The Repo Rate has been reduced by 25 basis points.
What that means is that our interest rates are dropping by 0.25%.
#miltons #knowledge #inthenews !
The Repo Rate has been reduced by 25 basis points.
What that means is that our interest rates are dropping by 0.25%.
#miltons #knowledge #inthenews !
Co-ownership is the mother of disputes (Roman law maxim)
Buying property can be an excellent investment, but it can also be expensive. So sometimes it makes a lot of sense to share the financial burden with someone else. Perhaps for example you are spouses or life partners buying your first home. Perhaps you are a group of families planning to share a holiday house, or two firms looking to co-own business premises.
Just be very careful here…
What can go wrong?
Co-ownership (or “joint ownership” – it’s the same thing) always starts off all fine and friendly. You’re life partners, or business partners, or best friends (you may even be all of those things together) and all is good between you. So nothing can go wrong, right?
Unfortunately it can, and as many bitterly fought court cases can attest, it does. “The sting’s in the tail” as the old proverb has it, and problems tend to raise their ugly heads only down the line, long after you first became joint owners. Imagine a scenario where you can’t agree on how to run the property and/or cover its expenses, or you need to wind up your co-ownership but can’t agree on how to do so. What happens if one of you wants to buy the other out but the other refuses or you can’t agree on a fair price? Or if (as co-owners are entitled to do if not bound to a contrary agreement) they sell their share/s to a total stranger? Or the time may come when you need to/want/must sell your share and your co-owner refuses to cooperate.
The issue here is that when you are co-owners of property you don’t each hold separate title to your own physically-delineated “share”. Your title deed (registered in our Deeds Office) will reflect each co-owner as holding an undivided share in the property. You have to act jointly or call in the lawyers.
A great deal of unhappiness and dispute – perhaps even the cost, delay and hassle of litigation – beckon. For example, a court can order one of you to buy the other out, or to subdivide the property, or even to order its sale (commonly by public auction) – but it really is a last resort to ask a court to decide what is best for you.
A simple solution and a checklist for you
The trick of course is as always to plan ahead. Before you buy the property, take advice on the best structure to use for your particular circumstances. Factors to bear in mind would include things like ease of ownership, cost of ownership, the tax angle, ultimate disposal, estate planning, asset security, protection from creditors, and so on.
A whole multitude of factors, unique to each situation, will determine whether you should own the property in a legal entity like a company or trust, or register it in your names jointly, or find some other way of ensuring that you share equally in both the costs and the benefits of property ownership.
Critically, you need to put in place a written, signed agreement setting out as clearly and as simply as possible –
The above is of course just a summary of some common issues, so ask your lawyer to help you with your own checklist.
“The Internet is a Real Place with Real Consequences” (Rebecca MacKinnon, Internet policy expert)
We live in an age of online commerce. We buy and sell pretty much anything you can think of on the Internet, whilst contracting online for everything from an Uber ride to a plumber’s call out has become second nature.
So we should all know just how important it is to take note of those annoying little tick boxes saying things like “I agree to the terms and conditions available here” (with of course a hyperlink under the “here” leading you to a list of terms and conditions as long as your arm).
An interesting case recently before the High Court illustrates.
“I’ve won R5m” thought the online gambler
A regular visitor to a bookmaker’s online sports betting website was overjoyed when, after placing over 530 bets over an 8 month period, and for a stake of only R100, he successfully picked the winners in 8 different horse races.
His betting slip showed a “total possible payment” of R4,841,728 and that, thought the gambler, was exactly what he’d won (actually it would have been over R5m before tax).
Imagine his disappointment and distress when the bookmaker paid him only R1m, referring him to its online standard terms and conditions. Clause 9, pointed out the bookmaker, was headed “Maximum Payout” and imposed on every customer a daily winnings limit of R1m.
Unwilling to go down without a fight, the punter sued the bookmaker for the full amount. He hadn’t, he said, read the Ts and Cs (he is no doubt in very good company in that, which is indeed the point of this article) and anyway they were, he argued, overridden by the express reference on his betting slip to the full amount.
Let the signer beware
Unfortunately for him his luck had well and truly run out. The Court dismissed his claim with costs, holding that the “total possible payout” figure quoted on the betting slip could not entitle him to a payout in conflict with the daily limit.
Central to the Court’s decision was its finding that the gambler, when he opened his account on the site, must have ticked a box agreeing to the bookmaker’s standard terms and conditions. “When signing the document by placing an electronic tick in the box”, held the Court, “the applicant placed himself in the same position as a person who had physically signed the document. He is bound by the maxim caveat subscriptor [‘let the signer beware’], whether or not he actually took the trouble to read the terms”.
There’s a strong warning there to all of us – when the chips are down (so to speak) ticking those “I agree to the terms and conditions” boxes online binds you to them. You can’t try to evade them later on by saying “I didn’t actually read and understand them before agreeing – no one ever does”. You’re probably thinking “life’s too short to read all that gumpf”. But then pick your times to be cavalier about it, and when there’s a lot at stake rather take the time to read and understand what you’re agreeing to. Get legal advice in any doubt.
But wait, there’s more (a caution for online product and service providers)
This is an area of law still being explored by our courts, and particularly in these days of strong consumer protections, online service and product providers should note that the bookmaker’s case was bolstered by additional facts, two of them in particular –
Hence the Court’s conclusion that the bookmaker “takes all reasonable steps to ensure that the client assents to the terms and conditions before the account is opened and both prior and subsequent to the placing of any bet the punter is told about the limits on winnings.”
Perhaps the bookmaker would have won his case anyway on nothing more than the tick box and the “signer beware” principle, but on a better-safe-than-sorry basis online providers should perhaps follow the bookmaker’s lead on that one and not rely entirely on a one-off tick in a tick box.
When will the enforcement provisions of the Protection of Personal Information Act (“POPI” or “POPIA”) come into effect? Latest indications are that the Information Regulator will announce final Regulations and a commencement date shortly, but there have been so many delays already that we perhaps shouldn’t be holding our breath on that one.
Three important things to note here –
The King and the leaked sales call
To illustrate that risk –
Europe’s 25 May Deadline – Must You Comply?
If you offer goods or services in or to the EU, you must, even if you are based here and not in Europe, comply by 25 May with the EU’s GDPR (General Data Protection Regulation). Take advice on the specifics – although it resembles POPI in many respects, there are key differences. Plus you risk severe penalties for contravention – fines up to €20 million or 4% of your annual worldwide turnover.
“If you hear something (straight) from the horse’s mouth, you hear it from the person who has direct personal knowledge of it” (Cambridge Dictionary)
We all know by now that the VAT rate increases from 14% to 15% on 1 April. How does that affect your residential property sale/purchase?
We are talking big money here – if for example you bought a house from a developer for R10m + VAT, that extra 1% adds R100,000 to your cost. Fortunately a little-known (until now) section of the VAT Act provides some relief to residential property buyers.
This is what SARS has to say about it (slightly simplified) –
Question – “Is there a rate specific rule which is applicable to me if I signed the contract to buy residential property (for example, a dwelling) before the rate of VAT increased, but payment of the purchase price and registration will only take place on or after 1 April 2018?”
Answer – “Yes. You will pay VAT based on the rate that applied before the increase on 1 April 2018 (that is 14% VAT and not 15% VAT).
This rate specific rule applies only if –
For purposes of this rule, “residential property” includes –
But what about commercial property?
Let’s quote SARS again on property generally (once again, slightly simplified) –
Question – “How will the rate increase work generally for fixed property transactions?”
Answer – “The rate of VAT for fixed property transactions will be the rate that applies on the date of registration of transfer of the property in a Deeds Registry, or the date that any payment of the purchase price is made to the seller – whichever event occurs first.
If a “deposit” is paid and held in trust by the transferring attorney, this payment will not trigger the time of supply as it is not regarded as payment of the purchase price at that point in time.
Normally the sale price of a property is paid to the seller in full by the purchaser’s bank (for example, if a bond is granted) or by the purchaser’s transferring attorney. However, if the seller allows the purchaser to pay the purchase price off over a period of time, the output tax and input tax of the parties is calculated by multiplying the tax fraction at the original time of supply by the amount of each subsequent payment, as and when those payments are made. In other words, if the time of supply was triggered before 1 April 2018, your agreed payments to the seller over time will not increase because of the increase in the VAT rate on 1 April 2018.”
Successful entrepreneurs and corporates understand that a happy, healthy workplace environment is a productive one, and that a productive office is a key driver of profitability.
Now picture such a productive office, what springs to mind? What is its colour scheme, how much light is there? Is the temperature comfortable, how are the noise levels, is there a subtle fragrance in the air?
Create your own checklist for creating a really productive office with “5 Office Design Hacks That Will Increase Employee’s Productivity” on the Dumb Little Man website.
In terms of the new FICA laws, every estate agency is obliged to have a Risk Management and Compliance Programme as part of their business documentation. This is a document which sets out your internal rules and processes for the implementation of your Customer Due Diligence and reporting procedures.
We have taken it upon ourselves to prepare such a document for you to assist you in complying with this new law, as we feel your time would be better spent selling property! Our document is also considerably shorter than other versions currently circulating.
Here is a link to the document. You are welcome to download it and adapt it to your own needs. Just beware if you delete anything. Each part of the document has been drafted to meet a specific requirement of the Act, and if anything is removed, you may be non-compliant!
As you are no doubt aware SARS charges tax on any donation which a person makes to another person if the amount donated exceeds R100 000-00 in any tax year. This donations tax is currently running at 20%.
I recently did some research for a client who was about to receive a substantial donation (a half share in a house worth more than R2 million) from her life partner. He was a foreigner and he had no rights of residence here in South Africa.
What I established was that if a South African resident receives a donation from a foreign source, the whole of the donation is completely tax-free. Neither the donor nor the donee are liable for any tax here in South Africa. This worked out very well for my client.
This also provides an interesting loophole for foreigners who intend to settle here in this country. If they wish to divest themselves of assets for estate duty purposes here in SA, just before they arrive, they can establish a South African company or a South African trust and donate a substantial portion of their estate to the company or the trust. Such a donation will have no tax implications here in South Africa.
Kindly note that this information is true at the time of writing. Our tax laws do however change quite often. If you intend to rely on this advice, kindly protect yourself and obtain confirmation that this exemption has not been abolished.
Both sellers and buyers (of anything – houses, cars, you name it) need to understand how the CPA (Consumer Protection Act) has impacted on the very common “voetstoots” (“as is”) clause.
Firstly, what’s the difference between “patent” and “latent” defects?
Before we get into the meat of this question, let’s understand two important terms –
Exactly what is a voetstoots clause?
A general rule in our law is that when you sell something, you give the buyer an “implied warranty” against defects. That can be disastrous for the seller as it allows the buyer, on finding a defect, to claim a price reduction (or sometimes cancellation of the whole sale).
Hence the very common voetstoots or “as is” clause. In effect as seller you are telling the buyer “you agree to take the goods as they are, the risk of defects is on your shoulders, and I give no guarantees”. Note however that a seller cannot always hide behind such a clause – if he/she is aware of a latent defect and deliberately conceals it with the intention to defraud the buyer, all voetstoots protection falls away.
And then along came the CPA
The Consumer Protection Act has been a game changer when it comes to consumer rights. In a nutshell, as a buyer you are entitled to receive goods that are of good quality, “reasonably suitable” for the purposes for which they are generally intended, defect-free, durable and safe.
If anything you buy fails, or turns out to be defective or unsafe –
But does the CPA apply to all sales?
Here’s the rub for buyers – the CPA applies only when the seller is selling “in the ordinary course of business”, so generally “private sales” will fall outside its ambit.
In other words, if you buy a movable like a car from a trader or dealer, the CPA applies and overrides the voetstoots clause. But if you buy from a private seller, the voetstoots clause applies and you have no CPA protection.
What about property sales?
Developers, builders, investors and the like are clearly bound by the CPA. But for private sellers the position is less clear. Although it seems very likely that one-off private sales of residential property don’t fall under the CPA, there is some suggestion that we won’t be 100% sure on that until either our courts rule definitively on it, or the CPA is amended to provide clarity. On the “better safe than sorry” principle, don’t take any chances – cover yourself as below.
Practical advice for sellers
Cover yourself by disclosing any defects you know of to the buyer, and record any such disclosure/s in a written and signed annexure to the deed of sale. A buyer cannot complain if you have informed him/her of the condition of the goods and they have been bought on that basis.
Then if you are selling in the “ordinary course” of your business, be very aware that the CPA applies to you. Understand its very strict requirements (what is said above is of necessity only a brief overview) and the risks of not complying.
If on the other hand you are a “private seller”, make sure you are covered by a properly-drawn “voetstoots” clause. On the off-chance its validity is challenged, you can avoid later disputes with a “belt-and-braces” approach – have the goods checked out by an independent expert (like a home inspection service when selling a house) and have your lawyer incorporate that into the sale agreement.
Practical advice for buyers
Don’t risk having to fight in court over whether or not the CPA applies to your purchase, and over whether or not any voestoots clause is valid. Be warned that depriving a private seller of the protection of a voetstoots clause is never going to be easy, particularly since you will need to prove that the seller intended to defraud you by concealing a defect.
Rather be sure of the condition of the goods before you buy. If the seller hasn’t provided you with an expert report as above, commission one yourself.
Further to our Newsflash last week after the budget speech regarding the changes to VAT, we have received several enquiries as to how the change in the VAT rate will actually impact agreements of sale.
The typical questions we have received and the answers thereto are based on information which we have gathered from SARS’ VAT 404 GUIDE FOR VENDORS, which was issued by SARS’ website, on 21 February 2018 (for those who have access to it we refer to questions 8; 14; 15 and 19 referred to in the guide) can be summarized as follows: