Stopforths

Can a “private” person enforce a loan for property?

The National Credit Act (NCA) was designed to protect “credit consumers” against “credit providers”. But is it also applicable on private loans to friends and families and is it applicable on property transactions?
Our Courts made various and opposing judgements on this matter, but this changed with the recent Supreme Court of Appeal case of De Bruyn NO vs Karsten. In this case the business man sold his business to a friend for R 2 million, agreeing to receive R 500 000 and thereafter monthly payments of R 30 000 per month. As security for the outstanding amount, a mortgage bond was registered in favour of the businessman over the property of the friend. The business man registered as a credit provider in terms of the NCA to be able to register the mortgage bond.
At one stage the friend could not pay the instalments and the business man sued him for R 1,13 million. The friend opposed the claim stating that the credit agreement for the loan contravened the NCA and is therefore null and void. The court agreed as the business man only registered as accredit provider after the loan agreement was signed.
Always seek legal advice before entering into credit agreements with friends or family.

Joe van Rooyen
0832657200
[email protected]

Is a lease agreement invalid if the building does not have building plans?

In the case of Wierda Road West Properties vs Sizwe Ntsabula Goboda Inc 2018 (SCA), Wierda owned a building which was leased to Sizwe. Wierda institute action against Sizwe for outstanding rent of R 7,8 million. Sizwe opposed the action stating that there was no valid building plans and no occupancy certificate and therefore Wierda failed to comply with sections 49(1) and 14(1)(a) of the National Building Regulations and Building Standards Act 103 of 1977.
The High Court dismissed the action with costs and held that the lease was valid, but unenforceable. Wierda appealed to the Supreme Court of Appeal. The Appeal Court found that the relevant sections were not applicable to this matter as Wierda did not erect the building and hence did not have to comply with the Building Regulations Act. The court also found that even if the sections were applicable, the absence of building plans and an occupational certificate, did not invalidate the contract.
It was not the intention of the legislature to invalidate private agreements due to transgressions in the Act. The Penalty clauses in the Act makes provisions for fines if the Act is not complied with. The Appeal Court set the High court’s order aside and ordered that the outstanding rent must be paid.

Joe van Rooyen
0832657200
[email protected]

I have upgraded my sectional title unit. How does it affect the body corporate’s insurance?
One of the prescribed management rules of the regulations of the Sectional Title Schemes Management Act, no 8 of 2011 prescribes that a body corporate must obtain replacement values of all insured buildings and improvements every 3 years and present it at the annual general meeting. The body corporate is not responsible for insuring any improvements that the owner has made on the unit, whether it is done internally or externally.
The duty to insure an upgraded unit rests therefore with the owner. In some instances, the owner can add the improvements to the insurance of their personal belongings, for example, the insurance of an air conditioning unit. In other cases, it will not be possible, for example when an owner has renovated the unit with expensive wooden floors or tiles instead of the carpets which the other units might have. In such a case, the owner must inform the body corporate of the higher insurance value of the specific unit. The higher valuation can be obtained by making use of the services of a professional valuer. The body corporate might request the owner to pay for the increase in insurance.
Joe van Rooyen
0832657200
[email protected]

What extra costs (above the normal transfer costs) are payable by the seller and buyer when purchasing
a sectional title unit?
When a sectional title unit is sold, the cost that the purchaser must pay and the costs for the account
of the seller, are the same as the transfer costs of own title properties. There are, however, certain
extra costs payable when a sectional tile property is transferred:
1) Levies:
Sectional title properties attract monthly levies, which is payable in advance. When a property
is sold, and the attorney asks for a levy clearance certificate, to enable them to proceed with
the transfer, the body corporate (or managing agents on behalf of the body corporate) will
insist that the full outstanding levies to date must be paid in full. This will be for the account
of the seller. The body corporate will also insist that the levy for at least one month is payable
in advance after date of registration. This will be for the account for the purchaser. Certain
body corporates may insist that the full levy for the remainder of the tax year must be paid in
full. The period from after the date of registration until the end of the tax year, will be for the
account of the purchaser.
2) Special levies:
In some cases, the body corporate may have instituted a special levy for certain expenses
which cannot be covered from the body corporate’s normal budget. An example will be a
special levy to repaint the whole complex. In these cases, the body corporate will insist that
the full special levy is payable before they issue a levy clearance certificate.
The deed of sale must determine who will be liable for the special levy and the attorney will
allocate the payments accordingly.
3) Levy clearance certificate fees:
The body corporate (or managing agents on behalf of the body corporate) charges a fee for
the issuing of the levy clearance certificate. This fee is payable by the purchaser. The body
corporate (or managing agents) determines the fee and it could be between R500 and R2
500.
4) Home owner’s levies (if applicable):
If the property is situated in a complex managed by a home owner’s association, the seller
shall be liable for all outstanding levies (if applicable) but the purchaser shall be liable for the
certificate fee as well as one month’s levy in advance.
5) Session of exclusive use area:
Certain sectional title properties might have exclusive use areas which must be ceded by way
of a notarial session. Examples of these are parking bays, gardens or terraces. The fees for
notarial cessions are not included in the normal transfer costs. The fee for a notarial cession is
R 2 280 plus VAT per cession. The deeds office fee for the cession is R 305. The purchaser is
liable for the costs of cessions.
6) Additional sectional title units:
Certain sectional title properties might have extra units linked to the property, for example
garages which might have an extra unit number. In these cases, the transfer fees increase
with 15%. The purchaser is liable for the costs.
Joe van Rooyen
0832657200
[email protected]