-Yes, you have a legal obligation to disclose any latent defects that you are aware of to potential buyers.

Failure to disclose latent defects could result in legal action against the seller, including claims for damages and the cancellation of the sale agreement. It is therefore important for sellers to be transparent and forthcoming about any defects they are aware of, and to provide potential buyers with a full and accurate picture of the property they are considering purchasing.

-In a property sale, the transfer attorney is appointed by the seller, as determined by common law. This is because the seller grants the attorney the power to transfer the property to the purchaser via a power of attorney. Although the seller has the right to choose the transferring attorney, the buyer is responsible for covering the property transfer fee.

The transfer attorney handles most administrative tasks, including gathering necessary documents and submitting them to the deeds office. The parties may agree to use the purchaser’s transfer attorney, but if the seller objects, the seller’s attorney must be used. In some cases, the agent may recommend using their panel of attorneys, but the final decision still lies with the seller.

– The property transfer process in South Africa can be delayed due to various factors involving both the buyer and the seller. Some typical delays include:

1. Incomplete or inaccurate Deed of Sale: Delays can occur if the Deed of Sale is not fully or accurately completed by the buyer, seller, or real estate agent. This document is crucial for the bond application process, and any issues with it will necessitate amendments and reapplication.

2. Failure to provide personal information or FICA documents: Delays can happen if either party does not provide the necessary personal information or FICA documents to the bond and transferring attorneys in a timely manner.

3. Delay in signing bond and transfer documents: If the buyer or seller does not sign the relevant bond and transfer documents as requested by their attorneys, it can cause further delays.

4. Issues with the original title deed: The seller must provide the transferring attorney with the original title deed of the property being sold. If the title deed is lost or destroyed, obtaining a duplicate from the Deeds Office can take up to three weeks.

5. Cash shortfall: Delays can occur due to insufficient funds on the buyer’s side for bond registration and transfer costs or on the seller’s side if the selling price is not enough to settle an outstanding bond.

6. Failure to pay deposit or obtain bond approval: The transfer process can be delayed if the buyer fails to pay the required deposit amount or does not obtain bond approval.

7. Delay in obtaining Transfer Duty receipt: The buyer must pay the transfer costs to the conveyancing attorneys to obtain the Transfer Duty receipt, which is necessary for the conveyancer to lodge a transaction for registration.

8. Delay in bond cancellation: The seller needs to give the bondholder at least 90 days’ notice to cancel their existing bond, which can cause a 3-month delay.

9. Careful coordination and full cooperation from all parties involved are essential for a smooth property transfer process. Having a property law attorney present from the start can help avoid many of these hurdles.

–What are the challenges faced by sellers, landlords, and estate agents when it comes to selling or renting properties?

They have to be knowledgeable in many different fields, including VAT, which can have implications on the asking price, marketing information, the estate agents’ commission and the overall outcome of the transaction which may fall apart because of errors in VAT.

What is the general rule of thumb regarding VAT and property transactions?

If the property is NOT sold as a going concern, then the seller’s VAT status will determine whether VAT or transfer duty will be applicable in the transaction.

What are the requirements for a property to be sold as a going concern (0% VAT payable)?

i) Both the seller and the purchaser as described in the Offer must be registered for VAT;

ii) There must be VATable businesses being conducted at the property which is being sold as part of the property (like a lease); and

iii) the VATable business must also be sold from seller to purchaser.

What happens if the seller and buyer are both VAT vendors but there is no business being sold with the property?

Then the Offer price will have to provide for the 15% VAT which will be paid by the buyer as part of the purchase price. The buyer can then claim back the 15% from SARS as soon as his/her/its business starts operating.

Why do sellers, landlords, and agents prefer to advertise a property excluding VAT?

They prefer it for obvious reasons, such as avoiding a higher asking price, which can affect the property’s marketability.

Can a purchaser insist on an inclusive VAT price even if the property is advertised as exclusive of VAT?

Yes, they can. The seller will have to pay the VAT to SARS, calculated on the selling price, and cannot add it to the asking price. Clarity in respect of the TOTAL PRICE is required though so there are no disagreements later.

Is it legal to advertise a property without VAT or as exclusive of VAT?

No, it is illegal to advertise a property without including VAT. The Value-Added Tax Act 89 of 1991 requires that any price advertised or quoted by a VAT vendor must include VAT.

What happens if a seller, landlord, or estate agent advertises a property as VAT-exclusive?

It is a criminal offense, punishable by law, to advertise VAT-exclusive prices.

Can estate agents add VAT to their commission later on?

No, estate agents earn commission on the sales price ex VAT (so the net sales price) and the agents must then add their own VAT to their commission.

Is it still common practice to advertise properties as VAT-exclusive?

Yes, it is still a common practice, despite being illegal. Sellers, landlords, and estate agents should be aware of the legal requirements regarding VAT and property transactions.

–When is someone seen as a “swallow”?

• Most foreigners may visit South Africa freely without the need to apply for any VISA prior to entry;
• Most foreigners come to South Africa for holiday and once here, they realise how much they love it here;
• Such visitors, who have NO other VISA in their foreign passports, will arrive at passport control and their foreign passports will simply be stamped with a DATE STAMP;
• This date stamp entitles them to remain in South Africa for a maximum period of 90 days (calender). So there is a start and an expiry date for their visit;
• If the visitor reaches the 90-day period, they must leave the country;
• In order to avoid this complication, visitors are allowed to VISIT HOME AFFAIRS, within the first 30 days of entry to apply for a once-off 90-day extension to the initial period. This renewal application must be done in person and at a Home Affairs Office;
• If the renewal application is not done within the first 30 days of entry, the visitor will have to leave South Africa before the first 90 days expire;
• Many visitors do this 180-continuous days in South Africa on an annual basis (for many years in a row) completely legitimately. These visitors are called SWALLOWS as they follow the sun;
• Swallows (who are tax non-residents and financial non-residents) may borrow up to 50% of the value of the property. The other 50% MUST be paid from abroad with proof of this foreign payment required in order for this bond to register.

Tax Implications for “swallows”

• Visitors who avail themselves of the above, may not work in South Africa;
• This is why these swallows are usually retired;
• In order to work (or earn any form of income, including self-generated income other than rental) in South Africa, the visitor must apply for a temporary residency permit (like a work VISA);
• The temporary VISA application process takes 12 months to issue on average, sometimes even longer;
• Once a temporary VISA is issued, the visitor ceases to be a swallow;
• True swallows, who subsidise their 6 month visit here with income abroad, DO NOT HAVE TO REGISTER FOR INCOME TAX in South Africa. They will also not be seen as TAX RESIDENTS and will therefore not have to declare their foreign income in South Africa;
• Temporary residents however must register for income tax in South Africa and will be seen as tax residents in South Africa for the duration of their VISA. This is dangerous as many do not consider the tax implications of a temporary VISA and are then expected to declare ALL income in South Africa. Often leading to problems;
• Temporary residents may bond up to 75% of the value of their property BUT the 25% balance MUST be paid from abroad and not from South Africa in order for such a bond to register. Also, when the temporary resident leaves South Africa, the bond must be reduced to 50% of the original property value (with payment of cash into the bond) as the temporary resident reverts back to being a non-resident and failure to do this will result in all bank accounts being blocked.

Some important issues to remember when you are a swallow

• To apply for the additional once-off 90 days as soon as you can after first arriving in South Africa;
• NOT TO travel to another country for a short while to just re-enter South Africa (to commence a new 90-day visit). This is frowned upon by both Home Affairs and could lead to serious tax implications if you enter South Africa on multiple occasions in one year;
• If you are physically present in South Africa for more than 180 days, in total, over a year period, SARS will see you as a tax resident even if you do not have a temporary VISA;
• Rental can be earned by swallows at any time without attracting any tax consequences. South African rental is however taxable in • South Africa so swallows will declare rental earned here to SARS annually without the need to declare any other income.

Becoming a permanent resident

• You can apply to Home Affairs for a permanent residency VISA anytime after being a temporary resident for 5 continuous years;
• A permanent residency VSIA application could take up to 12 months (if not longer) to issue so it is important for temporary residents to ensure that their renewal or new permanent residency VISA application is submitted with enough time to spare;
• If their temporary residency VISAs expire before their renewal or permanent residency VISA is issued, they revert back to being a non-resident and must leave South Africa within 90 days after expiry. A big problem if the person is employed here. Such persons will be flagged for entry until the new VISA is issued.
• When your permanent VISA is issued, you are automatically deemed to be a tax resident with the need to submit worldwide income in South Africa. Even if you do not live here! Many people do not consider the tax consequences of this situation;
• The ability to also freely repatriate all funds introduced with submission of proof of these funds falls away after 5-year of the permanent residency VISA. Then such residents become subject to the same excon restrictions as us (R1mil without tax clearance // R4mill with tax clearance);
• Permanent residents may bond up to 100% of the property value with no requirement to introduce any portion of the purchase price from abroad.

When property is bough by more than one person with different status

• A big problem arises when there are two or more buyers who wish to bond a portion of the purchase price and each buyer has a different status;
• For example: a husband and wife where the husband is South African with an ID number and the wife is a non-resident waiting for a temporary residency VISA;
• The purchase price is then split in 2: the husband can bond 100% of his 50% in the property and the wife may bond 50% of her 50% in the property WITH A REQUIREMENT that the rest of the money must be paid by her from her bank account abroad (or a joint account). If there is no proof that the cash balance was paid from abroad, the bond CAN NEVER REGISTER as the excon condition can never be fulfilled.

-The Master will appoint an executor to act on behalf of the deceased estate and to ensure the estate is wound up in accordance with the law. The executor is the only person authorised to sign the Offer to Purchase on behalf of the estate, as well as any transfer documents.

Following an executor being appointed and the OTP being signed, the sale of property from a deceased estate must be authorised by the Master of the High Court. This is done by way of an endorsement of the Power of Attorney to Pass Transfer by the Master. It is the conveyancer’s responsibility to ensure that the Power of Attorney is endorsed by the Master during the transfer process.

In addition to the Master’s consent to sell property belonging to the deceased estate, the consent of all the heirs will need to be provided. It’s worth noting that this may cause a delay in the transfer process as the heirs will need to be located and their written consent will be required to be obtained.

-Most sale agreements of immovable property contain a clause in terms of which the buyer agrees to buy the property voetstoots.

This means that purchaser is buying the property from the seller as it stands and thereby indemnifying the seller against claims for damages in respect of any defects on the property, whether patent or latent.

What you need to know

Sellers cannot rely on the voetstoots clause if they were aware of a latent defect and deliberately concealed or failed to disclose it with the intention to defraud the buyer.

In terms of the Consumer Protection Act the voetstoots clause will not be applicable to a property transaction where the seller is selling the property in the ordinary course of business. This will typically be applicable to developers, builders and investors.

It is important for the parties to a property transaction to familiarise themselves with the impact and exclusions to the voetstoots clause and to carefully read the sale agreement to avoid costly and unnecessary legal battles.

– A latent defect is one which is hidden and not easily seen, such as hidden damp or a leaking pool. A patent defect are those defects that are known and can be seen, such as a broken window or cracked tile.

–An application can be made to the Deeds Office for a duplicate original if a title deed is destroyed or lost. Before an application can be made, the intention to apply for a certified copy must be advertised in a newspaper and lie for inspection at the Deeds Office for 2 weeks. Should there be no objections, the application is made to the Deeds Office in the form of an Affidavit stating that the deed is actually lost or destroyed and that a diligent search has been made for the deed.

Once the Registrar is satisfied he will then issue a certified copy of the title deed which will, for all purposes, be treated as if it were the original. The application for a lost or destroyed deed can be made simultaneously in the Deeds Office with the lodgement of the transfer documents.

-Yes, transfer documents can be signed abroad in line with one of the following methods, depending on the country where you are situated:

• In the presence of the head of the South African diplomatic mission or Consulate, or any designated official for this purpose. After signature, the document must be authenticated by a certificate which bears the official’s seal of office.
• In the presence of a local Notary, who’s seal of office is to be placed on the document in question (applicable to the UK, Zimbabwe, Botswana, Lesotho and Swaziland).
• In countries party to the Hague Convention, in the presence of a Notary Public.

Once signed, the documents must be apostilled by a relevant governmental authority.

–Yes, transfer documents can be signed abroad in line with one of the following methods, depending on the country where you are situated:

• In the presence of the head of the South African diplomatic mission or Consulate, or any designated official for this purpose. After signature, the document must be authenticated by a certificate which bears the official’s seal of office.
• In the presence of a local Notary, who’s seal of office is to be placed on the document in question (applicable to the UK, Zimbabwe, Botswana, Lesotho and Swaziland).
• In countries party to the Hague Convention, in the presence of a Notary Public.

Once signed, the documents must be apostilled by a relevant governmental authority.

– A suspensive condition is a condition that renders an agreement suspensive until such time that the condition which is stipulated is met or fully complied with.

The wording of the condition is crucial. The agreement must be worded that the condition must first be fulfilled or met and until such a time the agreement will not be fully binding and enforceable between the parties. To avoid any confusion, suspensive conditions must be clear and stipulate exactly what must be done and by when.

The most common suspensive conditions and their wording:

• This entire agreement is subject to the Purchaser obtaining a loan of Rx within 30 days of signature of this agreement. In the event that the purchaser does not obtain the required loan the agreement will not be binding and will lapse.
• This agreement is subject to Purchaser selling his/her property known as [address] within a period of [no] days and all suspensive conditions therein being met within [no] days from date of such sale.
• This agreement is subject to the Seller providing a copy of the approved building plans on or before [date].

– One does not know what the future entails and should you sell your property in the future it is recommended to keep the following documentation in a file for such an event.

• Your title deed from the conveyancer – if your property is bonded, the bank will keep the original and a copy should be sent to you by the conveyancer.
• The signed agreement of sale and annexures and the conveyancer’s final statement of account.
• The compliance certificates that were issued when you bought the property.
• Any plans, certifications or guarantees for workmanship.

-While many tasks in sectional title schemes can be delegated to a managing agent, the fiduciary duty remains with the trustees.

The duty of trust or fiduciary duty really means that the person responsible will exercise his powers in good faith and he will not act in his own interest or for another’s gain, but for the members (the owners of the sectional title units) he represents.

Trustees must disclose any conflicts of interest. Section 40(b) of the Sectional Titles Act states that “… a trustee shall avoid any material conflict between his own interests and those of the body corporate, and in particular-

(i) shall not derive any personal economic benefit to which he is not entitled by reason of his office as trustee of the body corporate, from the body corporate, or from any other person in circumstances in which that benefit is obtained in conflict with the interests of the body corporate;

(ii) shall notify every other trustee, at the earliest opportunity practicable in the circumstances, of the nature and extent of any direct or indirect material interest which he may have in any contract of the body corporate.”

If you act on behalf of another you have a duty to act with care. If you do not do this, you can be held liable for the loss suffered by members.

The trustees must, therefore display reasonable care and skill in managing the affairs of the body corporate.

The steps trustees can take to ensure they are qualified to execute their duties are to:

• familiarise themselves with the Sectional Titles Act and their schemes management and conduct rules;

• read one of the many how-to guides about sectional title;

• appoint a competent managing agent on whom they can rely for advice;
• appoint a management company that can help ensure that levies are raised correctly and that levy debt is collected without fear or favour.

A competent board of trustees is the secret to all successful schemes. Only people willing to act in the interest of all members should be elected as trustees. And once they are elected, trustees must equip themselves with the knowledge needed to perform their duties competently. Knowledgeable trustees who steer clear of conflicts of interest can never be accused of having breached their fiduciary duty.

-Before you can obtain information from the deeds office, you must have the following ready:

• Full names and/or identity number of the owner of the property, or at least his or her date of birth. In the case of a juristic person, the name and registration number, if available, is necessary.
• The correct erf number and township or farm name and number, not the street address. In the case of a sectional title scheme, the section, and the scheme name are required.

To obtain a copy of a deed or document from a deeds registry, you must:

• go to any deeds office. It is important to note that deeds registries may not give out information acting on a letter or a telephone call
• An official at the information desk will help you complete the correct form and explain the procedure to you.
• You can now request a search on the property, and pay the required fee at the cashier’s office. The receipt number will be allocated to your copy of title.

-When it comes to the management of a sectional title scheme, the majority of trustees will do an excellent job, but it sometimes makes sense to employ a managing agent to take care of what could be seen as a very time-consuming job.

Trustees do not get paid for the hours that they put into managing their scheme and often have to fit the necessary tasks into an already busy work schedule, whereas managing agents do this work only and are experienced in dealing with all sectional title matters.

If trustees do decide to employ a managing agent, they must ensure that they have written contract stating all the conditions of the appointment.

Prescribed management rules 46 and 47 deal with the appointment of a managing agent, and the cancellation of the contract. These rules deal with the authority to employ an agent, and it is up to the trustees to ensure that the contract complies with the PMR.

The contract drawn up should include:

• Term of the contract: PMR 46 says that a managing agent’s contract must run for one year and is renewed automatically unless the body corporate notifies him otherwise. There is no notice period specified and the trustees must ensure that this is included in the contract.

• Cancellation: the contract should include the provision to cancel the contract without notice if the managing agent is found to be non-performing of his duties or is in breach of the terms of the contract. The condition should state that he will have no claim against the body corporate should there be a cancellation.

• Revocation: there are three sets of circumstances whereby the contract could be revoked – liquidation or business rescue of the managing agent or his company; if he or any member of his staff have been found to have been convicted of an offense or involved in fraud of any kind; or if the body corporate has taken a special resolution to revoke the appointment. In the last case, however, the managing agent could claim compensation or damages for loss of income.

Before deciding to appoint a managing agent, trustees should ascertain specifically what it is they want the managing agent to take care of. These tasks should be clearly listed in the contract. These duties could include preparing the annual budget; preparing a schedule of insurance for the scheme; dealing with insurance claims; maintaining the common property; accounting and payment of accounts; minutes of meetings and notices to owners; dealing with complaints from owners, and enforcing rules of the scheme.

The key to a successful relationship is to find a good managing agent, one with contactable references and a good track record. The benefits will be that the administration and management work will be done by a professional in this field and by someone who only does this work. In turn, the performance of the body corporate should improve and the financial situation of the scheme will remain healthy.

–Once your solar PV or backup system has been installed, it’s important to ensure that a Certificate of Compliance (CoC) is issued.

This CoC checks that the electrician who performed the installation has complied with the rules and regulations that are in place to assure a safe installation.

Why you need a compliance certificate

As the property owner, you are responsible for the safety of the electrical installation on your property in terms of the OHS Act. According to the Occupational Health and Safety Act, Act 85 of 1993 (OHS Act), the owners of a premise where electricity is consumed need to be in possession of a valid Certificate of Compliance.

Without a valid electrical CoC, you will find it difficult to prove that you have taken reasonable precautions should anything go wrong. Insurance companies might not pay out for damages; and if someone is injured or dies as a result of the installation, you could be held liable as the property owner.

–An offer to purchase can be canceled but it will be extremely costly.

When a buyer cancels an offer to purchase:

• The buyer may lose their deposit.
• The seller may claim damages.
• The buyer will be liable for the agent’s commission.
• If the transfer of the property is already underway, the attorney responsible for it may also claim costs from the buyer.

An offer to purchase is a legally binding document, therefore, you need to be absolutely certain that you can afford to home, and that you want the home.

The seller, similarly, can be sued, or forced to go ahead with the sale.

However, the offer to purchase may include clauses that allow for it to be cancelled under certain conditions. Suspensive conditions that need be fulfilled before the offer to purchase becomes valid can also be included, allowing for the offer to be cancelled if they are met in a certain amount of time.

It is always best to consult an attorney to help determine whether you can cancel the offer to purchase without legal consequences.

-One of the most confusing terms in a sectional title is exclusive use areas (EUAs)

EUAs can be defined as areas that are part of the common property of a scheme for the exclusive use of certain owners. An owner enjoying exclusive rights to an area is responsible for keeping it clean and tidy and pays a levy to the body corporate to cover any maintenance required to the area.

EUAs do not have any participation quota (PQ) value and are not used in calculating quorums or votes at general meetings.

When selling a unit in a sectional title scheme, it is essential to determine whether an exclusive use area needs to be sold along with the section.

The following will help to determine whether there is an exclusive use area when selling a sectional title:

• Perform a person search on the Seller;
• The Title Deed of the property;
• The Sectional Title Plan;
• Check the levy statement.

It may also be allocated in terms of the Management or Conduct Rules of the Scheme which may not reflect in the above searches.

It may be worth asking the Seller or Managing Agents to confirm.

– A beetle compliance certificate is a document that is often included in the Offer To Purchase (OTP) in the Western Cape and Kwazulu-Natal regions that certifies that a property is beetle-free.

In the Western Cape there are three Wood borer Beetles that are commonly specified:

• Anobium Punctatium (commonly known as furniture beetle) – found predominately in wooden flooring
• Hylotrupes Bajules (commonly known as the European house borer) – found predominately in roof trusses, fascia boards and wendy houses
• Oxyplerus Nodieri (commonly known as the longhorn beetle) – found predominately in roof trusses, fascia boards and wendy houses

The participation quota is the formula used to calculate an owner’s levy contribution in a sectional title scheme.

It is calculated by dividing the number of square metres occupied by the owner’s section by the total floor area of all sections.