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06 Jun 2022

DEADLINE ALERT – ASBESTOS REGULATIONS – WHAT DOES THIS REALLY MEAN FOR PROPERTY PRACTITIONERS AND SELLERS/LANDLORDS?

It has come to our attention that an asbestos inspection company is sending emails to estate agents stating that it is now mandatory for sellers and landlords to “disclose the presence of any asbestos materials in a property, before entering into a new sale or lease agreement”. The article also states that the Property Practitioner Act requires sellers and landlords to disclose the existence of all defects. It therefore suggests that the mere existence of asbestos, is a defect, and that this must now be disclosed. The author relies on the recently published Asbestos Abatement Regulations to substantiate this view. (Read here to view our previous publications on this topic – Asbestos roofing article

We disagree with the views expressed in this article.

The regulations do not in any way oblige sellers or landlords to disclose the mere presence of asbestos. The regulations only require owners of properties which have asbestos, and which may expose workers to a risk of exposure, to have it inspected, or what to do, if they wish to treat or remove asbestos. Furthermore, it is established law that where a purchaser purchases voetstoets, the seller can only possibly be held liable for material, latent defects he actually knew of and fraudulently withheld at the time of sale, and which the purchaser could not determine himself upon a reasonable inspection.

There is not and never has been a duty to “disclose all defects”. And these PPA certainly does not change this as is alleged.

The mere fact that asbestos happens to form part of the roofing for example does not amount to a defect in any manner or form, which is what this article suggests. Assuming there is asbestos and assuming the property has been inspected, and that the asbestos has been found to be a threat, then this may need to be disclosed as a defect. At best, agents may want to possibly add some further questions to their condition reports, along the lines of:

Does the property have any asbestos that you are aware of which could also expose a worker to any risks associated with asbestos?

If so, has the property been inspected in terms of the Asbestos Abatement Regulations and can you provide a copy of the report?

If the seller cannot answer these questions to a purchaser’s satisfaction, then it is for a purchaser to decide whether to make an offer or to attach any further conditions in this regard, if so inclined.

We hope this will clarify any confusion which this article may cause.

03 Jun 2022

New Ruling on Divorce Assets: How Does it Affect You?

Whether you are about to tie the knot or about to divorce, you should know about an important new ruling from the High Court, declaring a section of the Divorce Act to be constitutionally invalid.

We start off with a recap of the 3 choices of “marital regime” available to you on marriage, then we discuss whether or not this new ruling will apply to your own marriage situation.

For those of you to whom it does apply, we analyse the practical effect of the Court’s judgment on your financial rights and prospects in divorce.

“…the inequality at hand is caused when, after the conclusion of the marriage, a distortion is caused by the fact that one spouse contributes directly or indirectly to the other’s maintenance or the increase of the other’s estate without any quid pro quo.” (Extract from judgment below)

You may have read of the recent High Court decision declaring a section of the Divorce Act invalid.

To understand the importance of this new ruling for many couples about to divorce (and for all couples about to marry), let’s start at the beginning –

A recap – your 3 choices of “marital regime” on marriage

  1. You can marry in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This by the way is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry.
  2. You can marry out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC (ante-nuptial contract) specifically excludes it.
  3. You can marry out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.

Before we move on to the altogether less happy subject of divorce – if you are about to marry, take full advice on which of these options is best for you before you tie the knot!

Does this new ruling apply to your marriage?

This ruling does not apply to you if your marriage was terminated by death or divorce prior to the judgment (which was handed down on 11 May 2022).

It does apply to you if –

  1. Your marriage is still in existence, and

  2. You chose Option 2 above, in other words if you are married out of community of property without accrual, and

  3. Your marriage was concluded after 1 November 1984. Why that 1984 cut-off date? Well, what this High Court case was really all about was the fact that where a marriage was concluded before 1 November 1984 (that’s when the new “Matrimonial Property Act” took effect), courts had a discretion to make a “redistribution order” transferring assets between the divorcing spouses. But (until now) courts have had no such discretion for marriages concluded after the cut-off date.

The constitutional invalidity

That time bar – the 1 November 1984 cut-off – is set by a section of the Divorce Act. And that, held the Court, is unconstitutional because it discriminates between couples based solely on the date of their marriage.

It deprives couples married after the cut-off date of the opportunity to ask a court for a share of benefits acquired during the marriage, based on their respective contributions (direct and indirect) “to the other’s maintenance and estate growth during the subsistence of the marriage”. In practice (until now), a spouse could be left destitute after spending decades contributing to a marriage and to the other spouse’s wealth.

The Court’s declaration of constitutional invalidity, whilst it must still be confirmed by the Constitutional Court, changes all that.

The practical effect of the ruling

  • Courts now have a very wide discretion to order a “redistribution” of assets between you and your spouse, ordering a transfer of assets and money from one spouse to another, regardless of what your ANC provides.
  • That gives you the right to claim compensation for your contributions to the marriage, in other words to claim a fair share of wealth accrued during the marriage (assets brought into the marriage aren’t affected). You will have to prove your case, show what you contributed, and convince the court that a redistribution in your favour is warranted.
  • The practical effect of such a redistribution order “is that the party who contributed to the other’s gain is compensated for its contribution to the extent that a court finds just and equitable. To this end, the court is cloaked with a wide discretion taking into account an infinite variety of factors.” Factors likely to be considered are each spouse’s respective contributions of time, services, savings of expenses, their current financial positions, what was agreed in the ANC, and the like – each case will be different.
  • Note that this is not the same as accrual (Option 3 above). With accrual, the spouse with less asset growth (accrual) during the marriage has an automatic claim against the other for half the difference. But with a “redistribution order”, there is nothing automatic or 50/50 about it – instead the court exercises its discretion as to what (if anything) to award to who.

The aim here is not to put the spouses into equal financial positions, the aim is to redress an unfair financial imbalance.

03 Jun 2022

Landlords: Zoning Law Contravention Could Invalidate Your Lease

Here’s a warning to property owners to know and comply with your local municipal zoning laws. Contravene them at your peril.

For example, as a landlord you could be left with an invalid lease, and no claim against your tenant for arrear rental, municipal service charges, or anything else. That’s exactly the fate that befell a landlord recently when a High Court ruled in favour of a tenant whose business (“coffee shop, home industry and restaurant”) fell foul of the “Single Residential 2” zoning that applies to the leased premises.

We discuss the outcome in that case and end off with some practical suggestions for both property buyers and landlords.

“…it is a general rule that a contract impliedly prohibited by statute is void and unenforceable…” (extract from judgment below)

Here’s yet another warning from our courts of the importance of complying with your local municipal zoning laws, whether you buy property to live in, as a capital investment, or to let out.

One risk for a landlord is finding yourself with an invalid lease and no claim against your tenant. A recent High Court decision illustrates –

The unlawful coffee shop and the invalid lease

  • A landlord rented premises to a tenant for use as a coffee shop, home industry and restaurant. The tenant also resided on the premises, but no rental for the residential component was specified in the lease.
  • The business use was contrary to zoning provisions indicating that the property could only be used for dwelling purposes as it was zoned “Single Residential 2”.
  • The landlord, although aware of the zoning restrictions, told the tenant that she could operate her business.
  • When the landlord sued for arrear rental and payment of municipal charges the tenant’s defence was that the lease was invalid and unenforceable.
  • The High Court (hearing an appeal from the Magistrate’s Court) held the lease agreement to be illegal, void and unenforceable. The tenant, it said, could not be expected to establish from the municipality, before entering into the lease agreement, whether the premises could be used for her business. She had seen other restaurants in the same street and had no reason to question the landlord’s right to allow her to trade as she did.
  • As to the applicable law, the Court found that “although it is a general rule that a contract impliedly prohibited by statute is void and unenforceable, this rule is not inflexible or inexorable [inevitable].” The Court’s analysis of when this will apply (and when it won’t) will be of great interest to property professionals, but for most landlords the important thing is the fact that your lease will normally be invalid when it contravenes local legislation.
  • In that event, you will have no claim against your tenant because, as the Court here put it “this court shall not countenance unlawful conduct by allowing the [landlord] from benefiting from an illegal contract.”
  • Bottom line – the coffee shop tenant is not liable for rental, nor even for municipal charges relating to her occupation and use of the premises.

Zoning – what to do when buying or letting out property

The bottom line is that you need to understand all local zoning restrictions before buying property or letting it out to a tenant. If as a landlord you are aware of a possible issue in this regard, take professional advice on whether you may be able to word the lease in such a way as to protect you from losing all your claims against the tenant should worst come to worst.

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