Welcome to Miltons Matsemela - The Conveyancers
17 Dec 2019

LEASE – SELLING A PROPERTY WHICH HAS A LEASE IN PLACE:

Herewith a few “rules of the road”

  1. General Golden Rule #1 – “Huur gaat voor koop”- your tenant’s lease takes preference over any sale agreement. As such you can sell, but the tenant can remain on the property and the buyer can be forced to take over the lease.
  2. If your lease is still in a FIXED TERM period (i.e. it is a 12 or 24 month lease for example) then ONLY THE TENANT may give 20 business days’ notice to terminate at any time during the lease. Unless it is specifically and clearly written into the lease a landlord does not have the same right to early termination. If your tenant does not agree to terminate before the lease expires, your buyer will have to take over the lease unless transfer is delayed to coincide with the termination date of the lease.
  3. If the fixed term is coming to an end make sure proper notice is given to effect termination in terms of the CPA – not less than 40 business days before termination, and not more than 80.
  4. If it is MONTH to MONTH lease, ensure that notice of termination is given properly (usually one FULL calendar month unless the contract provides otherwise) and in accordance with the lease agreement’s requirements. A full calendar month means that notice must be given BEFORE THE 1st of the month, and NOT ON THE 1st!
  5. ALWAYS check whether the lease makes provision for the tenant to have an OPTION TO RENEW – this is a unilateral right the tenant has and only the tenant can waive it. It allows the tenant the right to renew the lease for another period of time, and the landlord/buyer will be bound to this.
  6. ALWAYS check whether the lease makes provision for a RIGHT OF FIRST REFUSAL – this right, places an obligation on a landlord to first offer the property to the tenant before being able to commit to any other offers.
  7. If your sale agreement promises VACANT OCCUPATION ON TRANSFER make 100% sure you have given proper notice to the tenant!
  8. If your tenant refuses to vacate by the time you must give occupation / date of transfer, you have no choice but to start with eviction proceedings. Some common questions we get:
    • May I change the locks and remove the tenant’s furniture? – NO
    • May I disconnect water / electricity? NO
    • May I place other tenants in to make life difficult for the tenant? NO
    • May I do ANYTHING to try and force the tenant out without going to the trouble of getting an eviction order? NO
  9. How long does an average eviction take? Sometimes a tenant will do a midnight run a week after receiving an application for eviction. But most tenants stick it out to the bitter end and then it can EASILY take 3 – 4 months – or more.
  10. What does an eviction cost? It can cost as little as a couple of grand, up to around R30 000 depending on how much time and effort it takes. There is no way of knowing in advance.
  11. Can I recover these costs from the tenant? Theoretically YES – but good luck with that one!
08 Nov 2019

THE STORY BEHIND MOVEMBER

Don’t MO it, GROW it!

During the month of November, we all see men growing their moustaches, trying to emulate Tom Selleck in Magnum P.I. I myself was asked by my firm to grow mine, probably or so I thought, for the sole purpose of posting a selfie at the end of November on our Social media pages. Never one to just partake in something without knowing why (and making a fool of myself by looking like a 1980’s police-officer), I decided to do some research into the origins of Movember, with the hope of finding a deeper meaning. I certainly did!

According to Wikipedia, Movember is a “combination of the two words, “mo” for moustache and “November”. It is an annual event that involves men growing their moustaches during the month of November to raise awareness of men’s health issues, more specifically for prostate cancer, testicular cancer, and men’s suicide.”

So, where did it all start?

In 2003, two Australian friends, Travis Garone and Luke Slattery, met up for a beer and they came up with the idea that would eventually be “Movember.” They found 30 guys willing to take up the challenge to grow their moustaches (which was a dying trend) for cancer awareness and men’s health issues. These guys and girls willing to grow their “mos” are referred to as Mo Bros and
Mo Sistas. Movember was born!

In 2006, Movember reached official charity status in Australia.

In 2010, Movember officially hit the motherland of South Africa in partnership with CANSA (Cancer Association of South Africa). Through its funding, the world’s first Prostate Cancer Genome Mapping Project was completed, which assists us in understanding of how prostate cancer works. It was also through Movember funding alone, that it was possible for the University of Michigan to identify that there are over 25 different kinds of prostate cancer.

Today, Movember is ranked in the top 100 NGOs (charity) in the world, based on three primary criteria: impact, innovation and sustainability. (just to note that there are over 5 million NGO’s in the world, so this is no mean feat). The Mo Bros and Mo Sistas have grown to over 5,5 million and currently over 1250 men’s health projects has been funded. Movember has raised over R5 billion in support of men’s health issues.

Globally, a man dies by suicide, every minute. In South Africa, 75% of suicides, are male. Prostate cancer is the number 1 cancer affecting men in South Africa. Statistically, 1 out of 19 men will develop prostate cancer. Testicular cancer will affect 1 out of 270 men globally.

Taking part in Movember is more than just a selfie at the end of November. It’s about showing support for men world-wide that struggle with health issues. It’s a sign that we acknowledge each other as men, as humans and that we stand in solidarity for something that affects us all.

If Faf de Klerk can meet a Prince in his underwear, I can and shall proudly grow my moustache!

Elbe Young
Miltons Matsemela
Movember 2019

02 Oct 2019

Dementia and Incapacity: What is a Power of Attorney and is it Forever?

“The number of cases of dementia is estimated to almost triple by 2050” (World Health Organisation)

It’s a growing problem – with our aging population comes a steady increase in the number of older people developing dementia and other incapacitating mental conditions.

How as a family member or caregiver can you help? How as a person approaching old age can you plan for a future time when you will need help? Your first thought will likely be the quick, simple and cheap option of a power of attorney, but beware – it will fail (in a legal sense) just when it is needed most.

We’ll have a look at what a power of attorney is, at why it is (unfortunately) not a “forever” solution, and at the alternatives available to you.

Although the actual prevalence per capita of dementia is reportedly on the decline, aging populations ensure that it is becoming more and more of a problem in society – for older people, their families and caregivers.

If someone close to you (normally an aging parent or relative) needs – or may in the future need – assistance with their financial affairs, your first thought will probably be a power of attorney by which the “principal” appoints an “agent” to act for him/her, either for a particular purpose (a ‘special power of attorney’) or generally (a ‘general power of attorney’). You may well have the same thought if you yourself are approaching old age and starting to plan for your future needs.

A power of attorney is certainly a quick, cheap and easy solution but be careful – it’s only a temporary one. It is not “forever”!

The downside – automatic termination (just when help is most needed)

Of course a principal can cancel his/her own power of attorney at any time, but what is not so well known is that it terminates automatically if and when the principal –

  1. Dies (an executor is then appointed); or
  2. Becomes insolvent and his/her estate is sequestrated (a trustee is then appointed); or
  3. Becomes mentally incapacitated in the sense of being no longer able to make his/her own decisions for whatever reason – perhaps a stroke, coma following an accident, mental illness, dementia, Alzheimer’s, general age-related diminishing capacity etc.

It’s this last scenario that catches most people unawares, because it seems so illogical for the power of attorney to lapse just when it’s needed most.

But that, unfortunately, is the law. An agent can only do what the principal can do, so if a principal loses legal capacity, the power of attorney immediately fails. Or as a Department of Justice document neatly puts it: “In South Africa the power of attorney remains valid only for as long as the principal is still capable of appreciating the concept and consequences of granting another person his or her power of attorney”.

In practice there are probably many cases of powers of attorney continuing to be used to everyone’s benefit long after the principal has lost formal capacity, but an agent in that situation acts without authority and risks personal liability for doing so if the validity of anything done under the failed power of attorney is challenged.

So what are the alternatives?

  • The High Court can appoint a “curator” when a person becomes unable to manage his/her own affairs. A curator bonis handles all the person’s financial affairs, a curator ad personam his/her personal affairs (such as giving consent for medical treatment, where to live etc). Unfortunately curatorships are costly, prone to bureaucratic red tape and delay, paternalistic and, being public, demeaning to the principal.
  • A simpler and cheaper alternative is the appointment by a Master of the High Court of an “administrator” in terms of the Mental Health Care Act. An administrator only has power to deal with the person’s property (not personal affairs), and this alternative is only available in cases of actual “mental illness” or severe/profound intellectual disability, and only for smaller estates (assets up to R 200,000 and annual income up to R 24,000).
  • A trust to address the purely financial aspects might also be worth considering whilst the person in question still has legal capacity. Take advice however on the costs, tax and other implications.

What about an “enduring” or “conditional” power of attorney?

In 2004 the South African Law Reform Commission recommended changes to our law to allow for alternatives like –

  1. An “enduring power of attorney” (or “EPA”) which would remain valid despite the subsequent incapacity of the principal; and
  2. A “conditional power of attorney” which would come into operation only on the incapacity of the principal.

Unfortunately nothing concrete has as yet come of that, and although some legal commentators suggest that our courts might perhaps uphold a properly-worded EPA, the general consensus appears to be that they will not be recognised.

It boils down to this – take full legal advice on your particular circumstances.

26 Sep 2019

OFFER TO PURCHASE ACCEPTANCE – DOES ACCEPTANCE OF AN OFFER TO PURCHASE HAVE TO BE COMMUNICATED TO A PURCHASER? THE LATEST CASE ON THE SUBJECT CASTS DOUBT!

The judgement in the matter of Terry and Terry v Solfafa and Others, which judgement was delivered in the Bloemfontein High Court on 29th of August 2019, has recently come across my desk.

In the matter, Mr and Mrs Terry were seeking an order compelling Ms Solfafa to transfer a property which they had bought into their name. Ms Solfafa raised three defenses to the claim.

Firstly, she argued that because Mr and Mrs Terry were married in community of property, and because only Mr Terry had signed the deed of sale, the agreement was invalid. It did not take the judge long to dismiss this argument. The Matrimonial Property Act leaves no doubt that either spouse who is married in community of property can bind the joint estate to purchase immovable property on their own. It is only when immovable property is sold (or mortgaged) that the written consent of both spouses is required.

Secondly, she argued that because the agreement was subject to the “successful sale” of the Terry’s property, and because it had not been transferred by the due date, the agreement had lapsed for want of fulfillment of this suspensive condition. Once again, the judge found against her and interpreted the term “successful sale” in this contract to mean simply the signing of a deed of sale, not the registration of transfer.

Thirdly, she argued that after signing the deed of sale, and before the acceptance of the offer had been communicated to the purchasers, she revoked her acceptance. On this point the judge found that her signature to the deed of sale alone was sufficient to bring about a binding deed of sale, despite the fact that her acceptance had not yet been communicated to the purchasers.

It was this last point that caught my interest. This is because our common law on the point is clear, and is against the learned judge. In terms of our common law, the general principle is that a contract only comes into being once acceptance of the offer has been communicated to the offeror. The reason for this is obvious. A person needs to know when they are bound by a contract. If they do not know they might do something which will prevent them from being able to perform in terms of the contract (like buy another house). Also, obligations in the contract might fall due for performance, and if a person does not know that they have obligations to perform they could easily fall into breach and become liable for damages.

There will obviously be some exceptions to this rule, for example, some deeds of sale specifically provide for communication of acceptance of the offer to be made to the estate agent. These exceptions should however only come about when the contract specifically provides for this or when circumstances clearly dictate.

In our case, the judge referred to a previous case which had decided that when an offer is made in writing, it will be easier to infer, “in the absence of any indication to the contrary”, that for the contract to arise, the acceptance required was no more than a signature.

The judge then leaped to the conclusion that Ms Solfafa’s signature to the offer to purchase was sufficient to bring about a binding deed of sale here.

While I have not read the contract in this case, and with respect to the judge, I found his reasoning to be weak. Nevertheless, it is a judgement of the High Court, and it will therefore have persuasive value in other cases on this point that might arise in the future. For this reason, I believe is important to check the wording of your deed of sale to ensure that there is no room for doubt.

We suggest that your deed of sale (or offer to purchase) should specifically provide that the contract will only come into existence once the seller’s acceptance has been communicated to the purchaser or the estate agent. This will make things clear, it will protect all of the parties, and it will ensure that there will be no dispute on the point in the future.

If you need help in amending your contract, or if you are not sure what to do, do not hesitate to contact one of our attorneys for guidance.

Miltons Matsemela Inc.
Deon Welz
September 2019

20 Sep 2019

HOMEOWNERS’ ASSOCIATIONS AND PREFERENTIAL MARKETING AGREEMENTS WITH ESTATE AGENCIES – ARE THEY LEGAL?

The legality of an agreement between a homeowners association and an estate agency, conferring upon the estate agency preferential marketing rights in return for payment of a percentage of the sales value of the property, has recently been decided on by the Supreme Court of Appeal.

This decision was handed down on 16 September 2019 in the case of Atlantic Beach Homeowners Association and others v The Estate Agency Affairs Board (978/218 ZASCA 112).

In this matter, the Estate Agency Affairs Board (EAAB) had brought charges against the Atlantic Beach Homeowners Association (ABHO) and their CEO, Mr Harry White, along with a franchise of Pam Golding Properties (PGP) and their principal, Mrs Emarie Campbell, flowing from a “Property Partnership Agreement” that had been entered into between the ABHOA and PGP.

In terms of this agreement PGP were afforded special marketing privileges and marketing assistance on the Atlantic Beach Golf Estate, in return for which the ABHOA received a percentage of the sales value of any property sold.

Rival estate agencies in the area were obviously dissatisfied by this arrangement and complaints were lodged against PGP at the EAAB. Following these complaints, the EAAB instituted disciplinary procedures against PGP and their principal and instituted criminal charges against the ABHOA and their CEO. These charges were premised on the assumption that the ABHOA was operating as an estate agency without a fidelity fund certificate, and that PGP were complicit.

In their defense, the ABHOA and PGP brought an application in the Cape Town High Court in which they asked the court:

  1. to declare that the ABHOA and their CEO were not estate agents as defined in the Estate Agency Affairs Act (and therefore did not need fidelity fund certificates); and
  2. to set aside the decision by the EAAB to institute disciplinary steps against the parties.

The ABHOA and PGP lost the case in the Cape Town High Court on a technical point, but they took the decision on appeal.

At the appeal hearing, the EAAB argued that because the Property Partnership Agreement placed an obligation on the ABHOA to carry out joint marketing and joint advertising initiatives to generate leads for PGP, and because they received a percentage of the purchase price from the sale as payment, the ABHOA fell within the definition of an estate agent and therefore required a fidelity fund certificate.

The court however did not agree. The court found that a person who merely carries out the functions of an estate agent does not automatically become an estate agent for the purposes of the Act unless they also hold themselves out or advertise, “for the acquisition of gain”, that they are doing this work. To put it another way, the ABHOA would only have fallen within the definition of an estate agent if they had, with the intention to make a profit, made it public that they were carrying out the work of an estate agent.

The court interpreted the ABHOA‘s obligations in terms of the Property Partnership Agreement to be nothing more than the provision of marketing benefits and it was in return for these marketing benefits that the ABHOA was to be paid.

The judge therefore upheld the appeal and set aside all the disciplinary charges that the EAAB had initiated against the ABHOA and PGP.

On the basis of this judgement, it would appear that the way is now clear for individual estate agencies to enter into these types of property partnership agreements with homeowners’ associations or body corporates.

But please beware, arrangements of this nature may not be exclusive, i.e. they may not deprive other agencies of the right to sell property on the estate. This is because such an exclusive contract would fall foul of our competitions law.

Deon Welz
Miltons Matsemela Inc
September 2019

13 Aug 2019

Left Money in a South African Will But Living Overseas?

What happens if you want to access a South African bequest overseas?

BizNews gives you a step-by-step breakdown of how to go about it, depending on whether you are –

  • Non-resident,
  • Financially emigrated, or
  • A South African resident temporarily abroad.

Read also the section on taxation.

Bear in mind that of necessity an article like this can only give you an overview of some general principles, and that getting anything wrong could cost you dearly. Professional advice on your specific circumstances is a no-brainer here!

05 Jul 2019

Business Email Dos and Don’ts

“The email of the species is deadlier than the mail” (Stephen Fry)

Do your business emails enhance your brand or tarnish it? It’s a critical question, particularly for businesses with high email volumes (that’s most of us these days) and it’s entirely up to you what the answer is.

On the one hand it’s all too easy to jeopardise an entire business relationship by hitting the “Send” button on a badly considered, written or configured email. On the other, it’s easy to turn every email you send into a powerful projection of all the good things you want everyone to know about your business and about you personally.

Get started with “The dos and don’ts when sending a business email” on BusinessTech, a 13-point checklist of things to watch for, from “Subject Line” to “Conversation Closer”.

30 May 2019

You Signed a Property Sale Agreement, Can You Still Accept a Better Offer?

Selling property, particularly your own home, is one of the more stressful events in life. Will you get the right buyer? The best price? What if it all goes wrong?

Then an offer comes in that is acceptable, but not perfect. If for example there is a bond clause and the buyer’s bond application fails a month down the line you’ve lost all that valuable marketing time. You’ll never know whether you just missed the “perfect offer” while your buyer filled out bank forms and got FICA’d for the tenth time.

Relax; there is an answer – the “72-hour clause” often found in standard sale agreements. We’ll cover what the clause means, how it works, when you need it, and what should always be covered in it, with a note also for property buyers.

You put your property on the market and an acceptable but not-perfect offer comes in. On the “a bird in the hand is worth two in the bush” principle you want to accept the offer even though it’s not ideal.

Perhaps it’s not perfect because it’s subject to a suspensive condition – common ones give the buyer time to sell his/her current house or to obtain a bond. In both scenarios your sale will fall through if the buyer is unsuccessful within the stated time, and if that happens you are back to square one after a long and fruitless delay. Bear in mind that that delay could be a protracted one depending on what your sale agreement actually provides – normally no less than 30 days to get a bond, sometimes several months to sell an existing house. That’s a lot of very valuable marketing time lost – and you’ll never know for sure whether you just missed out on that “perfect offer”.

The “72-hour clause” and what it does

This is where the “72-hour”, “continued marketing” or “escape” clause comes in handy.

In a nutshell, it allows you to continue marketing your property until suspensive conditions are met. If your marketing pays off and an unconditional offer does come in, you can give your existing buyer 72 hours’ notice to match it. So the buyer would have an opportunity to make the sale unconditional – either by waiving (abandoning) the condition or by fulfilling it.

If the buyer fails to do whatever the clause requires within the 72 hours, you are clear to accept the new offer. If on the other hand the buyer does perform in time, the existing sale immediately becomes fully binding and the transfer process can get underway.

A note for buyers

The clause is usually there for the seller’s benefit so perhaps avoid it when you can. But if it’s a choice between your offer being accepted or not, bear in mind that having a signed sale agreement at least gives you a solid base for a full bond application and/or a concerted effort to finalise your own house sale.

Just be ready to react quickly if the seller does indeed give you the 72 hour notice – you don’t want to be rushing around in a last-minute panic.

Buyers and sellers – check the wording!

Although 72-hour clauses are common in standard sale agreements, the exact wording can vary substantially, and may need tailoring to meet your specific needs. You might for example want to be given proof of availability of funds together with a bond clause waiver, or proof that the sale of the buyer’s house is a viable one – every situation will be different.

Apart from everything else, make sure that –

  • The 72 hour period specifically excludes Saturdays, Sundays and Public Holidays (religious holidays too if important to you),
  • You can extend the 72 hours by mutual agreement if you want to,
  • There are clear requirements for the method and timing of giving notice and of waiving conditions, and
  • You aren’t binding yourself to anything else that could turn around and bite you down the line.

Delete the clause if it doesn’t apply.

As always, have your lawyer check it all for you before you sign anything!

30 Apr 2019

Security Estates: Can You Fine Speedsters?

“When the [property owners] chose to purchase property within the estate and become members of the Association, they agreed to be bound by its rules” (extract from judgment below)

Buying property in security estates and other community schemes comes with a range of benefits, but it’s important to be aware of all the rules and regulations you are agreeing to – our courts will almost always hold you to them!

For example, Home Owners Associations and Bodies Corporate will welcome a recent Supreme Court of Appeal decision upholding the rights of a golf estate to impose a 40km/h speed limit (and penalties for breaching it) on all homeowners, tenants and guests using estate roads.

We discuss the facts of the case (which involved speeding fines totalling R3,000 imposed on a homeowner’s daughter), its outcome, and the basis of the Court’s decision.

There are many advantages to buying in a security estate or other community scheme, including quality of life and increased potential for growth in your property’s value.

As a buyer just be aware that you will almost certainly be binding yourself to a set of rules and regulations imposed by the Homeowners Association (HOA) or Sectional Title Body Corporate. Check that you are happy with them before you sign anything! Our courts have regularly confirmed the general principle that you are bound by what you agree to, and a recent high-profile Supreme Court of Appeal (SCA) decision provides an interesting example.

HOAs and Bodies Corporate on the other hand will be particularly pleased with the outcome, the High Court having originally held that the speed limit rules imposed by the estate in question were an unlawful attempt to usurp State powers over public roads and therefore invalid.

Speeding fines in a golf estate

  • A large golf estate (comprising some 890 freehold and sectional title properties with extensive common areas and facilities) is serviced by a network of roads and pathways. It has imposed a speed limit of 40km/h on its roads, with penalties for speeding.
  • A property owner was fined R3,000 for his daughter’s repeated speeding contraventions, but he refused to pay, and the dispute has since then been grinding its way through the courts.
  • The High Court originally held the speed limit rule to be invalid on the grounds that the estate’s roads were “public roads”.
  • But the SCA overturned this ruling, holding that the estate is a “private township” and its roads are (and were from inception) “private roads”. The “general public” has no right to access the estate’s roads, admission being restricted by electrified perimeter fencing and strict control at gated access points to owners, tenants, employees, guests, invitees and other “duly authorised persons”.
  • Even if the roads had been “public”, said the Court, owners had voluntarily agreed to bind themselves contractually to use the estate’s roads subject to the conduct rules. And because invitees are only allowed into the estate with the owner’s prior consent, the rule making the owner responsible for any breach by them of the rules is valid.
  • Moreover, the estate’s imposition of a speed limit is not unreasonable, especially given the presence of children, pedestrians and animals (wild and domestic) in the estate.

The end result – the estate’s speed limit is valid, it is entitled to impose penalties for breaches, and the owner must pay his daughter’s speeding fines together with some (no doubt substantial) legal costs.

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