premises, cancelled the existing leases and then offered the premises back to the tenants at increased rentals. Such conduct may be unfair, the Court held, and obliged the parties to refer the issue to the Rental Housing Tribunal for determination.

Whilst the outcome is humane and protective of vulnerable citizens, it raises concerns as to how the decline of urban residential leases can be reversed if the landlord-developer struggles to earn a realistic return on the upgrade of the building.

Read the full judgement (from STBB Attorney's)
Read the summary of the full judgement (from STBB Attorney's)

CONVEYANCING ROLE PLAYERS (III)

CONVEYANCING ROLE PLAYERS | THE BODY CORPORATE AND MANAGING AGENTS

(MF ATTORNEYS)

In our last post we looked at the role of municipality in the transfer process. This week we will look at the body corporate and managing agents in the transfer process.

THE BODY CORPORATE AND MANAGING AGENTS
Body corporates exist only in Sectional Title Schemes. Their function is to ensure the effective running and maintenance of the scheme. In certain instances, it is the managing agents who do this on behalf of the body corporate.

A sectional title unit cannot be transferred until a clearance certificate from the body corporate is obtained. This certifies that all levies are paid up and that no outstanding fees are due to the body corporate or managing agent. Where there is a managing agent in place the levy clearance certificate will be issued by this agen.

A common hurdle, when dealing with managing agents occurs when the managing agent changes its name, neglects to disclose this change and submits a certificate in the previous name. In this instance, the Deeds Office will reject the matter call for proof of change of name and request a new levy clearance certificate.

CONVEYANCING ROLE PLAYERS (II)

CONVEYANCING ROLE PLAYERS | THE MUNICIPAL COUNCIL

(MF ATTORNEYS)

Last week we looked at the role that the South African Revenue Services (SARS) plays in the property transfer process. This week we will look at the municipal council, their requirements and the potential challenges that occasionally occur in the transfer process.

The Municipal Council

Dealing with the local municipality is always infamously riddled with bureaucratic hurdles, hoops and challenges. In order to minimize the delay from this institution during the transfer process, certain firms have appointed internal office members to attend to the council on a daily basis in order to resolve issues when obtaining rates clearance figures, whilst other firms make use of rates consultants. These extra measures have become a necessity due to the various challenges that Transferring Attorneys are experiencing when attempting to obtain rates clearance certificates. The costs involved for these are usually for the seller’s account as the seller is the party responsible for obtaining rates figures and effecting payment of the rates amount, four months in advance.

Whenever a property is sold, the municipality needs to confirm that all the rates have been paid in full.

CONVEYANCING ROLE PLAYERS (I)

CONVEYANCING ROLE PLAYERS | SARS

Conveyancing Role Players - another piece in the puzzle...

(MF LEGAL)

There are various role players in the transfer process, namely; SARS, the council, the Body Corporate (sectional title) or a Home Owners Association (cluster), bond cancellation attorneys and bond attorneys, and their respective clients being the banks that they service. Today we will look at the role that SARS plays and its requirements as well as potential challenges that can play a role in the transfer process.

South African Revenue Services (SARS)

SARS is an important role player because they issue the transfer duty receipt or transfer duty exemption certificate. Without this document the matter cannot be lodged in the deeds office.

SARS requires the offer to purchase in order to confirm the purchase price and to ensure that the amount of duty payable is correct. They also check the tax history of the seller, purchaser and agent/agency involved. If any one of these parties’ tax is not in order, SARS can refuse to grant a transfer duty receipt or exemption, and thereby delay the transfer.

CAPITAL GAINS TAX 2013

implications for the real estate sector

(MF LEGAL)

The 2012 budget speech, delivered by Pravin Gordhan on 22 February, has left some relieved and others a bit disappointed. Some are feeling like they will be stretched while the small business sector will be feeling relieved by the reduction in certain taxes. Capital gains tax is one of the taxes that effects the property industry where individuals, or entities, dispose of property registered in a Close Corporation/Company or is over a certain threshold.

Previously this rate of interest for an individual was 10% but from March 2012 it will increase by 3.32%. Companies will also see and increase to 18.65% from the previous 14%. Essentially, what this means is that when individuals and companies dispose of assets they will be liable to pay capital gains tax.

In other areas, the rebate on a primary residence has been increased from R1,5m to R2m. When an individual sells their primary residence, they will pay capital gains tax on the amount over and above the R2m rebate. A primary residence is any residence where the seller ordinarily resides, which he uses for domestic purposes. These provisions would generally apply to those possessing properties that have accumulated vastly in value since they were bought. However, looking at the current property market a large number of property owners will find themselves exempt from this tax.

If you need help or advice on taxation or financial planning within the real estate sector, contact us at Rivigan Property Group for more information.

NATIONAL BUDGET SPEECH 2012

key points for financial planning

In his State of the Nation address, our country’s leader, President Jacob Zuma highlighted the government’s commitment to reduce fiscal inequality through job creation, infra-structure growth and fight poverty. Pravin Gordon, our Minister of Finance, echoed these sentiments in the close of his budget speech last week.

With changes across the board, there is a substantial amount of information contained in the entire budget speech, so, we’ve uploaded a condensed version that was supplied by Old Mutual’s Personal Financial Advice and Private Wealth Management, HR & Legal Departments. It outlines some of the notable changes and adjustment in the budget that will see us through to 2013.

You can view the condensed version of the budget speech here.

If you need help or advice on budgeting or financial planning within the real estate sector, contact us at Rivigan Property Group for more information.

SECTIONAL TITLE EXTENSIONS

OWNERS AND AGENTS: BE AWARE OF STEPS TO EXTEND SECTIONAL TITLE SECTION

Want to install aircon, satellite dishes or some other addition to your sectional title home? Be careful not to spend any money before you’ve taken the correct steps… you may be forced to remove or demolish any unauthorised building or renovations! Our attorney’s, Masilo and Friedman, recently offered us the following advice:

An owner seeking to extend his/her section must first arrange with the body corporate to call for a special general meeting of all owners so as to pass a special resolution to allow the owner to extend his/her section. Thirty-days notice is usually required for such a meeting. The special resolution would have to be passed by at least three quarters of the owners present in the meeting. It is possible to obtain a special resolution by having three quarters of the owners sign a “round robin” resolution.

SECTIONAL TITLES

SECTIONAL TITLES TERMINOLOGY

The property world can be a maze of terms, forms and contracts that leave one feeling unsettled and a little unsure of what they may have just agreed to… Our lawyers (MF Attorneys) compiled this comprehensive list of terms and concepts that apply to buyers, and sellers, within a housing complex or gated development where a large property is developed and sold-off in sections. These are known as sectional titles.

Here are some FAQs that the Rivigan team hopes will help you!

1. What is sectional title unit?

A title system in which sections of buildings are created for separate ownership. A sectional plan is registered and available at the Surveyor-General's Office for each sectional title development. All the parts of the land and the buildings that are not labeled as sections (or parts of sections) on the sectional plan are either common property or exclusive-use areas. The entire development (collection of units) is referred to as a sectional title scheme.

"Keeping up with the trends so that you can make the smart choice."

From MF Legal:

In 2011 we dealt with many topics. Two of these topics have since had further developments or have been clarified.

The first of these is the infamous voetstoots clause in the Consumer Protection Act 68 of 2008 (CPA) and the other is with regards to the transfer of immovable property from a company, close corporation or trust to an individual. Here’s an update for our valued clients and agents on those issues that have since changed.