Friday, 3 August 2018

YOUR BODY CORPORATE AND ARREAR LEVIES: TO SEQUESTRATE OR NOT TO SEQUESTRATE?



ArticleImage

“…aye, there’s the rub” (Shakespeare)


Levies are the lifeblood of a sectional title scheme, and the Body Corporate has a duty to recover arrears from defaulting owners. It has the power, in addition to following standard debt collection procedures and perhaps approaching the Community Schemes Ombud for assistance, to apply for the sequestration of the owner’s estate. Indeed just the threat of a sequestration application is sometimes enough to frighten a recalcitrant debtor into paying up.

But, as Shakespeare might have put it, there’s an alarming “rub” here that body corporate trustees ignore at their peril. It arises from ‘the danger of contribution’ in insolvent estates. In a nutshell, where the ‘costs of sequestration’ exceed the funds in the estate available to pay them, proved creditors may well have to contribute towards those costs in addition to losing their claims. Talk about adding insult to injury!


A R46k shortfall – must the body corporate contribute?
  • A body corporate successfully applied for the sequestration of the personal estate of a defaulting section owner.
  • The property was bonded to two banks who duly proved their claims against the insolvent estate. Wisely, no other creditors proved claims and the trustee of the insolvent estate drew an account providing for the two banks alone to pay pro-rata contributions to cover the R46,663-16 shortfall in the costs of sequestration.
  • The banks objected to the account on the basis that the body corporate should also contribute as ‘petitioning creditor’, although it hadn’t formally proved a claim. The Master of the High Court ruled that the body corporate was protected from contributing as its claim related to arrear levies (and the costs of recovering the arrears) – claims which didn’t need to be formally proved and would by law be paid out of the proceeds of the property anyway.
  • The banks asked the High Court to set aside the Master’s ruling, and the Court duly held that as “petitioning creditor” the body corporate must indeed contribute to the shortfall pro-rata with the bondholders. 
The bottom line - trustees of bodies corporate should, before applying for a defaulting owner’s sequestration, make certain that there is no danger of contribution. 

THIS CONTRIBUTION WITH THE COMPLIMENTS OF MAURICE PHILLIPS,
WiSENBURG. ATTORNEYS, CAPE TOWN AND WAS ORIGINALLY PUBLISHED BY DOTNEWS.



Monday, 4 June 2018

WHAT HAPPENS IF YOU CANCEL YOUR LEASE EARLY?



“There ain’t no such thing as a free lunch” (Wise old adage)


You sign a two year lease for a nice little apartment (or a large family house if you have a spouse, 3 kids and a dog) but after 6 months your employer transfers you and you have to cancel early. 

“Fine” says your landlord “but you are breaching your lease and I am holding you liable for the remaining 18 months’ rental”.

What are your rights? As is often the case in life, that depends…
Check the terms of your lease
First things first, generally your most important consideration is this: “What does my lease say about termination?” 

Most leases specify what happens if you don’t comply with the terms of your lease and our law will generally hold you to your agreements. So if you have agreed to be bound to a two year lease, your starting point should be that you are at risk if you cancel early. 

Before you concede anything however, consider the following –
Does the CPA apply?
First step is to decide whether the Consumer Protection Act (CPA) applies to your lease.

The CPA gives its protections to “fixed-term agreement” tenants but only if your landlord is leasing to you “in the ordinary course of business” and it’s unfortunately not yet clear how our courts will interpret that definition in property leasing scenarios. For example, if your landlord is a property investor running a full-on letting business with a whole selection of apartments or houses, you will definitely fall under the CPA. But what about a private home owner who is overseas for a year and rents to you on a temporary basis? Or a pensioner letting out a “granny flat” to boost their retirement income? You can certainly argue that in both cases the landlord is making “a business” of the letting out, but expect your landlord to disagree. 


The 20 day notice provision in the CPA If the CPA does indeed apply, this is the crux: The CPA allows you to give your landlord 20 business days’ notice, at any time, and for any reason

“Hooray” I hear you shout, “I get off scot free”. But not so fast! 

The CPA also allows your landlord -

  • To recover any amounts still owed by you in terms of the lease up to the date of cancellation, and 
  • To impose a “reasonable cancellation penalty”. The principle here isn’t to punish you by allowing your landlord to, for example, automatically hold you liable for the full remaining period of your lease. The idea rather is to let the landlord recover all actual losses resulting from your early cancellation – rental lost until a new tenant is in place, re-advertising costs, new agent’s fees, new lease preparation costs and so on. Particularly if you are cancelling a fixed-term lease early on, expect to pay for the privilege.
Note that this all applies regardless of what your lease says – you can’t be contracted out of these protections. In other words if your lease imposes a set “early cancellation fee” or the like, it must still be a reasonable one.  Note also that you must give the required notice “in writing or other recorded manner and form” (keep proof).
What if the CPA doesn’t apply?
In this case, you have no specific right of early cancellation and will be bound by the terms of your lease. 

But you still aren’t entirely at your landlord’s mercy. Any penalty imposed on you must still be reasonable. Per the Conventional Penalties Act, a court can reduce a penalty if it is “out of proportion to the prejudice suffered” by the landlord.


This article first published in the LawDotnews of June 2018 and comes with the compliments of Messrs. Maurice Phillips, Wisenberg, Attorneys, Notaries and Conveyancers,  Cape Town

Saturday, 26 May 2018

Short term rental available in the Oasis Retirement Resort in Cape Town

Would you like to experience what it feels like to live in a retirement complex before you decide about your own future?
Are you in two minds about what to do?

We have a suggestion for you:
Why don't you try it out for a month or two or longer? 
Available on long or short term.

  • Are you retiring?
  • Is the maintenance of your house and the garden getting too much to handle?
  • Do you feel vulnerable from a security point of view?
  • Are you worried about the day that you may need to be close to medical attention or frail care?
  • Maybe you would just like to come and stay in Cape Town for a while visiting friends and relatives or simply to relax, eat in the many great restaurants, visiting the tourist spots, the winelands, the Waterfront........Need we go on?


Come and stay in our fully furnished and equipped two bedroom, two bathroom apartment in the Oasis Retirement Resort in Century City in Cape Town for a month or two.
Compared to B&B's, Vacation rentals, etc. you will find it economical too, even before you consider the other advantages that come with a premium retirement resort.
It  is our own home when we are in Cape Town so it is ready to move in. It also includes one basement parking and one open parking bay. We just remove our personal belongings.
You will enjoy the full benefits and services offered by a prime retirement resort  - healthcare, security, heated indoor pool and sauna, gym, restaurant, coffee shop and loads of activities you may or may not choose to use.
Write to us at Pensionpower@gmail.com where you found this blog or phone us on 082 738 5499 when we are at home or +34 634 335 452 when we are away and someone else is staying in our apartment.

Friday, 3 February 2012

WHO'S LIABLE FOR YOUR LEAKING ROOF?

This extract from their newsletter is published with the kind permission of Messrs. Maurice Philips, Weisenberg, @ Long Street, Cape Town and their publishers of this newsletter.

FEBRUARY 2012 
You buy your dream house, you settle in, all's well. Until it rains, and the roof starts leaking. Who's liable?
The law, and the limits to voetstoots
First, determine whether the leak problem is a latent defect, i.e. one that "would not have been visible or discoverable upon inspection by the ordinary purchaser".
Next, check the precise terms of the sale agreement. Standard practice is for property sellers to sell the property "as is", by contracting out of liability for latent defects with a voetstoots clause.
Note that a seller can never use a voetstoots clause to escape liability for any defect which he/she is actually aware of - deliberate failure to disclose a material defect is fraudulent.
Moreover, where the CPA (Consumer Protection Act) applies - and although current thought is that one-off private sales won't fall under the Act, you should take specific advice on this in need - the buyer's position is likely to be a lot stronger, perhaps even to the extent of voetstoots clauses losing all validity. There is also speculation as to the extent that estate agents risk liability in sales generally. (Note that the court case mentioned below arose before the CPA came into effect.)

Knowledge is key!
As an interesting case recently before the High Court neatly illustrates, the seller cannot be held liable for a latent defect of which he was unaware. The house in question had a thatched roof, and the seller had recently effected repairs to it to rectify several problems which had caused leaking previously - all of which he had disclosed to the buyer.

What's the perfect pitch for thatch?
After transfer, the roof again leaked, and a structural engineer specialising in thatched roofs told the buyer that the roof should be replaced rather than repaired, because its pitch was largely incorrect (his opinion as expressed in Court thereafter being that a pitch of 45° is to be recommended, whilst "a pitch below 30ยบ cannot be regarded as functional").

The finding
The buyer sued the seller for a reduction in the purchase price, alternatively damages. Finding that the seller had not known of the relevant structural defect, i.e. the incorrect pitch of the roof, the Court upheld the seller's reliance on the voetstoots clause in the deed of sale, and dismissed the buyer's claim.

Sunday, 8 January 2012

PROPERTY BUYERS - PROTECT YOUR DEPOSIT!

This contribution is published with the kind permission LawDotNews (see bottom) and the compliments of Messrs. Maurice Phillips, Wisenberg, 2 Long Street, Cape Town 8000.
When you buy a property you will commonly have to pay a deposit of part of the purchase price, the balance to be paid on transfer.
Make sure that the "deposit clause" is properly drawn to protect your interests. A recent Supreme Court of Appeal decision highlights the dangers of not doing so. 

The facts
A farming trust put its business, incorporating 3 farms, up for auction 
The successful buyer paid a 20% deposit of R900,000 to the auctioneer
The auctioneer paid out the deposit to the trust's creditors on confirmation of the sale
The buyer became aware of a land claim against the farms, cancelled the sale and sued for return of his deposit
Judgment was granted in favour of the buyer for return of his deposit, but the trust was sequestrated and he was left with a concurrent claim against the trust
This left the buyer with a substantial loss (over R700,000) and he sued the auctioneers and their representative in an attempt to recover it.
The buyer takes a big hit
The buyer lost, the Court holding that the auctioneer had acted correctly in paying out the deposit.
Critically, the conditions of the auction sale as drawn did not specify that the deposit had to be held in trust pending transfer, and the Court's interpretation of the contract as a whole was that it obliged the auctioneer to pay the deposit out to the seller before transfer.

So, how do you protect your deposit?
Don't sign anything until your attorney has checked it.
Insist that the sale agreement provides for the deposit to be paid into a trust account (the transferring attorney's trust account is normally specified, but you and the seller can agree otherwise), pending transfer.
Note that the monies held in trust should generally be invested, with interest, with interest accruing for your benefit.

© DotNews, 2005-2012 - LawDotNews(law.news) is a division of DotNews, proprietor Stanhope Trustees SA (Pty) Ltd, Reg. No. 1999/017337/07
Web site: http://www.dotnews.co.za/

Tuesday, 25 October 2011

Retirement and property: What are our options?

Sooner or later one reaches this crucial stage and the number of options can be quite confusing. This can  lead to anxiety and sleepless nights.
Most seniors will agree that the subject often comes up in conversations with children and fellow seniors. The easy way out is to rest in your comfort zone and do nothing but is that the best option? Certainly not! You must consider all options and you must look beyond your current situation.
Broadly speaking these options are:
- Stay in your home.
- Move in with the kids.
- Buy in a retirement village or -complex.
- Retire to your seaside cottage where you have spent so many happy family holidays.
- Buy a cottage on the coast, on a golf estate, a wine, farm, game farm , etc.
- Move to be near loved ones.
- Move overseas, following your family or on your own.
We will be discussing these options and invite you to add your opinion, advice or personal experience to this crucial debate.