Category Archives: Property Law

Contract Law: Applying the abstract theory in property transfers

In transactions where immovable property is sold and transferred, ownership will only be transferred when there is an agreement of sale (which may be regarded as the “underlying transaction”) and upon registration of the deed of transfer.

There are two theories that relate to the transfer of property, namely the causal theory and the abstract theory. South-African law follows and applies the abstract theory.

We may differentiate between the abstract and causal theory when it concerns how real rights are transferred... Read More

Property Law: land claims on immovable property sold

It appears that most of the land claims relates to agricultural land, therefore it is very important to check with your seller whether there is a land claim pending against the property to be sold.

It is not illegal to sell land that has a claim on it, but this must be disclosed to the buyer by the seller.

In terms of the Restitution of Land Rights Act 22 of 1994, once a notice is published in the Government Gazette to confirm a claim meeting the administrative requirements has been received:

no person may in an improper manner obstruct the passage of the claim; no person may sell, exchange, donate, lease, sublease, rezone or develop the land in question without having given the Regional Land Claims Commissioner one month’s written notice of his or her intention to do so, and, where such notice was not given in respect of – any sale, exchange, donation, lease, subdivision or rezoning of land and the Court is satisfied that such sale, exchange, donation, lease, subdivision or rezoning was not done in good faith, the Court may set aside such sale, exchange, donation, lease, subdivision ore rezoning or grant any other order if deems fit; any development of land and the Court is satisfied that such development was not done in good faith, the court may grant any order if deems fit... Read More

The Subdivision of Agricultural Land Act: a review

The Subdivision of Agricultural Land Act No. 70 of 1970 (“the Act”) restricts the subdivision of agricultural land except with the permission of the minister. The Act was scheduled to have been repealed by the Subdivision of Agricultural Land Act Repeal Act. This Act has, however, never been put into operation.

The Act defines “agricultural land” to mean any land except:

land situated in the area of jurisdiction of a municipal council, city council, town council, village council, village management board, village management council, local board, health board or health committee, and land forming part of, in the province of the Cape of Good Hope, a local area established under section 6(1)(i) of the Divisional Councils Ordinance, 1952, and, in the province of Natal, a development area as defined in section 1 of the Development and Services Board Ordinance, 1941, and in the province of the Transvaal, an area in respect of which a local area committee has been established under section 21(1) of the Transvaal Board for the Development of Peri-Urban Areas Ordinance, 1943, but excluding any such land declared by the minister after consultation with the relevant executive committee and by notice in the Government Gazette to be agricultural land for the purposes of the Act; land which forms part of any area subdivided in terms of the Agricultural Holdings (Transvaal) Registration Act, or which is a township as defined in section 102(1) of the Deeds Registries Act, but excluding a private township as defined in section 1 of the Town Planning Ordinance, 1949, not situated in an area of jurisdiction or a development area referred to in paragraph 3.2.1; land of which the state is the owner or which is held in trust by the state or a minister for any person; land which the minister, after consultation with the relevant executive committee and by notice in the Gazette, excludes from the provisions of the Act... Read More

Joint Ownership in Immovable Property

The following legal aspects regulate joint ownership in immovable property and the partition thereof.

The parties own the property in undivided shares, meaning that no owner is the sole owner of any particular portion of the property. They both own the property as a whole. The ratio of the parties shares is only relevant with regard to their liability for payment of expenses and sharing profits. Parties may regulate their rights and duties by agreement between them, whether in writing, implied or tacit terms... Read More

Property Law: Purchasing and bonding a property in a foreign currency

From time to time, foreign investors may wish to secure loans made to South African property owners by means of a mortgage bond and in some cases, the lenders requires the mortgage bond to reflect the amount of the loan in a format with which they are familiar, i.e. a foreign currency of their choice.

Similarly, a foreign purchaser may require that a property purchased in South African is concluded in a foreign currency.  Allan West examines the situation where the parties insist that these amounts are reflected in foreign currency values in the deeds office. .. Read More

Property Law: Agricultural Land: Options no longer an option

The Subdivision of Agricultural Land Act[1] (“the Act”) prescribes that an owner of agricultural land must first apply to the Minister of Agriculture before subdividing such land. The purpose of the Act is manifest in that its object is to control and prevent the loss of sub-division of agriculturally useful farmland into uneconomic units.[2] Along with this physical prohibition, and for purposes of this article, section 3(e)(i) of the Act prohibits any portion of agricultural land from being sold or advertised for sale, unless the Minister has consented thereto in writing... Read More

Contract Law: Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga : The importance of interest clauses

Interest is a vital consideration when contemplating the provisions of a contract. This was made clear in the judgment of Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga and Others. In this case, the parties had entered into an agreement of sale which included a clause providing that interest was to be levied against the Purchaser in the event that it did not make timeous payment. However, the Supreme Court of Appeal’s (“SCA”) interpretation and application of the clause reached farther than a plain reading of the provision... Read More

Property Law: A seller’s liability for the non-fraudulent misrepresentations by an estate agent

It is often disputed that misrepresentations made by an estate agent in the sale of property bind his or her mandate.

A contracting party who seeks relief on the basis of a misrepresentation or misstatement must establish the following elements:

a precontractual incorrect statement; which was material or wrongful (unlawful); made by the other party to the contract (or someone for whom he or she is responsible); with the intention of inducing the contract; and which induced the contract or caused the other party to suffer loss... Read More

Law of Contract: The legal status of emails: Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another

Do emails have the same legal status in law as paper-based documents and conventional  signatures? This question was addressed in the Spring Forest Trading-case.

Two parties, Wilberry and Spring Forest, entered into several agreements in terms of which mobile dispensing units were used in Wilberry’s car wash business.

Following a dispute, the validity of the cancellation of a number of agreements between the parties by exchange of e-mails, was relevant. The agreements contained the standard clauses providing that the agreements may only be cancelled in writing and signed by the parties... Read More

Contract Law: Waiver of a right to cancel: Sewpersadh v Dookie [2008] 1 All SA 286 (D)

A sale agreement had been entered into in regards to the purchase of a property. The material terms of the agreement were that the purchase of price would be paid via installments over a 24 month period. The respondent then breached the terms of agreement when he failed to pay the full purchase price. In light of such failure to pay, the applicant sent a letter to the respondent demanding compliance within seven days.

The applicant asked the court for the ejectment of the respondent from the immovable property on the ground that the agreement of sale had been cancelled... Read More

Contract Law: Suspensive conditions and the Kovacs-case

The case of Kovacs Investments 724 (Pty) Ltd v Marais (323/2008) [2009] ZASCA 84 is critically analyzed with a deeper view of suspensive conditions in an agreement of sale.

In dispute was, inter alia, whether an agreement of sale in respect of immovable property had lapsed due to non-fulfilment of suspensive conditions contained in the deed of sale.

A written agreement of sale was concluded on 29 July 2005 in terms of which the respondent sold a commercial section of a building in Bellville, Cape Town for the purchase price of R18 454 041 to the appellant... Read More

Contract Law: Effective cause revisited

The transfer process of a property can be exciting for the host of involved parties but what starts off as a zealous stream of positive energy can turn into a disaster. In the competitive real estate industry, if an agent finds himself in a situation where his commission is not certain due to the intervention of competing agents who may actually eventuate a sale despite the initial agent’s hard work.

If Agent A who introduces a prospective buyer to a property which Agent A has a mandate to sell and if he further invests a substantial effort to bring that sale to fruition, he will have earned his commission and a seller who entertains another Agent B (Agent B who may have actually eventuated the sale) will then be liable for double commission and he will have only himself to blame for not protecting himself against such risk... Read More

Sectional Title Schemes: Liability for structural repairs to the common property

Owners of sectional title units are often confronted with the question of whether they have recourse against the body corporate for defects to the foundations of the buildings in the scheme. Problems with the foundations often manifest in the ground floor concrete slab, causing damage to units on ground floor level.

If the damage had been caused by subsidence or landslide, the insurance cover issued to the body corporate should solve the problem. However, if the damages are as a result of a design fault or poor workmanship when the buildings were constructed, a claim will probably be repudiated as not being events covered by the insurance... Read More

Sectional Title Schemes: Deviations from section 25 plans finally settled

Deviation from the section 25(2)(a) and (b) plans when exercising a real right of extension has been soaked in debate since their introduction as a potential “plot-and-plan” option in sectional title developments. Alan West analysed the recent unreported case of Hartenbos Woonwapark CC v Registrar of Deeds and others and argues that the issue has finally been put to rest.

In the initial case of Dolphin Whisper Trading 10 (PTY) LTD v The Registrar of Deeds and another (20645/08) [2009][ZAWCHC] the Court found that if there is not sufficient evidence of changed circumstances, the real right of extension has to be exercised strictly in accordance with the section 25(2)(a) and (b) plans... Read More

Land Use Planning Law: A breakdown of demolition orders and encroachments: the latest judgments

In the recent Supreme Court of Appeal case Lester v Ndlambe Municipality and Another the court found that Section 21 of the National Building Regulations and Building Standards Act 103 of 1977 empowers a magistrate, on the application of any local authority or the Minister, to make an order authorising the municipality to demolish a building if that court is satisfied that the erection of the building does not comply with the provisions of the Act or any approval or authorisation granted thereunder... Read More

Property Law & Conveyancing: Municipalities’ rates clearance demands reigned in

In the recent Supreme Court of Appeal case Nelson Mandela Bay Municipality v Amber Mountain Investments the court dismissed an appeal by the Municipality, against a judgment of the Eastern Cape Local Division of the High Court, Port Elizabeth that the municipality is only entitled to demand payment of advance rates to the date of transfer of a property and not up to the end of a municipality’s financial year.

The respondent applied for a rates clearance certificate from the local municipality in order to transfer a property which it had recently sold during February of that year... Read More

Property Law and Contract: Contractual Unfairness and the Constitution

In the recent as yet unreported case of Bondev Holdings Midrand (Pty) vs Mulatedzi Alton Madzhie and others delivered by Acting Judge CR Jansen on 19 December 2016  in the Gauteng High Court, important contractual issues in a constitutional perspective were addressed in an insightful and ground-breaking judgement.

The applicant, a property developer, sold a vacant residential plot to the first respondent in January 2012. The first respondent paid the purchase price from loan finance raised, but failed to commence with construction of a dwelling on the property as required in terms of the deed of sale... Read More

Estate Agents: No Fidelity Fund Certificate, No Commission?

Section 34A of the Estate Agency Affairs Act 112 of 1976 requires that an estate agent must have been issued with a valid Fidelity Fund Certificate before he or she will be entitled to remuneration or other payment arising from the performance of any duties of an estate agent.

In the recent High Court judgment of Crous International (Pty) Ltd v Printing Industries Federation of South Africa an estate agent claimed commission from his principal following the successful sale of its immovable property... Read More

Property Law: Property owners’ liability for historical municipal debts

Section 118 of The Local Government Municipal Structures Act protects the rights of the Municipality in respect of Municipal debts owed by property owners. This section created much uncertainty in matters where the municipal attempted to enforce its rights against property owners. Since 2012, the Supreme court of Appeal dealt with this issue in two separate cases in an effort to provide the correct interpretation of the Act.

Liability of Municipal Debt in terms of the Municipal Systems Act

Section 118 of the Municipal Systems Act (herein after referred to as “the Act”) states in subsection:

(1)  “A registrar of deeds may not register the transfer of property except on production to that registrar of deeds of a prescribed certificate –

(a) issued by the municipality or municipalities in which that property is situated;  and

(b) which certifies that all amounts that became due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two years preceding the date of application for the certificate have been fully paid... Read More

Property Law: The newly published e-Deeds Bill: the dawn of modern conveyancing

The Minister for Rural Development and Land Reform recently published the Deeds Registries Amendment Bill, 2016 for public comment.

At the same time, the Department also published an informative memorandum on the object of the Bill, which is reproduced as follows:

MEMORANDUM ON THE OBJECTS OF THE DEEDS REGISTRIES AMENDMENT BILL, 2016     

1   BACKGROUND 1.1 Security of title in South Africa is not explicitly guaranteed by statute, but flows from the unique deeds registration system which is based on specific responsibilities (assigned by the Deeds Registries Act, 1937 (Act No... Read More

CBD property developments: be prepared before you develop

Louw Malherbe considers the pitfalls of central city property development, where developers are often confronted with the unknown and have to deal with title conditions which are not always disclosed in conventional searches.

A developer wanting to develop a building project in a CBD must first and foremost instruct its legal representatives to do an in-depth investigation into servitudes, conditions and/or endorsements registered against the titles of the properties on which the development will take place. In general, and after careful investigation and perusal of present and historic title deeds, a legal representative may feel at ease to submit a positive report to the client if no restrictions are found against such Development Land that will stand in the way of  the Development... Read More

Case law: Buffelsdrift Game Reserve Owners Association v Holkom & Others: the keeping of pets and (non)enforcement of HOA rules

The keeping of pets is a frequent bone of contention in estates managed by home owners associations. So too are complaints by owners regarding non-enforcement of the applicable rules by managing bodies.

The facts of the dispute were as follows:

The Buffelsdrift Game Reserve is a private property development.  A Home Owners Association (“HOA”) was established and all owners in the development were obliged to become members thereof. This was included as a condition in the sale agreement of the property... Read More

Authentication of documents for use inside and outside of South Africa

Ever had to sign or legalise documents within South Africa for use abroad or vice versa? If you have, then you have probably experienced the frustration of being told that the documents have been validly  executed, but not properly authenticated and therefore not suitable for use in a deeds office or other formal purpose. Ms. Allison Schoeman (Strauss Daly Umhlanga branch) compiled this practical guide to ensure that your documents are in order, which can be downloaded here... Read More

Foreign companies: mortgage bonds and property ownership

Section 1 of the new Companies Act 71 of 2006, which came into operation on 1 May 2012, defines an “external company” as “a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23 (2).”

Section 23(2) of the Act goes further to state that:

“For the purposes of subsection (1), and the definition of “external company” as set out in section 1, a foreign company must be regarded as “conducting business, or non-profit activities, as the case may be, within the Republic” if that foreign company— (a) is a party to one or more employment contracts within the Republic; or (b) subject to subsection (2A), is engaging in a course of conduct, or has engaged in a course or pattern of activities within the Republic over a period of at least six months, such as would lead a person to reasonably conclude that the company intended to continually engage in business or non-profit activities within the Republic.”

If a company meets the requirements set out above in that it is regarded as an external company in terms of the Act, it is required, within 20 business days after it first begins to conduct business, or non-profit activities, as the case may be, within the Republic, to register with the Companies and Intellectual Property Commission (CIPC)... Read More

Value Added Tax: Temporary relief for property developers to expire 1 January 2015

During 2012 SARS granted temporary relief to property developers in terms of section 18B of the Value Added Tax Act to enable developers to let unsold residential units for a period of 36 months without incurring a VAT liability.

This relief only applied to developers who intended to sell the properties at a later stage. It was intended to assist those who were unable to sell the properties in adverse economic conditions and were forced to lease the properties to cover costs... Read More

City of Cape Town issues fines totalling R722 650 for building regulations- and land use planning transgressions

In a recent media release the City of Cape Town stated that it is making progress with convictions related to illegal building work and land use transgressions. According to the briefing on their website, a total of 471 court cases were concluded, which resulted in fines worth R722 650 being issued to individuals from January to December 2013.

They are calling on property owners, neighbours and developers to share in the responsibility of ensuring that small and large developments are compliant with the necessary regulations to avoid penalties... Read More

The “one-pager” and the “cut-and-paste” demon

Contracting parties often misunderstand comprehensive- and well drafted contracts to be expensive and unnecessary, believing that the notorious “one-pager” is as effective.

Legal practitioners are regularly confronted with such requests, or are mandated to deal with contracts previously properly drafted by a lawyer, but which have subsequently been mutated by the “cut-and-paste” demon into a document brimming with now irrelevant legalize and most of the essentialia of the contract missing. In short: litigation paradise!

The main problems of these contracts are that they do not properly reflect the true intention of the parties and material terms of the contract are inevitably omitted... Read More

Residential Leases: Cancellation Penalties and the CPA

The introduction of the Consumer Protection Act (“CPA”) not only affected several of our established common law principles (caveat subscriptor; freedom to contract, the passing of the risk rule; the parol evidence rule and voetstoots clauses), but it is also responsible for a new thinking on residential leases.

One such important aspect is the restriction of the landlord’s remedies upon a tenant’s early termination of a residential lease concluded between natural persons. Previously an attempted early termination of a lease was regarded as a repudiation of the contract by the tenant, resulting in the landlord’s right to accept the repudiation, cancel the lease and claim damages from the tenant... Read More

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