Can An Offer To Purchase Be Revived?

CAN AN OFFER TO PURCHASE BE REVIVED?

Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024] ZASCA 136

In the abovementioned case, the Supreme Court of Appeal (hereinafter ‘SCA’) considered whether an addendum to an offer to purchase (‘OTP’), which had previously lapsed, could amount to a revival of that offer to purchase.

The purchasers (third and fourth respondents) concluded a sale agreement for immovable property on 4 February 2020. The agreement was subject to a suspensive condition being the approval, in writing, of a mortgage bond for the amount of R4 950 000 (Four million nine hundred and fifty thousand Rand). The Purchasers were required to obtain such approval by 14 February 2020. The first addendum to the OTP was concluded on 11 February 2020 which extended the period to 19 February 2020.

Due to Covid-19, the Purchasers were unable to obtain finance to which the Appellant agreed to furnish the funds on behalf of the Purchaser. The Appellant was unable to provide the funds by 20 February 2020, so the Purchasers and the Seller concluded a second addendum on 21 February 2021, after the lapse of the suspensive condition.

The court had to consider whether the second addendum, having been concluded after the lapse of the OTP, amounts to a revival of that OTP. The court relied heavily on McPherson v Khanyise Capital (2009) where the respective court highlighted that:

A suspensive condition cannot be waived or extended after the time fulfilment of the condition has passed;
That an agreement which has lapsed because of the non-fulfilment of the condition cannot be revived; and
That the parties are required to enter into an entirely new agreement, which can be on the same terms and conditions of the old one

The court further relied on the principle in Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd (2011) which has previously been affirmed by the constitutional court, that a contract which has lapsed due to non-fulfilment of a suspensive condition cannot be revived, because there is no longer a right that can be waived. On this basis, the court decided that the second addendum did not amount to a revival of the OTP because there was no right to be waived as the OTP had lapsed and was unenforceable.

Written by: Marc van der Merwe – Associate Conveyancer

Click here to contact our conveyancers or via:

Switchboard: 021-441 9800

Bissets Whatsapp: 072 370 0416 – our Client Liaison, Tracy, will put you in contact with the relevant professional.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E & OE).

What Is A Usufruct?

Bissets Blog Feature Image 10 June 2020 1

With many South Africans encouraged to practise social distancing to help ‘flatten the curve’ of the coronavirus contagion, there is a focus on planning ahead for your future, executing a valid will or updating an existing will. When we are dealing with estate planning usufructs are often considered when we want a vulnerable family member to be taken care of. In theory this may sound like a solution but there are certain implications to consider before bequeathing a usufruct.

To bequeath usufruct to someone is a common way of providing for your next of kin after your death, but people often forget that usufruct can place an enormous financial burden on the actual heirs to your estate

Usufructs

When drawing up a will, a concern often raised is what to do with immovable property, especially if a dependant person requires living in the property after someone has passed away, for which purposes a usufruct is a popular consideration.

What is a usufruct?

A usufruct is the right to possession, use and enjoyment of an asset and the right to take the fruits thereof. A usufruct is most commonly over immovable property. An example would be where an immovable property is transferred to an heir, also known as the bare dominium owner, subject to the condition that a usufruct be registered in favour of a third party, known as the usufructuary.

The usufructuary cannot destroy or adversely affect the value of the asset or alter its character. On termination of the usufruct the property must be restored to the bare dominium owner.

Usufructs are personal servitudes and cannot be registered beyond the lifetime of a person in whose favour it has been created. Usufructs are usually created for the lifetime of the usufructuary, however they can also be created for a fixed period of time. Usufructs may also be subject to conditions, which should be provided for in a will.

Usufructs are not transferable, and a usufructuary cannot pass on, bequeath or dispose of the usufruct on his or her death. A usufructuary is not obligated to live in the property and may rent out the property provided that such a lease agreement does not exceed the duration of the usufruct.

When to consider creating a usufruct

A testator should be mindful of the fact that whilst he or she intends creating a benefit by ensuring a “roof over the usufructuary’s head” he or she may in fact be creating a burden for the usufructuary as the gift of the usufruct may be inappropriate to or for the usufructuary’s circumstances.

The usufructuary is responsible for the maintenance and upkeep of the property and if the usufructuary does not have the means to maintain the property the usufruct can create unintended hardships. Ideally provision should be made in the will to cover expenses such as maintenance, insurance and rates.

What are the tax implications of a usufruct?

When considering creating a usufruct it is wise to consider Capital’s Gains Tax implications for the bare dominium owner. The bare dominium owner receives the asset at the bare dominium value (this constitutes base cost) and after the death of the usufructuary and on the sale of the asset, the Capital Gains Tax is greater than if he had inherited the full value of the asset.

Further consideration should be given to the practical consequences of creating a usufruct, especially in cases of second marriages and the relationship between the second wife and the children from a previous marriage.

In a case where a husband bequeaths immovable property to his children from a first marriage and creates a usufruct in favour of his second wife for the duration of her lifetime, could create unpleasant hardships and family disagreements continuing for years. Especially if there are strained relationships between the usufructuary (spouse) and the bare dominium owner (children).

Heirs must refrain from interfering with the use of the property while the usufruct is in existence. However, they do have the right to protect their interest should the usufructuary be using the property inappropriately.

In closing, while the property is transferred into the names of the heirs, the usufruct is registered against the new title deed for the usufructuary. If the heirs pass away before the usufructuary, their portion of the usufruct assets is transferred to their heirs and subject to the existing usufruct.

It must always be remembered that a usufruct is registered at the Deeds Office against the title deed, so no transactions can take place on that property without due consideration given to an existing usufruct.

Written by:
Elke Herbst – Associate
For more information on usufructs, please contact our Elke Herbst at eherbst@bissets.com or via:

Switchboard: 021-441 9800
Website: www.bissets.com
Bissets WhatsApp: 072 370 0416 – our Client Liaison, Tracy, will put you in contact with the relevant professional.

Update: Lost title deeds

In February 2019 the Chief Registrar of Deeds issued a circular to announce that the Deeds Registries Regulations Board (the Board) had decided to suspend the implementation of the amendments to regulation 68 of the Deeds Registries Act 47 of 1937 announced in February 2019. However on 1 November 2019 the Minister of Rural Development and Land Reform published amended regulations dealing with lost or destroyed title deeds of fixed property. The amended regulations will commence 1 January 2020.

An advertisement regarding the intention of the property owner to apply for a copy to replace the lost or destroyed title deed will also, in terms of these changes, have to be placed in a newspaper circulating in the area in which the land is situated affording affected parties two weeks from date of publication to object. In case of a notarial bond the advertisement will have to be placed in an issue of one or more newspapers circulating in the area of every deeds registry in which such notarial bond is registered.

Copies of the above-mentioned deeds will also be open for inspection in the deeds registry free of charge by any interested person during the two week period. If an affected party wants to object, the objection must be lodged in writing with the relevant Registrar of Deeds within the two week period.

This will certainly cause a delay in any property transaction and there will also be additional costs for the property owner.

We therefore urge all property owners to ensure that they know the whereabouts of their title deeds. If your property is mortgaged to a bank under a mortgage bond then the bank would usually hold the title deed. If your property is un-bonded and you cannot locate your title deed we urge you to contact us immediately to assist with the replacement thereof before the implementation of the new regulations.

If you would like a more in-depth analysis or legal advice regarding the new regulations please do not hesitate to contact us.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Purchase of immovable property by a company to be formed

Section 21 of the Companies Act 71 of 2008 (“the Act”) provides for an exception to the common law rule that a person cannot bind a non-existent principal.

The Act provides in Section 21(1) that a person may enter into a written agreement on behalf of a company not yet in existence at the time. However, the Act sets out various formalities that must be adhered to for a pre-incorporation contract to be valid and enforceable.

The above exception is qualified by Section 21(4) which sets out strict timelines for ratification of the pre-incorporation contract by the company, as well as a default rule in the event that the company neither ratifies nor rejects the contract. In particular, the Act provides that the board of directors may within three months after the date on which a company was incorporated, completely, partially or conditionally ratify or reject any pre-incorporation contract. Failure to do so, will result in the company being deemed to have ratified the pre-incorporation contract.

Should the company ratify the pre-incorporation contract, then the person who represented the company will be released from all legal liability. However, should the company not be incorporated, or after its incorporation, rejects any part of the contract, the person who entered into the pre-incorporation contract on behalf of the company will be held personally liable on a joint and several basis (together with the company, if incorporated) for the liabilities under the contract.

The common law is not excluded by the Act. Therefore, parties can still conclude a contract on behalf of a company to be formed by making use of the common law stipilatio alteri (contract for the benefit of a third party). The only difference between the above methods is that the common law does not provide for deemed ratification of the contract and does not impose personal liability on the person contracting on behalf of the company. If the company is not incorporated or the pre-incorporation contract is rejected by the company, the contract simply falls away.

It is important to note that the Act does not specifically deal with the rights and obligations of the parties in the interim period, i.e. the period between conclusion and ratification of the contract by the company. Therefore, and in order to avoid uncertainty, it would be prudent to structure the contract in such a way so as to clearly reflect the intentions of the parties. In particular, it is advisable to indicate whether the contract is a S21 pre-incorporation contract or a common law stipilatio alteri. Furthermore, and based on the judgement handed down in the case of Venalex (Pty) Ltd v Vigraha Property CC and Others (2015) 2 All SA 645 (KZD), where the court held that the words “a company to be formed” can be construed as to include a shelf company, it is recommended that the contract clearly specify whether the company will be a shelf company or a newly incorporated company.

In conclusion, considering the implications of personal liability, it is advisable to consult an attorney before entering into such pre-incorporation contracts.

For more information, please contact our Alison Caron Fortuin at afortuin@bissets.com or call our offices on 021 441 9800.

Alison Caron Fortuin | Senior Associate

E: afortuin@bissets.com

Areas of Expertise: Conveyancing | Property Law

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The age old question surrounding fixtures and fittings: What stays and what goes?

When selling their properties, sellers are not always aware of the rules around fixtures and fittings and what should stay and what may be removed.

The “golden” rule in South African property law is that everything built on or attaching to the land, forms part of the land. The rule aims to protect land ownership and dates back to the Roman Law principle, superficies solo cedit, meaning that what is on the surface yields to the land. That means whatever is on the land, belongs to the owner of the land.

Unfortunately, there are many instances where a property is sold without any reference to fixtures and fittings. The general rule is that when a buyer purchases a property and becomes the owner of it, the permanent physical improvements such as any buildings erected on the land, along with all items that are permanently attached to the improvements or buildings are purchased as well. This includes (but is not limited to) upgrades and fixtures and fittings of a permanent nature. It is therefore important to define what is regarded as “permanent nature”.

When trying to establish whether a fixture or fitting is of a permanent nature, the following should be taken into consideration:

The nature of the item. Is its intended purpose to serve the land permanently?
The manner and degree of the attachment of the item. Can the item be removed without causing damage to the structure or land to which it is attached? If not, the item should not be removed and should be considered as permanent.
The intention of the owner when attaching the item. If the intention of the owner was to attach the item permanently, then that should be given consideration.

A seller should therefore prepare a list itemising what is to be included in the sale of the house or flat prior to listing the property with an agent and the property being viewed by potential buyers. There may also need to be an agreement in regard to replacing some of the items. This too should be included in the agreement.

Fittings and fixtures that the seller wishes to remove must specifically be stipulated in the agreement of sale between the buyer and seller. Even if the item is regarded as a fixture, a seller is within his rights to remove the item, provided the buyer is aware of the fact, and agrees, normally with the requirement that the seller make good any damage which may be caused by its removal.

For more information, please contact our Leanne Williams at lwilliams@bissets.com or call our offices on 021 441 9800.

Leanne Williams | Associate

E: lwilliams@bissets.com

Areas of Expertise: Conveyancing | Property Law

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Antenuptial contracts: Financially safeguarding yourselves

Getting married is more than just saying “I do” and choosing a wedding cake: you must also choose a marital property regime. This is not planning for divorce, but rather, planning for one’s future!

There are three marital regimes to choose from, each with their own advantages and disadvantages:

Marriage in community of property: your and your partner’s estates become a “joint estate” and you share all assets and liabilities, barring a few automatically excluded assets. You also have to have each other’s permission to, for instance, open an account or obtain a bond.

Should one party become insolvent, the entire joint estate can be attached by creditors to settle debts and the parties can lose everything.

Marriage in community of property is the default position if you do not have and antenuptial agreement, although this can be changed later through an application to the High Court.

Marriage out of community of property: each spouse retains a separate estate and the freedom to deal therewith as that spouse sees fit. In this instance, spouses may also be protected from one another’s creditors.

If one chooses to be married out of community of property, both partners must sign the antenuptial agreement in front of a notary before getting married. This is registered at the Deeds Office and becomes a public record.

Should you decide to marry out of community of property, you can elect whether the accrual system will apply or not.

2.1. Without the accrual system, the estates of the spouses remain separate from the beginning to the dissolution of the marriage, i.e. on death or divorce. The spouses have no claim to the increase in the other spouse’s estate.

2.2. If the accrual system applies, the gains of the spouses’ respective estates are compared on the dissolution of the marriage, and an adjustment is made. In other words, the increases in the estates from the date of the marriage are compared, and the difference is divided in two.

It is important to consult a notary timeously before entering into a marriage.

Lili Von Geyso | Senior Associate

E: l.vongeyso@bissets.com

Areas of Expertise: Litigation, Deceased Estates, Contractual Law, Labour Law, Notarial, Immigration Law

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Joint ownership: How do I terminate without the co-operation of the other joint owner?

This article gives a brief overview of the nature of joint ownership, and specifically focuses on the termination of joint ownership and the remedy available to a joint owner who wants to terminate the joint ownership, but cannot achieve it because of a lack of co-operation of the other joint owner.

Nature of joint ownership

Joint owners own undivided shares in the property which they own jointly. Consequently, the joint owners cannot divide the joint property while the joint ownership remains in existence. A joint owner also cannot alienate the property or a part thereof without the consent of the other joint owner. The rights in respect of the joint property need to be exercised jointly by the owners thereof.

Ways in which joint ownership can arise

Joint ownership can come into existence by way of an inheritance in which an indivisible property is left to more than one person in undivided shares; by way of a marriage in community of property, by the mixture of movable property in such a way that it forms a new movable item or by way of an agreement in terms of which the parties agree to jointly buy a property and that both will have equal indivisible shares in the property.

Division of joint property

Any joint owner can claim the division of the joint property according to that joint owner’s share in the property. It is a requirement for the division of the joint property that the parties need to try to divide the property among themselves first, before approaching the Court for an action to divide the property, which action is called the actio communi dividendo.

The underlying principle of the actio communi dividendo is that no co-owner is normally obliged to remain such against his will. If there is a refusal on the part of one of the co-owners to divide, then the other co-owner can go to Court and ask the Court to order the other to partition. The Court has a wide discretion in making a division of the joint property, which is similar to the discretion which a court has in respect of the mode of distribution of partnership assets among partners.

The Court may award the joint property to one of the owners provided that he/she compensate the other co-owner, or cause the joint property to be put up to auction and the proceeds divided among the co-owners. Where there is no agreement between the parties as to how the joint assets are to be divided a liquidator is ordinarily appointed, and he can then sell the assets and divide the proceeds, if it is not possible to divide the assets between the parties. If the immediate division of the joint property will be detrimental to the parties, the Court can order in certain cases that the division or the sale of the property be postponed for a period.

It is beneficial that there exist means to divide assets which are jointly owned by parties, who no longer wish to be co-owners, but who cannot reach an agreement on the division of the assets. Without such an action, people might be stuck with a property which they derive no benefit from because it is in the possession of the other co-owner, who refuse to sell the property.

For more information regarding property and property disputes, please contact:

Lisa Visagie | Partner

E: l.visagie@bissets.com

Areas of Expertise: Property Law | Conveyancing

Rifqah Omar | Partner

E: r.omar@bissets.com

Areas of Expertise: Litigation | Professional Discipline Law | Muslim Personal Law | Curatorship applications and administration | Administration of estates

[1] Inleiding tot die sakereg, Van Niekerk & Pienaar, Juta, p 53 – 61.

[2] Robson v Theron 1978 (1) SA 841 (A).

[3] 1978 (1) SA 841 (A).

[4] 1978 (1) SA 841 (A).

[5] Van Niekerk & Pienaar, p 61 – 62.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Can I obtain financing if I don’t own immovable property as security?

The article gives a brief overview of what a notarial bond is, the requirements that need to be complied with to register a notarial bond and give tips regarding clauses that will prove to be useful in a notarial bond. It also deals with the situation where a debtor disposes of an asset listed in a notarial bond, contrary to the provisions thereof.

A very useful way of obtaining financing to start a new business, is to register a notarial bond over the movable property belonging to the business. For instance, notarial bonds are regularly utilised in transport companies – a notarial bond is registered over the vehicles forming the core of the business, but the vehicles do not need to be in the physical possession of the creditor, thus the business can fully operate.

What is a notarial bond?

A notarial bond is a general or special bond where the movable assets of a debtor are used as security for a debt. In terms of the notarial bond, the debtor undertakes to pay his debt towards the creditor, failing which the creditor will be entitled to sell these movable assets and to utilise the proceeds thereof to satisfy his claim against the debtor. There are 2 types of notarial bonds:

General notarial bond: all the movable assets on the debtor’s property serves as security for the debtor’s debt.
Special notarial bond: specific movable assets identified in the bond will serve as security for the debt.

How does a notarial bond differ from a pledge?

A pledge requires the delivery of the movable asset pledged. A notarial bond does not require the delivery of the movable assets identified in the bond, but in terms of section 1(1) of the Security by Means of Movable Property Act 57 of 1993, the movable property listed in the notarial bond will be deemed to have been pledged to the creditor as effectually as if it had been delivered to the creditor. The fact that the creditor is deemed to be in possession of the property thus places him on equal footing with that of a pledgee. The creditor, upon registration of the notarial bond in the deeds registry, acquires a real right of security in the movable property specified in the bond.

Requirements:

Existence of a principal debt;
Assets which serve as security must be movable, including corporeal and incorporeal assets.

Corporeal assets include furniture, vehicles, the goods of a business, animals and the future offspring of animals and stock in trade.

Incorporeal assets include an unregistered long-term lease of immovable property, a short-term lease of immovable property, a liquor license, a water use license, site permit, shares in a company, goodwill of a business, book debts etc.

What if more than one creditor uses the same asset as security for their debt?

A bond which was registered first enjoys priority over a bond registered thereafter.

Important clause to insert in the bond:

To prevent the debtor from disposing of assets which serve as security in terms of the notarial bond, a clause should be inserted disallowing the debtor to sell, alienate, dispose of, transfer or permit the removal of the asset from the debtor’s place of residence or place where he carries on business, without the prior written consent of the creditor.

What happens if a debtor disposes of the asset identified in the notarial bond, contrary to the stipulations in the notarial bond?

The creditor will be able to apply for provisional sentence summons against the debtor, provided that the notarial deed meets the requirement of being a liquid document. A liquid document is a document which indicates, without having to consult extrinsic evidence, an acknowledgement of debt, of which the amount is easily determinable. A notarial bond will in general qualify as being a liquid document.

A creditor will also be able to claim back an asset which has been sold, contrary to the provisions of the notarial bond, to a bona fide third party, from such third party. The reason for that is the fact that a notarial bond, which has been registered in the Deeds Registry, creates a real right, which is a right that attaches to property, rather than a person.

It is not easy to obtain credit in the economic environment in which our country currently finds itself. However, there are ways to get your business off the ground and registering a notarial bond over the property of your business is a recognised method of securing your business’ debt. If notarial bonds can be utilised more frequently, it can help a lot of new businesses get the financing they need to buy equipment, vehicles and machinery necessary for the operation of the business.

Reference List:

Explanatory Notes Part 1: Course in Notarial Practice, compiled by Gawie Le Roux, Erinda Frantzen and Ilse Pretorius
The South African Notary, sixth edition, M J Lowe, M O Dale, A De Kock, S L Froneman, A J G Lang

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Can my property be used for Airbnb?

When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

According to Brett Herron, the mayoral committee member for transport and urban development at the City of Cape Town, different holiday accommodation land use types, such as B&Bs and guest houses, are regulated by the City’s zoning scheme, called the Development Management Scheme.

If referring to Cape Town, for instance, the city has a Guest Accommodation Policy that sets out the guidelines that have to be considered when applications are made to obtain the necessary planning permissions. According to the Policy, if you wanted to provide a self-catering, flexible accommodation option in line with current trends for transient guests, visitors and tourists, then these are the guidelines that should be followed:

Purpose

A building or group of buildings consisting of separate accommodation units rented for residential purposes, each incorporating a kitchenette / full kitchen, but may also include an option of meals being provided communally to guests.
May include communal areas for the exclusive use by lodgers / transient guests.

Scale

Form and scale of development determined by development parameters of particular zone (i.e. floor space, building lines, height) and the site context.
No general restriction on number of units, but must be locally appropriate in context of the building/site characteristics and surrounding area.
Council may determine / restrict the number of units per development in cases and lay down conditions necessary to mitigate the impact thereof.

Location

Not supported on a single residential zoned property, subject site must have suitable general residential, mixed use or commercial zoning.
Locational criteria that should be considered, include:
- proximity to public transport routes, commercial centres and tourist activities.
- character of the surrounding area;
- mixed use or commercial locations (including areas designated for high density development) are encouraged.

Conclusion

In many cities, you must register, get a permit, or obtain a licence before you can list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local municipalities may also vary greatly in how they enforce these laws. However, it is not impossible to list your property on Airbnb, you just have to find out from the local municipality if you have the correct permissions and if the property has the correct zoning.

References:

Guest Accommodation Policy, the City of Cape Town, Department of Planning & Building Development Management.

“Regulating Airbnb in Cape Town”, Jan Vermeulen, MyBroadband. https://mybroadband.co.za/news/government/210884-regulating-airbnb-in-cape-town.html

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Renting property to foreigners

Renting property in South Africa is a straightforward process. The country has a vast selection of rental accommodation including bachelor flats in apartment blocks, Victorian cottages, stand-alone houses with big gardens, and semi-detached units in modern townhouse complexes.

In South Africa, the right of a foreigner to purchase immovable property was restricted in the past by the Aliens Control Act. These restrictions were uplifted in 2003 by the new Immigration Act (“the Act”) which repealed the Aliens Control Act and many of its restrictive provisions and now clearly defines who a legal foreigner is and who is not. In short, a legal foreigner is a person in possession of a valid temporary residence permit or a permanent residence permit approved by the Department of Home Affairs.

The new Act makes provision for various temporary residence permits to be issued to foreigners, including amongst others:

A visitor’s permit
A work and entrepreneurial permit
A retired person permit

In principle, a landlord or tenant can legitimately lease or sell immovable property to any person recognised under the Act as a legal foreigner.

That said, foreigners working in South Africa with a legal work permit, are not regarded as “non-residents” by the South African Reserve Bank. They are considered to be residents for the duration of the period of their work permit and are therefore not restricted to a loan of only 50% of the purchase price.

It is also important to take note that the Act criminalizes the letting or selling of immovable property to an illegal foreigner by making this transaction equivalent to the aiding and abetting of an illegal foreigner and is such an act classified as a criminal offence in terms of the Act.

In conclusion, a legal foreigner may let or buy immovable property in South Africa, provided that he is the holder of either a legal temporary residence permit or a permanent residence permit approved by the Department of Home Affairs. Ensure that you enquire from your potential tenant or purchaser whether they are legally present in South Africa and obtain the necessary proof from them before entering into any transaction with a foreigner. Also, take account of the restrictions on local financing, particularly where the procurement of financing is a condition precedent to the agreement.

References:

http://www.expatarrivals.com/south-africa/accommodation-in-south-africa
http://www.avidfirefly.co.za/00000/index.php?option=com_k2&view=item&id=92:can-i-lease-or-sell-my-house-to-a-foreigner?

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Damage to property

What happens when your property has been purposefully damaged, especially during an altercation?

Uber car torching

During the road closures by meter taxis in Johannesburg on October 27 2017, two Uber drivers’ cars were set alight. A total of thirty meter taxi drivers were arrested for traffic disruption on the R21 and R24 highways of Johannesburg, and further investigations were underway as to determine how the cars were torched during the protest. With the meter taxi drivers being responsible for the flames, and assaulting an Uber passenger before leaving with her belongings. There have been ongoing violent feuds between Uber, meter taxis and taxi drivers, and in one instance, an Uber passenger was stabbed in the face, allegedly by a taxi driver. Two cars, believed to be Uber vehicles, were petrol-bombed earlier in September.

Malicious damage to property

Damaging property belonging to someone else is common – someone’s car door could fling to bump yours, the neighbour’s son may swing a cricket ball towards your kitchen window. These are mistakes which don’t normally require the assistance of authorities. Malicious damage to property is the intentional and unlawful vandalization of property or belongings of another person. As a criminal offence in South Africa, damage to property extends over to the physical harm of pets, and the vandalization of cars, furniture and other tangible items which can cause financial setbacks.

Suing for malicious damage for property follows reporting the incident as soon as possible. It is advised to keep records, such as photographs, names of witnesses, time of incident, and most importantly, financial records of repairing or replacing said property or belongings. It is important to note that in cases where property is damaged in an act of self-defence, or protecting property, the claim for malicious damage to property will not be a successful one.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

Criminal Procedure Act 51 of 1977. (1977). [ebook] p.194. Available at: http://www.justice.gov.za/legislation/acts/1977-051.pdf [Accessed 31 Oct. 2017].

Has your property become a target for intentional damage by someone else?
Are your belongings lawfully protected against those who have damaged them?
You can sue for your property if it is intentionally damaged at the hands of someone else

Can the future development of a property be stopped?

The provincial heritage resources authority (PHRA) granted a permit in terms of Section 34 of the National Heritage Resources Act 25 of 1999 for the demolition of a structure that was older than 60 years and situated on a property with no formal heritage status. By doing so, conditions were imposed controlling future development on the property and it was held that such conditions were lawfully imposed.

Gees v the Provincial Minister of Cultural Affairs and Sport

The Supreme Court of Appeal (SCA) recently dismissed an appeal against a judgment of the Western Cape High Court. In so doing the SCA held that the large concentration of art deco buildings spanning Davenport Road, Vredehoek, Cape Town, forms part of the national estate and is worthy of protection as a heritage resource.

Therefore, the SCA held that Heritage Western Cape, in granting a permit for the demolition of the appellant’s 60-year-old block of flats, was justified in imposing conditions controlling future development on the property.

It is true that the conditions imposed in the demolition permit amount to a curtailment of the appellant’s entitlement to deal with his property as he sees fit, and may therefore to a certain extent be regarded as a deprivation of property. However, it is widely recognised that in our present constitutional democracy an increased emphasis has been placed upon the characteristic of ownership which requires that entitlements must be exercised in accordance with the social function of law in the interest of the community.

Conclusion

AJ van der Walt and GJ Pienaar in “Introduction to the Law of Property” 7ed (2016), put it as follows:

‘. . . the inherent responsibility of the owner towards the community in the exercise of his entitlements is emphasised. The balance between the protection of ownership and the exercise of entitlements of the owner regarding third parties, on the one hand, and the obligations of the owner to the community, on the other hand, must be maintained throughout. This might, in certain circumstances, even mean that an owner’s entitlements could be limited or infringed upon in the interest of the community. In such cases the infringement must always be reasonable and equitable [not arbitrary].’

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference:

Gees v The Provincial Minister of Cultural Affairs and Sport (974/2015) [2015] ZASCA 136 (29 September 2016)

Can my property be used for Airbnb?

When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

According to Brett Herron, the mayoral committee member for transport and urban development at the City of Cape Town, different holiday accommodation land use types, such as B&Bs and guest houses, are regulated by the City’s zoning scheme, called the Development Management Scheme.

If referring to Cape Town, for instance, the city has a Guest Accommodation Policy that sets out the guidelines that have to be considered when applications are made to obtain the necessary planning permissions. According to the Policy, if you wanted to provide a self-catering, flexible accommodation option in line with current trends for transient guests, visitors and tourists, then these are the guidelines that should be followed:

Purpose

A building or group of buildings consisting of separate accommodation units rented for residential purposes, each incorporating a kitchenette / full kitchen, but may also include an option of meals being provided communally to guests.
May include communal areas for the exclusive use by lodgers / transient guests.

Scale

Form and scale of development determined by development parameters of particular zone (i.e. floor space, building lines, height) and the site context.
No general restriction on number of units, but must be locally appropriate in context of the building/site characteristics and surrounding area.
Council may determine / restrict the number of units per development in cases and lay down conditions necessary to mitigate the impact thereof.

Location

Not supported on a single residential zoned property, subject site must have suitable general residential, mixed use or commercial zoning.
Locational criteria that should be considered, include:
- proximity to public transport routes, commercial centres and tourist activities.
- character of the surrounding area;
- mixed use or commercial locations (including areas designated for high density development) are encouraged.

Conclusion

In many cities, you must register, get a permit, or obtain a licence before you can list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local municipalities may also vary greatly in how they enforce these laws. However, it is not impossible to list your property on Airbnb, you just have to find out from the local municipality if you have the correct permissions and if the property has the correct zoning.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

Guest Accommodation Policy, the City of Cape Town, Department of Planning & Building Development Management.

“Regulating Airbnb in Cape Town”, Jan Vermeulen, MyBroadband. https://mybroadband.co.za/news/government/210884-regulating-airbnb-in-cape-town.html

Fearing Foreclosure: What are your rights as the homeowner?

The recent junk status announcement has shaken us into a quick action of tightening our belts and letting go of luxuries to afford our day to day expenses. This financial condition inhibits the possibility of purchasing a new house, let alone affording your current home. Have you thought about what you would do if your foreclosure wiped its shoes on your doormat?

You have the option to sell

Selling, rather than waiting for foreclosure, offers a greater possibility of you receiving greater value for your home. You may choose to sell privately or through an estate agent. It is advisable that your qualified conveyancing attorney be notified of any concerns, as well as any interests of potential buyers. During this time, look for alternative home solutions, and consider a suitable transfer date.

Prior to the signing of the agreement of sale and the transfer of ownership, the property still belongs to you.

You have time

Before receiving a foreclosure notice, the bank allows a grace period for you to catch up on your bond instalments. It may be difficult to do so, considering your finances have already been tightrope walking over the past few months. Meeting with your bank allows the opportunity for a payment restructure to be discussed and agreed upon.

The repossession procedure is paused during the time you are in application of or in debt review. The National Credit Act allows this opportunity.

Approach your lawyer

If, after attempting to recover payments, you receive foreclosure summons, contact your lawyer. As stated by section 26(3) of the South African Constitution, your eviction may not be finalised without an official court order. The courts consider all relevant circumstances before reaching a final eviction decision.

You may not be arbitrarily removed from your home.

You won’t be homeless

You have the right to adequate housing, despite your previous or current economic standing. Adequacy is determined by a place to eat, shelter, a place to sleep, and a place to raise a family, and this accessibility is the responsibility of the state. Following the outcome of the sale by the bank, the home is no longer in your ownership, and the state classifies you as an unlawful occupier.

The eviction process will then follow that of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

National Credit Act

Constitution of the Republic of South Africa [1996]

Prevention of Illegal Eviction from and Unlawful Occupation of Land Act [No. 19 of 1996]

Renting property to foreigners

Renting property in South Africa is a straightforward process. The country has a vast selection of rental accommodation including bachelor flats in apartment blocks, Victorian cottages, stand-alone houses with big gardens, and semi-detached units in modern townhouse complexes.

In South Africa, the right of a foreigner to purchase immovable property was restricted in the past by the Aliens Control Act. These restrictions were uplifted in 2003 by the new Immigration Act (“the Act”) which repealed the Aliens Control Act and many of its restrictive provisions and now clearly defines who a legal foreigner is and who is not. In short, a legal foreigner is a person in possession of a valid temporary residence permit or a permanent residence permit approved by the Department of Home Affairs.

The new Act makes provision for various temporary residence permits to be issued to foreigners, including amongst others:

A visitor’s permit
A work and entrepreneurial permit
A retired person permit

In principle, a landlord or tenant can legitimately lease or sell immovable property to any person recognised under the Act as a legal foreigner.

That said, foreigners working in South Africa with a legal work permit, are not regarded as “non-residents” by the South African Reserve Bank. They are considered to be residents for the duration of the period of their work permit and are therefore not restricted to a loan of only 50% of the purchase price.

It is also important to take note that the Act criminalizes the letting or selling of immovable property to an illegal foreigner by making this transaction equivalent to the aiding and abetting of an illegal foreigner and is such an act classified as a criminal offence in terms of the Act.

In conclusion, a legal foreigner may let or buy immovable property in South Africa, provided that he is the holder of either a legal temporary residence permit or a permanent residence permit approved by the Department of Home Affairs. Ensure that you enquire from your potential tenant or purchaser whether they are legally present in South Africa and obtain the necessary proof from them before entering into any transaction with a foreigner. Also, take account of the restrictions on local financing, particularly where the procurement of financing is a condition precedent to the agreement.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.expatarrivals.com/south-africa/accommodation-in-south-africa

http://www.avidfirefly.co.za/00000/index.php?option=com_k2&view=item&id=92:can-i-lease-or-sell-my-house-to-a-foreigner?