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30 Apr 2021

AN INCREASE IN CONVEYANCING FEES FROM 1 MAY 2021

An increase in the recommended tariff for conveyancing fees has just been published. This is in line with the annual increase in inflation as reflected in the Consumer Price Index. The increase will be effective and applicable to all transfer and bond instructions received as from 1 May 2021.

The increase affects all conveyancing fees, but the most important part relates to the registration of bonds and transfers, where the increase is just short of 4,5%. The best way to assess the change is to look at 3 examples.

For a bond or a transfer with a value of R1 000 000, the attorneys fee component of the costs will now increase from R19 600 to R20 580.

For a bond or a transfer with a value of R3 000 000, the increase will be from R35 600 to R37 180.

For a bond or a transfer with a value of R5 000 000, the increase will be from R51 600 to R53 780.

These figures exclude VAT at the current rate of 15%.

Our fees will be adjusted accordingly, and we will amend our cost sheets and our online cost calculators as soon as possible.

Deon Welz
Miltons Matsemela Inc.

13 Apr 2021

The POPI Compliance Manual – Your POPI compliance simplified!

The deadline for the implementation of POPI into all our businesses is 1 July 2021. This is just around the corner. For those of you who have looked into what needs to be done the prospects are daunting.

We hope that you have read our two previous publications relating to [1] obtaining consent from our clients to work with their personal information, and [2] the rules relating to direct marketing. These are two critically important aspects of the new law that need to be understood and implemented.

The third and most onerous requirement of this new law is however the creation of a POPI “Compliance Manual” in which the rules and procedures relating to the processing of personal information in your business are set out. This document is similar to the Risk Management and Compliance Programme that was required by all estate agencies in terms of FICA. To save you the time and trouble of preparing your own such POPI Compliance Manual, we have prepared a “standard’ version of a Compliance Manual that, with minor amendments, should work for most estate agencies. This document is available in Word format here. Feel free to download the document and to make it your own. We would however appreciate it if you would acknowledge ourselves on the document in recognition of the assistance that we have given with the implementation of POPI into your business. We don’t want our work to be stolen by others who might pass it off as their own.

POPI compliance is still in its infancy, and we do not yet know how it will be eventually look. There was accordingly very little guidance available for us. While we can’t assure you that the Compliance Manual is perfect in every respect, we have spent a lot of time and trouble in preparing the document and it is almost identical to the one that we have adopted in our own business. We are therefore confident that it will pass muster, and that if you implement the procedures and follow the guidelines, you will have nothing more to worry about.

The problem with a generic document like this is that it cannot take into account the unique characteristics of each business, and you must therefore read the document carefully and understand it to ensure that all parts are applicable to you. The parts of the document that will certainly need to be customised for your business would be Section D, which deals with Security Safeguards; clause F 2, where you need to insert the amount you will charge to respond to a request to provide copies of personal information; and Section J, where you will have to insert name of your Information Officer. Please be careful if you delete any parts. The document has been designed to tick all the boxes as required by the Act, and a deletion might result in non-compliance.

In the Compliance Manual you will also see references to annexures and forms. These annexures and forms are also listed in Section O. To assist further we have created these annexures and forms for you, and they can be found here. Once again, feel free to download the documents and to make them your own.  Some of the documents has been created by us or customised for use by an estate agency. Others have merely been converted from the .pdf documents that were published as part of the Regulations or Guidance Notes.

I know that this last step in compliance is going to be a difficult one. We are however all in the same boat. I do hope that what we have provided for you will simplify the implementation of POPI into your business, so that you can spend more of your time on the real work of meeting the property needs of all your clients.

Kindest regards

Deon Welz
Miltons Matsemela Inc

12 Apr 2021

DIGITAL SIGNATURES – LATEST CASE LAW!

Never before in our country’s history, have we seen a concerted effort in the property industry as we did, during levels 5 and 4 of lockdown, for estate agents; attorneys; sellers and purchasers to find “alternative methods” to sign sale agreements for land, when they had no access to printers and could not meet face to face as we are all accustomed to. And this, all because the Alienation of Land Act of 1981 (ALA), requires all sale agreements of land to be signed. In addition the case law that has evolved under the ALA has always interpreted signatures to mean “wet ink signatures”. And to top it off, the Electronic Communications and Transactions Act 25 of 2002 (ECTA), specifically states that electronic signatures, may not be used for the sale agreements of land! So we all had to come up with some interesting methods to ensure that sale agreements were properly signed during Covid level 4 and 5 lockdown!

The question which has of course arisen, is what exactly constitutes an electronic signature for the sake of ECTA, when dealing with the sale of land under the ALA?

We finally have some case law which is certain to be referred to and relied on (or criticised) in the years that lie ahead, on this vexing topic! In the matter of Borcherds and Another v Duxbury and Others one of the parties had concluded a sale agreement of land on 20 June 2020 in the Eastern Cape, by signing the contract and initialling it, utilising an application loaded onto his cellular telephone called DocuSign. He had imported images of his actual “wet ink” signature and initials into the DocuSign application on his phone and then applied these to a digital copy of the contract, using the same application. This was all “common cause” between the parties.

But – it has been trite law in SA for decades now, that for the sake of a “signature” on a sale agreement of land, a so called “wet ink” signature has always been required or to be more specific, a “mark” made by a person holding a pen or pencil, or even a thumb print using an ink pad. But to simply copy a photo image and then to paste it onto a digital copy of a sale agreement…? Is this legal and binding? Does this amount to “making your mark?”

It was submitted by the opposing team that by utilising the DocuSign application to sign the contract, the signatory had applied electronic signatures to the contract within the meaning of ECTA and that as such, the contract was of no force and effect as it did not satisfy the signature requirement of the (ALA), read with all the case law that has evolved over the years, requiring “wet ink” signatures.

The court however reflected on the fact that the words ‘sign’ and ‘signed’ are not defined in the ALA. It also reflected that the approach of the courts to signatures has always been pragmatic, not formalistic. They look to whether the method of the signature used, fulfils the function of a signature (which is, to authenticate the identity of the signatory) rather than to insist on the form of the signature used.

The court reflected on the fact that in the days before electronic communication, the courts were willing to accept any mark made by a person for the purpose of attesting a document, or identifying it as his act, to be a valid signature. A ‘signature’ is after all the person’s “distinguishing mark” made with the intention to be identified as his mark. The court reflected on another decision where the court had held that a signature could even be effected by means of a rubber stamp! The importance of the long string of cases that deal with signatures, lies in the recognition that the word ‘sign’ means to “sign by name or by mark”.

The court also looked at some authority where the concern with digital signatures, lay in the possibility of abuse, but in this case, there was no denying, that the digital image of a signature was that of the actual signatory. Applied to the facts of the case, it was thus common cause that the signatures and initials of the party who used DocuSign were simply digitised versions of original handwritten signatures and initials.

On these facts the court then held that “by affixing their signatures and initials to the contract utilising the DocuSign application the[signatory] signed the contract as envisaged in s 2(1) of the [ALA] Act with the intention of being bound to the contract as seller”. The court therefore upheld the argument that this signature complied with the requirements of ALA!

Our take? We would advise you to treat this judgment with caution. Remember that this was a single judge ruling by a court in the Eastern Cape, which is not at all binding on any other province or high court. Until the Supreme Court of Appeal rules similarly or the ALA and/or ECTA is amended to specifically cater for signatures of land sale agreements in this manner, we are nowhere near certainty on this point. We would like to therefore suggest that you rather stick to “old school wet ink signatures”, as far as possible!

Kind regards
Robert Krautkramer
Miltons Matsemela Inc.

07 Apr 2021

Who Gets the House on Divorce?

Historically 44% of South African marriages have ended in divorce, and there has reportedly been a 20% surge in new divorce applications since lockdown. For those unfortunate couples whose marriages do eventually fall apart, often the most important asset in play from both a financial and an emotional perspective is the family home. So it is crucial for any couple contemplating marriage, or currently married but considering a split, to understand what our law says about who gets what on divorce.

Your divorce order as issued by the divorce court will be the “final word” here. If you have been able to agree on a split of assets and liabilities your agreement will typically be contained in a “consent paper”, and agreement is of course very much “first prize” here. Particularly if you have children – exposing them to a bitter fight over assets and to the risk of having to leave their childhood home and neighbourhood will only add to the disruption and the trauma in their lives. In any event if you can’t agree to the terms of the divorce, you are in for some emotional, time-hungry and expensive litigation before a court finalizes the split for you.

A variety of factors will be at play here, all linked to the question of what “marital regime” applies to your marriage so the first question you need to ask is whether you are married in or out of community of property – and if out, does accrual apply?

If you are married in community of property

This is the default marital regime for South African marriages, and if you didn’t sign an ante-nuptial contract (“ANC”) before you married, all your assets and liabilities at date of divorce (with a few specific exceptions) will automatically belong to both of you in “undivided shares” i.e. 50/50.

Typically, your divorce order and/or consent paper will provide for one spouse to become the 100% owner of the communal home, with a suitable financial adjustment between you to account for the value of the other spouse’s 50% share.

No formal transfer of the share in the property in the Deeds Office is needed, your attorney will just arrange for an endorsement on the property’s title deed to transfer ownership.

If you are married out of community of property

You have two separate estates and what you bring into the marriage remains yours, as does any growth in asset value during the marriage, depending on whether the accrual system applies or not.

As to who keeps (or gets) the house, and as to how much if anything the other spouse must pay in return, that will depend on a host of factors including the terms of your ANC and whether you were married with or without “accrual”.

“With accrual” is the default unless you specifically opt to marry “without accrual”. In practice most modern couples specifically opt for accrual, in which event the difference in growth in value between the estates, if any, during the marriage of your two estates will be split between you.

If the house is currently registered in only one of your names and that spouse is to keep the house, no formal transfer nor endorsement of the title deed will be necessary. If however the other spouse is to become the registered owner, a full transfer of ownership in the Deeds Office is needed. Although an exemption from transfer duty applies in this case, there will still be other transfer fees and costs to consider.

If you are co-owners of the property (in other words, if you are jointly recorded as owners on the title deed) you may want to transfer the one’s share to the other spouse. Again, a transfer will be needed. There is however nothing to stop you agreeing on a temporary or permanent continuation of the co-ownership after divorce, perhaps to minimize disruption to your children’s lives, or perhaps while you jointly market and sell it at the best price (in which event your agreement should specify in detail who will pay what costs, what the minimum purchase price will be, interim arrangements, and so on).

Who pays off the mortgage bond?

If you are currently registered as co-owners, both of you will be equally liable for the full remaining debt owing to the bank. If one of you is the owner and the other is to take transfer, the current owner remains solely liable for the loan debt until released by the bank.

Whichever spouse keeps (or takes over) sole ownership of the house will have to make a new loan application to the bank in his/her own name and be substituted as the sole debtor/mortgagor.

If you get the house, how will you pay out your ex-spouse?

As above, normally there will be a financial adjustment between you to compensate the other spouse, and if you don’t have the funds available you may need to ask the bank for a second mortgage. You could of course also agree to sell the house and split the proceeds after settling the existing bond.

What if our house is owned by a trust or company?

Houses and other properties have historically often been held in trusts or companies for estate planning and asset protection purposes, and our courts are regularly called upon to resolve bitter disputes along the lines of “it was all a sham, the house never really belonged the trust, so please Judge order the trust to put it back into the pot as a personal asset”. Here the law refers to “piercing the corporate veil”.

The spouse making such a claim will generally have to prove some form of “abuse” of the trust before a court will order that the house in fact belongs to the other spouse personally. But there are grey areas here and professional advice specific to your particular circumstances is essential.

Prevention being better than cure….

Your house could well be your marriage’s most important asset both financially and emotionally. Rather than fight over it when divorce looms, seek professional advice before you tie the knot on what marital regime is best for you, and on how best to sort out who gets the house if you should be unlucky enough to part ways down the line.

In closing:

The above is a very simplified summary of the various scenarios one may face in a divorce. Remember, that it will not only be your ex-spouse that will have to be paid. All transactions in the deeds office will carry conveyancing costs and deeds office fees. In addition, you will require a rates clearance certificate, a levy clearance certificate (if the property is part of a housing scheme) and possibly, compliance certificates. The bank that agrees to the substitution of debtor or that grants a new bond will also charge an initiation fee that may be payable in advance. Anyone contemplating taking over ownership of a property, or a share therein, following a divorce would therefore be wise to obtain a quotation for all of this work from a firm of conveyancing attorneys before agreeing to a settlement on this basis.

This article was published recently by LawDotNews and we credit the original author. We have made minor amendments to the text to clarify aspects of the article that we thought were of importance.

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