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Monday, 26 March 2012 11:36

No, never!

Only one of the two taxes will be payable in a transaction. VAT takes preference over transfer duty.

The VAT payable is taken from the seller’s perspective. If the seller is registered for VAT and the property forms part of that seller’s (vendor’s) taxable supply, then VAT is payable and not transfer duty. However, if the seller is not registered for VAT or the property does not form part of that seller’s (vendor’s) taxable supply, then transfer duty will be payable.

Published in Property
Friday, 17 February 2012 07:16

The easiest way to determine the boundaries between properties is to consult the official town planning diagrams kept by the local authority in control of the area. In the event of a dispute over the dividing line between two properties, the first point of reference would be the official property plans (diagrams). One can refer to the title deeds of the properties concerned to ascertain plan numbers and with which deeds the plans are filed.

In the absence of proof that a boundary wall or fence is entirely on one of two adjoining properties, it is presumed to half on one property and half on the other. Some legal authorities state that each part is separately owned by the owner of the property on which it stands, but that there are reciprocal servitudes of support. Other authorities state that the wall is jointly owned by the owners of the adjoining properties.

It is important to take note that the law relating to such encroaching boundary walls reflects the influence of both trains of thought and does not concretely swing in either direction. An owner who transfers his property automatically transfers his joint ownership.

Neither owner may without the consent of the other remove, raise or lower the boundary wall or tamper with it in any way except in an emergency, although in terms of common law a neighbour is allowed to break down a wooden fence and replace it at own cost with a more expensive partition.

Either owner my re-erect a boundary wall destroyed by an act of God, such as fire or flood; the other owner would have to contribute half the cost – if he or she will derive any benefit from it. Each owner is obliged to contribute to the maintenance and repair of the wall, although an owner can refuse to contribute to the cost of an unreasonably expensive new wall. Also, an owner is under no obligation to replace with a similar structure a boundary wall that was unreasonably expensive when it was originally erected.

Although both parties are entitled to reasonable use of the boundary wall, this right does not include reducing its strength or making it unstable but does however include improving and altering the appearance of the side that fronts your property. Subject to local authority regulations, either owner my use his side of the boundary wall as support or a beam or for water pipes and may even build on it if it is strong enough.

Title deeds might determine who is responsible for repairing shared walls or fences. A servitude could also make a single owner entirely liable for the costs of upkeep. If one neighbour refuses to make essential repairs, anyone who is entitled to enforce the servitude may obtain an estimate of the costs of repairs, though it is unlikely that a contractor will undertake to handle the repairs if the person responsible for payment refuses to do so.

The owner of a wall who is not bound by a servitude is usually under no obligation to carry out repairs. However, in the case of deterioration that is likely to prove dangerous to the public, a local authority might order the owner(s) of the property to carry out repairs. Should no servitude exist, repairs must be carried out by agreement between the two owners.


In both the High Court judgments of Van Bergen v Van Niekerk & Another and Passano v Leissler, the court reiterated the same stance in accordance with the principles laid down in Voet’s Commentarius ad Pandectas.

The respective courts held that in case of doubt, a wall intermediate between two adjoining properties is presumed to have been built on the common boundary. Such a party wall belongs to both the owners of the adjoining properties, irrespective of who built it. Although this is not co-ownership in the accepted sense of the term, the owners of neighbouring properties do have rights against each other.

One view which was taken was that the owners have the rights of co-owners in the sense that each is entitled to the maintenance of the wall encroaching on his neighbours property, as well as the part standing on his own property. Another view is that while each owner has no right of ownership in the portion of the wall standing on his neighbour’s ground, each owner is entitled to demand that the other co-owner should keep his half of the wall in a proper state of repair.

The courts seemed to favour the view that each owner owns half of the wall on his side of the median line with reciprocal servitudes of lateral support. Accordingly both neighbours are liable for the cost of the maintenance of the wall and both must refrain from doing anything which my detrimentally affect the stability of the wall.

Published in Property
Friday, 10 February 2012 08:50


The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably".
Sellers and buyers alike are 'consumers' of estate agency services.


The target market of the services of estate agents is buyers and sellers of property.

When it markets its services to sellers, it does so with the view to securing a mandate to sell a property.

When an Multi-Listing estate agent markets a Multi-Listing Mandate, it does so on the basis that a such Mandate will be beneficial to the seller in procuring interested buyers and implicit in this is that they will deal with a select group of experienced and reputable estate agents to the exclusion of others, and that the property will sell at a market related price.

When it markets its services to buyers, it does so with the view to securing offers to purchase which are market related in relation to properties on their books, having regard to the actual condition of such properties, which offers it can then present to sellers.


The marketing of an estate agent's services and the marketing of the properties listed with estate agents pursuant to the mandates that have been signed, are inextricably linked.

It is implicit that estate agents would provide potential buyers with reliable, honest and accurate information in relation to the properties it advertises and markets, and its services in relation thereto.

Every advertisement of a property in respect of which an agency has a mandate, carries the name and logo of the estate agency concerned, and will also often contain a reference to the website of the estate agency.

An estate agency professes to be an area expert of the properties on their books, and market assessments are carried out by agencies within a particular area on that basis.

In order to find a 'willing and able' buyer for a property, the property must be correctly priced.

In order for an agent to correctly price a property, an agent must conduct a thorough inspection of the property, and familiarise him or herself with every aspect of the property – including any defects the property might have as it may affect the price and it may influence the buyer in putting in an offer.


If an estate agency fails to conduct a thorough inspection of a property, and markets a property at a certain price in circumstances where it later turns out that there were major undisclosed defects to the property which were easily determinable by a qualified and experienced agent, the estate agency will most certainly be exposed to potential claims from the buyer – such claim will not be based on any contract with the estate agent (or the sale agreement itself), but it will be based on the estate agency's failure to adhere to the standard of conduct which it professes to uphold (and which the market demands) in relation to the delivery of its services as an estate agent.

The seller of the property may still enjoy the protection of the 'voetstoots' clause in the sale agreement as the seller is not bound to the CPA – and this may leave the estate agency concerned wide open to potential claims from a dissatisfied buyer where no effort was made to check for defects.


The so-called Seller's Declaration protects the estate agent against potential claims, in the following manner:

  1. The market assessment by the agent is now based on accurate information and no misrepresentation is made with regard to the inherent value of a particular property;
  2. The seller is forced to apply his or her mind to the condition of their property, and to disclose any defects they may be aware of to the agent, prior to the marketing of the property, or the marketing of the estate agency's services in relation to that or other properties;
  3. The agent will ensure that their marketing and advertising activities are aligned to the actual condition of the property and that defects are either attended to prior to the sale taking place, or that the purchaser takes possession of the property, well knowing the condition of the property which they are buying.
  4. It shows that the agent has taken reasonable care to ensure that it fulfils the expectation that was created in the market place, namely that it would provide a professional service;
  5. It creates an atmosphere of transparency and buyers know exactly what they are buying;
  6. The number of disputes arising from sale transactions are significantly reduced as it facilitates the resolution of disputes  - both parties have a much clearer understanding of what was bought and sold;
  7. It protects both the listing agent and the selling agent as there is now a very clear description of the property and what may be excluded or  included in the sale – sellers often (mistakenly) assume that information that was given to the listing agent has been passed on the selling agent.

A buyer should not succeed in any claim against the agent on the basis of false or misleading marketing or advertising where an agency has disclosed all defects they were aware of, or could reasonably have become aware of, prior to a sale taking place.
The relevant provisions of the CPA are as follows:

Consumers right to fair and responsible marketing:

General standards for marketing of goods or services

29. A producer, importer, distributor, retailer or service provider must not market any goods or services.

  1. In a manner that is reasonably likely to imply a false or misleading representation concerning those goods or services, as contemplated in section 41; or
  2. in a manner that is misleading, fraudulent or deceptive in any way, including in respect of—
  1. the nature, properties, advantages or uses of the goods or services;
  2. the manner in or conditions on which those goods or services may be supplied;
  3. the price at which the goods may be supplied, or the existence of, or relationship of the price to, any previous price or  competitor’s price for comparable or similar goods or services;
  4. the sponsoring of any event; or
  5. any other material aspect of the goods or services

Consumers right to fair and honest dealing:

False, misleading or deceptive representations

41(1) In relation to the marketing of any goods or services, the supplier must not, by words or conduct
           (a) directly or indirectly express or imply a false, misleading or deceptive representation concerning a
                 material fact to a consumer,

45(b) use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that
           failure amounts to a deception, or

        c) fail to correct an apparent misapprehension on the part of a consumer, amounting to a false, misleading
            or deceptive representation, or permit or require any other person to do so on behalf of the supplier.

(3) Without limiting the generality of subsections (1) and (2),  it is a false, misleading or deceptive representation
    to falsely state or imply, or fail to correct an apparent misapprehension on the part of a consumer to the effect,

      c) any land or other immovable property

         i) has characteristics that it does not have;

        ii) may lawfully be used, or is capable of being used, for a purpose that is in fact unlawful or
           impracticable, or

        iii) has or is proximate to any facilities, amenities or natural features that it does not have, or that are not
              available or proximate to it.

Published in Property
Monday, 16 January 2012 14:00

Children owning land?

If land is donated or bequethed to children born or to be born of any person or from any marriage, or is acquired on behalf of such children, transfer of the land can be effected on behalf of such children. In such a case, the land may be registered in the name of a person to hold it in trust on behalf of the children.

Once the identities of the children have been established after their birth the Deeds Office will, upon application, endorse the title deed with their names and the title deed will thereupon be deemed to be in favour of such children, as if the transfer had originally been passed to them in person.

Published in Property
Friday, 13 January 2012 13:57

Can a sectional title owner act against the managing agent.

What can a registered owner of a unit in a sectional title scheme do, should he be of the opinion that the scheme is mismanaged or that the Body Corporate has suffered damages but failed to do anything about it?

In terms of Section 41 of the Sectional Titles Act, the owner must serve written notice on the Body Corporate calling on it to institute proceedings within 1 month of such notice. If the Body Corporate fails to do so, the owner can then bring an application to Court for an order appointing a curator ad litem for the Body Corporate. The curator will then institute and conduct proceedings on behalf of the Body Corporate.

Published in Property
Monday, 12 December 2011 13:46

VAT Relief coming for developers who rent out unsold property

Due to current harsh economic circumstances, many developers are struggling to sell the residential units in their developments. To rent these out is an option in order to generate funds, but VAT legislation considers this a change in use of the property, thereby triggering VAT liability in the hands of the developer.
SARS took note and proposed amendments to the VAT Act as follows: if

  • a developer rents out residential properties before their intended sale (that were constructed with the purpose of selling them in the normal course to the public); andthe 
  • property is subsequently temporarily let;

then such supply by the developer will be deemed not to be a VAT-able supply.

The amendments are set to come into effect soon, but will be temporary in that such exemption will only be granted until 2015. In addition, it is limited to rental of a maximum period of 36 months before any sale of the property.

Published in Property
Wednesday, 23 November 2011 12:46

CPA Lease agreements- when may they exceed 24 Month?

In terms of the Consumer Protection Act, a lease agreement between a supplier and a consumer (as defined in that Act) may not exceed a period of 24 months. However, the following exceptions apply:

  • where both parties are juristic persons;
  • where the landlord is able to prove that the property being leased is not part of any of his business operations and that the lease is a “once off” transaction;
  • where the lessee is exempt from the operation of the Act, i.e., if the lessee is a company, trust or close corporation with a turnover or asset base over R2 million; or
  • where it can be shown that there is demonstrable financial benefit to the lessee in a lease that extends longer than 24 months.
Published in Property
Friday, 18 November 2011 12:42

Interesting changes to the new companies act

The New Companies Act which came into force on 1 May 2011 has introduced some interesting changes, one of which concerns the sale by a company of the whole or a major portion of its assets.

The previous Companies Act required a special resolution by the shareholders which had to be registered with the Companies Office within 6 months of its passing, failing which it would be invalid.

The New Companies Act still requires the passing of a special resolution by the shareholders, but does not require it to be registered or filed with the Companies and Intellectual Property Commission for it to be valid.

Published in Property
Friday, 04 November 2011 06:56

Mortgage Bonds: Is the TIFFSKI Judgment  a bank's worst  nightmare?

A recent judgment handed down by the Supreme Court of Appeal on 30 September 2011 has laid bare the effects of non-compliance with the requirements of Section 34 of the Insolvency Act and should arguably sent shivers down every buyer, banker’s and conveyancing attorney’s spine. 

Not only was the sale and transfer of the assets of a business, which was subsequently liquidated, declared void ab initio, but so too the mortgage bonds registered in favour of the bank financing the transaction. 

A proper due diligence investigation into all relevant issues is thus of utmost importance when assisting a buyer or a bank evaluating it’s security. It proves that “possession cannot be regarded as “10 points of the law” and possession and even ownership and the security of a mortgage bond can be set aside by a ruling of a court. A bona fide buyer or bank are most likely to be un-aware of a pending liquidation or insolvency of a seller, which liquidation or sequestration can take up to six months to come to conclusion after the sale and full payment of a purchase price has taken place. 

The facts of the case can be summarised as follows:

  • Tiffindell Ski Limited (the company) concluded an agreement of sale with Tiffski Property Investment (Pty) Ltd (Tiffski) on 12 July 2007 in which it sold to Tiffski the immovable property on which it conducted a hotel and resort enterprise along with the said business enterprise (the subject matter).
  • The written agreement of sale contained terms quite common in many such agreements and to the effect that possession, occupation and control would be given to Tiffski on the date of transfer, that the agreement would not be published in term of Section 34 of the Insolvency Act, that the company would continue to conduct its business pending transfer and that the agreement represented the entire agreement between the parties.
  • Registration of transfer subsequently took place on 16 September 2008 simultaneous with the registration of two mortgage bonds in favour of the State Bank of India Limited (the Bank).
  • The company went into liquidation on 23 October 2008 and its liquidators challenged the validity of the transfer of the subject matter and the registration of the mortgage bonds against themselves, arguing that it was void as against them on the grounds that (1) the company went into liquidation within 6[six] months from the transaction (2) the transfer was not in the ordinary course of business (3) the transfer of the business was not for the purpose of securing the payment by the company of its debts and (4) the required notice was not published as set out in Section 34 of the Act. 

Upon accepting the liquidator’s arguments, the court rejected Tiffski’s contentions that it was not a “trader” as defined in the Act, that the transaction was in the ordinary course of business, that the transfer fell outside of the 6 month window contemplated in the Act and that due to the transaction being common knowledge it was not necessary to advertise. 

It placed specific emphasis on the Bank’s role when considering the validity of the mortgage bonds and rejected the claim by the Bank that it was unaware of the company’s financial difficulties at the time it approved the disputed mortgage bonds. The Bank further contended that the bonds passed by Tiffski over the immovable property transferred from the company constituted real rights in the said property that served as its only “real security” for the monies lent. Thus any order voiding the mortgage bonds would cause it irreparable financial harm. 

The Bank sought to rely on a number of court decisions for the proposition that the validity of a mortgage bond duly registered in the Deeds Office is not dependent on the validity of the antecedent contract, a contention that the court also rejected. According to the court in this instance, it is trite that no legal consequence flow from a void jural act. The court stated that “As Tiffski did not acquire ownership of the company’s immovable property – on account of the voidness of the transfer – it must logically flow that Tiffski could not in turn grant any rights, let alone real rights, in the immovable property to the Bank”.

The court then further slammed the Bank saying that it should have insisted on publication of a notice in terms of Section 34 and this being expressly excluded in the agreement of sale must have been done with the Bank’s approval or acquiescence. It was the opinion of the court that to uphold any argument advanced by the Bank in its defense would “defeat the very purpose which the Legislature wished to achieve in enacting Section 34 (1) and benefit the Bank at the expense of the company’s creditors. The Bank must accordingly be taken to have consciously assumed the risk of the transfer of the company’s business to Tiffski falling foul of the legislative requirements and nevertheless agreed to advance moneys to Tiffski fully aware of the risk in doing so. 

In future, any bank or money lending institution should do well to take head of the court’s hardline approach applied in this case and as the usual remedies relied on in cases of this nature fell on deaf ears in favour of the rights of the company’s numerous creditors. It could in fact signal the start of a growing trend to protect creditors and restrict lending even further, warning any bank to tighten its mechanisms for due diligence, information control and mortgage bond approval criteria even further. 

Conveyancing attorneys who attend to the registration of mortgage bonds must also be aware of the risks associated with the registration of a mortgage bond when a court rules the security void, due to non compliance of legal requirements.

With special thanks to Daan Steenkamp.

Published in Property
Tuesday, 11 October 2011 07:01

“Court warns developers not to rely on local authorities to know the correct zoning of their property”

Historically municipalities were indemnified against liability for negligent omissions (failure to perform a duty that is legally due). However, one merely has to look at our case law to see that this has been done away with.

All bodies (public or private) exercising public power owe a duty of care to the public. In addition to this, section 33 of the Constitution of the Republic of South Africa (the Constitution) provides that everyone has a right to an administrative action (as defined by section 1 of the Promotion of Administrative Justice Act 3 of 2000) that is lawful, reasonable and procedurally fair. Therefore administrative actions such as decisions given by local authorities are subject to scrutiny so as to ensure compliance with legal principles.

As per the judgment in Faircape Property Developers (Pty) Ltd v Premier, Western Cape 2002 6 180 (C), a property developer who suffers a loss as a result of a local authority having exercised his/her statutory duties negligently has recourse against that local authority.

Judgments such as the above are in line with our Constitution, which is the supreme form of law in South Africa. Our Constitution is founded on values such as the values of democratic government to ensure accountability, responsiveness and openness. The value of an accountable government is promoted by ensuring that citizens have some form of relief against their government when the latter causes them harm.

Davis J In the Faircape Property Developers case said the following:
“… to find that a party who would be gravely prejudiced by gross negligence of an official enjoined to consider such an application, should be without any remedy and thus left to suffer considerable financial consequences of such a wrongful decision would offend the principle of accountable…”

In addition to the above, it is also important to note that when interpreting any legislation in South Africa, every court must promote the spirit, purport and objectives of the Bill of Rights. Section 195 (1) of the Constitution provides that public administration must be governed by the democratic values and principles enshrined in the Constitution, including a high standard of professional ethics, accountability and transparency. Section 152 (1) of the Constitution provides that the objects of local government include the provision of democratic and accountable government for local communities.

It is due to the above that I submit that the warning that was recently sent out by South African Property Owners Association (SAPOA)- court warns developers not to rely on local authorities to know the correct zoning on their property, can be deemed as superfluous; the public will always have recourse against a public official whose negligent conduct causes them harm, financial or otherwise.

The Consumer Protection Act (CPA) and municipalities:

• The application of the CPA to municipalities was delayed so as to give municipalities a chance to get their affairs in order. However, municipalities with high capacities such as Cape Town, Johannesburg and Tshwane were never exempted i.e. the CPA applied to these      municipalities with high capacity as soon as it came into effect.

If you would like a detailed article on the above, please contact the author.

Published in Property
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