Legal Matters – July 2022

BUYING AND SELLING PROPERTY: WHO PAYS WHAT COSTS?

 “Risk comes from not knowing what you’re doing” (Warren Buffett) 

Don’t risk not knowing what you’re doing when you either sell or buy property. Avoid nasty shocks by budgeting properly for the costs you will incur. Some of them can be substantial, and some are less obvious than others. 

The checklists below are of necessity not exhaustive and you would do well to take specific professional advice and to get cost quotes before you finalise your financial planning. 

The costs you will pay as buyer 

In the excitement of buying a house, particularly if it’s your first one, it’s easy to underbudget and forget all the amounts of money you will have to pay over and above the purchase price. 

One suggestion is to budget for costs totaling up to about 10% of the purchase price, but here’s a list to help you with your own calculations (ignore any items that don’t apply to your purchase):

  •  Transfer duty (a government tax payable to the state via SARS unless the sale is subject to vat). You will pay on a sliding IN THIS EDITION Buying and Selling Property: Who Pays What Costs? Beware – this can be a substantial cost! 
  • The applicable transfer fees that the conveyancers will charge for their services in handling the transfer. You must pay these before transfer 
  • Deeds Office fees 
  • Bond registration fees charged by the bank’s attorney 
  • Bond/Home Loan initiation fee payable to the bank. The bank may also require you to take out a home loan protection life policy 
  • Occupational interest, if payable, when you move in before the transfer takes place 
  • Pro-rata rates, municipal charges and levies. Some are payable in advance 
  • If you are buying into a complex (sectional title or Homeowners Association) you may be liable for body corporate or HOA levy clearance fees in addition to pro-rata levies 
  • Don’t forget other costs like moving costs, redecorating, telephone and internet connections, water and electricity deposits etc 
  • Also remember to budget for your ongoing monthly costs of property ownership – rates, levies, municipal services, insurance (building and contents), security, building maintenance and the like The costs you will pay as a seller Again, ignore any of these items that don’t apply to your particular sale. 
  • Estate agent’s commission (don’t forget the vat component) 
  • Certificates of compliance – electrical, water, gas, electric fence, and the like. Provide also for the possibility of repairs and upgrades to ensure compliance with regulations • Bond cancellation fees. Be careful here to give the bank enough notice to avoid having to pay an early termination penalty as well 
  • Rates and levies 
  • If you live in a complex, there may be other fees payable to your body corporate or Homeowners Association 
TRUSTS ON DIVORCE: ARE YOU STUCK WITH AN EX-SPOUSE AS TRUSTEE? 

“Love is grand. Divorce is a hundred grand.” (Anon) 

Trusts may be formed for a variety of reasons, and the purpose and structure of each trust will inform the choice of trustees. When it comes to families aiming to preserve and protect family assets for future generations, often both spouses are appointed not only as beneficiaries, but also as trustees. 

That’s a great scenario whilst the marriage prospers, but what happens on divorce? A recent High Court decision addressed one such scenario. 

‘Not the Titanic’ – this marriage took six years to sink 

In 2014, whilst a marriage was, as the Court put it, in a judgment rich in nautical imagery, “still in calm waters”, the spouses formed four trusts. Two were called business trusts, one a property trust, and the fourth a family trust. Naming choices aside, the critical issue is that both spouses had been appointed as trustees. Regrettably in 2015 the couple drifted apart and their marriage ran aground and settled on the rocky shores of the divorce courts door with the institution of divorce proceedings. Unlike the Titanic, observed the Court, the relationship took six years more to be finally laid to rest. The divorce was only granted in 2021.

 The ex-spouses apply for each other’s removal as trustee 

The ex-husband then applied to the High Court for removal of his ex-wife as trustee of all four trusts on the grounds that she had breached her duties as trustee. Most significantly, he said, she had failed to attend trustee meetings for some five years despite being invited to them. 

  • Her main defence was that, in the context of the ongoing divorce proceedings, her ex-husband’s conduct made it impossible for her to attend to her duties as trustee. The Court was unconvinced by her various allegations in this regard, and two aspects in particular bear mention:

o She complained that being in the minority her decisions were overruled. The Court held that this is not an excuse for failing to attend meetings 

o Her ex-husband failed to provide a vehicle to enable her to attend meetings. Again, no excuse, said the Court, there being a provision in the trust deed for virtual meetings. 

  • Also counting against her was the fact that she was living in a trust-owned property but fails to maintain such and pays no rent at all despite receiving the amount of R10 000,00 per month towards property expenses incurred. 
  • Finding that she had not been involved in the trust’s affairs and did nothing to safeguard them, the Court ordered her removal as trustee. The Court then rejected as being without merit her counterclaim for her ex-husband’s removal as trustee on the grounds of a breach of his duty of trust towards her and a conflict of duty between his private interests and his duties as trustee. Let’s have a look at the law behind those decisions: 

What are a trustee’s duties? 

Per the Trust Property Control Act: “A trustee shall in the performance of his/her duties and the exercise of his/her powers, act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another”. Must a trustee be impartial? The Court: “It is not required of a trustee to be total[ly] impartial or [to have] no connection with the beneficiaries, but rather that he or she is capable of bringing the necessary independent mind to bear [to] the business of the trust and of deciding what is in the interests of the trust.” 

When will a court remove a trustee? 

The court has a discretion which it must exercise with circumspection. Per the Court: “The court has to be satisfied that the requested removal will be in the best interest of the trust and the beneficiaries … a mere conflict of interest between trustees and beneficiaries or amongst the trustees [is] insufficient for the removal of a trustee … the overriding question is always whether or not the conduct of the trustee imperils the trust property or its administration”. There is no requirement to prove bad faith or misconduct, rather “the essential test is whether such disharmony, as in the present matter, imperils the trust estate or its proper administration … It is therefore clear that the court may remove a trustee from office in the event that such removal will be in the interest of the trust and its beneficiaries.” 

In closing… 

If you are faced with a divorce scenario, avoid a situation such as the ex-spouses in this matter faced by making sure that all questions around any trusts involved, such as who is to remain as trustee, who is to remain as beneficiary and so on, are resolved as part of the divorce process, and not left for future resolution. Even better, take professional advice upfront when setting up trusts on how to avoid any future disputes that may arise should your marriage ever sail into stormy waters. 

VERBAL AGREEMENTS – NOT MUCH GOOD, BUT LOTS OF BAD AND UGLY 

“The Good, The Bad, and The Ugly” (Spaghetti Western, 1966) 

A common myth – one that can get you into a whole lot of trouble if you aren’t alive to it – is that verbal contracts are not legally enforceable in South Africa. The opposite is true. With very few exceptions, our law will hold you to all your agreements, whether oral or written. 

What verbal agreements aren’t binding? 

Not many. Only a few types of agreement must be in writing to be fully valid, the most common being contracts for the sale, exchange, or donation of land or of any interest in land, ante-nuptial contracts (ANCs), as well as deeds of suretyship. 

So, watch what you say! 

Firstly, although our laws of contract are complex, with many exceptions and ifs and buts, at the most basic level the only requirements for a binding contract are an offer and an acceptance of that offer. 

So, watch what you say! 

Make an offer to someone else, or accept another person’s offer, and that little voice at the back of your mind telling you “Don’t worry, you aren’t actually tying yourself into anything here” is very likely to be (a) totally wrong and (b) getting you into a whole lot of trouble. 

The danger – a little bit of Good, but mostly Bad and Ugly 

Of course, verbal agreements do have their benefits – they’re quick, easy, and cost-free. We enter into little give-and-take deals with others in our daily lives without a second thought and with not a drop of ink in sight. And that’s absolutely fine for the little things. But contracting orally is a terrible idea when the stakes are high: 

  • Our not-so-sharp memories: 

As the old proverb warns us: “The bluntest pencil is better than the sharpest memory”. It’s a human trait for us to hear what we want to hear. And to remember what we want to remember. You and the other person could well, in all innocence, come away from exactly the same discussion with totally different ideas and memories of what you actually agreed to. Next thing you know you’re both in court, swearing to the truth of your own versions and leaving it to a judicial officer to try and decide whose recollection is the more accurate. That decision could go either way. Record what you agree to, for all to see. 

  • The fraud risk: 

Worse, if your opponent isn’t above stretching the truth a little (or a lot!) you have the same problem but magnified. Make it difficult for a dishonest party to wriggle out of an agreement – or to misrepresent its terms – by recording it in black and white. 

  • Proof: 

Which brings us to the question of proof. With an oral agreement it is your word against theirs. At best, you may be lucky enough to have a witness available to support your version, but such a witness may or may not have a good memory and high credibility. That can never match up to the evidential weight of a signed, sealed and delivered contract. 

  • Certainty and Dispute:

 Let’s bring that all together under the heading of “certainty”. Although written contracts aren’t perfect – our courts are regularly faced with disputes over them – there’s a lot less room for misinterpretation, uncertainty, and dispute when you can stand up in court waving a signed piece of paper rather than saying “As I recall it…” 

An end note on electronic contracts 

This is a whole other topic on its own, but bear in mind that since the arrival on the scene of the ECT (Electronic Communications and Transactions) Act you can often contract electronically via email, WhatsApp, and the like. There’s both a warning there – be careful what you agree to electronically – and an opportunity – paper, pen and ink not always needed. Take professional advice in any doubt. 

Innis Du Preez
Director 

Qualifications

  • B Proc
  • Adv Diploma Labour Law

Focus Areas

  • Corporate Recoveries
  • Bank Foreclosures
  • Vehicle Asset Finance Recoveries
  • Insurance Recoveries and Litigation
  • Liquidations

For references or notable cases, please contact Innis directly.

Shakira Ahmed
Senior Associate

Qualifications

  • LLB (Nelson Mandela University)
  • Conveyancer
  • Notary
  • Advanced Certificate in Insolvency

Focus Areas

  • Equality Court Disputes
  • Evictions – Commercial/Residential
  • High Court Delictual Litigation
  • Insurance Law
  • Notarial and Surety Bonds
  • Notarial Law – Antenuptial Contracts
  • Personal Injury Law
  • Professional Indemnity Insurance Defence Law
  • Professional Negligence Law
  • Property Law
  • Land Disputes
  • Liquor Law
  • Liquidations and Insolvency
  • Deceased Estate Litigation
  • Correspondent Litigation
  • Immigration Law

For references or notable cases, please contact Shakira directly.

Qualifications

  • LL B (University of Pretoria)
  • Notary

Focus Areas

  • Civil Law
  • Medical Law
  • Mediation
  • Evictions – Commercial/Residential
  • High Court Delictual Litigation
  • Insurance Law
  • Medical Defence Law
  • Notarial Law
  • Personal Injury Law
  • Professional Indemnity Insurance Defence Law
  • Professional Negligence Law
  • Property Law
  • Deceased Estate Litigation
  • Correspondent Litigation

For references or notable cases, please contact Natasha directly.

Hennie van Eck
Consulting Director

Qualifications

  • BProc

Focus Areas

  • Civil Law
  • Medical Law
  • Mediation
  • High Court Delictual Litigation
  • Insurance Law
  • Medical Defence Law
  • Personal Injury Law
  • Professional Indemnity Insurance Defence Law
  • Professional Negligence Law
  • Continued Professional Development Education (Seminars/Workshops)

For references or notable cases, please contact Hennie directly.

Leonelle Conradie
Associate 

Qualifications

  • BA Law
  • LLB

Focus Areas

  • Drafting Employment Contracts and Policy Documents
  • Training of internal processes
  • Employment Law Compliance Audits
  • Chairing and prosecuting Internal Disciplinary Hearings
  • Retrenchments
  • Contractual Disputes
  • Restraint of Trade disputes
  • Arbitrations (CCMA & Bargaining Councils)
  • Labour Court appearances

For references or notable cases, please contact Leonelle directly.

Qualifications

  • LLB
  • Master’s Degree (Labour Law)
  • Post graduate Diploma (Labour Law)

Focus Areas

  • Review Applications of arbitration awards
  • Arbitrations (CCMA & Bargaining Councils)
  • Disciplinary investigations and subsequent prosecution
  • Employee Relations
  • Drafting Employment Contracts and Policy Documents
  • Chairing Internal Disciplinary Hearings
  • Corporate Restructuring (Retrenchments)
  • Employment Law Compliance Audits
  • Exemption Applications
  • Contractual Disputes
  • Commercial employment transactions
  • Restraint of Trade disputes

For references or notable cases, please contact Marco directly.

Leon van Staden
Director

Qualifications

  • BJuris
  • LLB
  • LLM (Labour)

Focus Areas

  • Employment Law for private companies and public entities
  • Municipal Law
  • Labour litigation- CCMA, Bargaining Councils
  • Labour Court
  • Labour Appeal Court
  • Constitutional Court
  • Review Applications
  • Collective Bargaining
  • Strike Interdicts
  • Advice on all employment related aspects- restructuring, employment contracts & policies
  • Chairing and prosecuting in disciplinary hearings

For references or notable cases, please contact Leon directly.

Rowan Willcock
Director

Qualifications

  • BJuris
  • LLB
  • Agricultural Diploma

Focus Areas

  • Labour & Employment Law
  • Industrial dispute guidance
  • Labour Court appearances
  • CCMA representation
  • Arbitrations
  • Drafting contracts of employment, collective agreements, and related agreements.
  • Workshops and training.
  • Strategic advice during restructuring exercises.
  • Chairing internal enquiries.
  • Mediation services

For references or notable cases, please contact Rowan directly.

Teresa Heasley
Senior Associate

Qualifications

B Proc
Conveyancer

Focus Areas

  • Deceased Estates
  • Conveyancing

Notable projects / judgements

For references or notable cases, please contact Teresa directly.

Qualifications

  • B Proc
  • Conveyancer
  • Notary Public

Focus Areas

  • Property Law
  • Conveyancing
  • Notarial Law
  • Contract Law pertaining to Property (Freehold, Sectional Title and Developments)
  • Registration of Mortgage and Notarial Bonds

For references or notable cases, please contact Dubennette directly.

Qualifications

  • LLB

Focus Areas

  • Corporate and Commercial litigation and general legal advice
  • Contract Law
  • Immigration Law
  • Administrative Law
  • Trust Law
  • Magistrates Court & High Court Litigation

For references or notable cases, please contact Nathan directly.

Phiwokuhle Ncanywa
Director

Qualifications

  • LLB (Nelson Mandela University)

Focus Areas

  • Corporate and Commercial litigation and general legal advice
  • Administrative Law Litigation
  • Municipal Law
  • Environmental Law
  • Information Law
  • Spatial Planning and Land Use Law
  • Property law
  • Land Dispute Matters
  • Procurement Law
  • Construction Law

For references or notable cases, please contact Phiwokuhle directly.

Qualifications

  • LLB (Fort Hare)
  • Notary

Focus Areas

  • Magistrates Court Litigation
  • High Court Litigation
  • Corporate and Commercial litigation and general legal advice
  • Contract Law
  • Insolvency Law
  • Construction Disputes
  • Recoveries
  • Personal Injury Law
  • Ante Nuptial Contracts
  • Notarial Services

For references or notable cases, please contact Loren directly.

Qualifications

  • B Juris
  • Baccalareus Legum
  • Notary

Focus Areas

  • Corporate and Commercial arbitrations, litigation and general legal advice
  • Contract Law
  • Municipal Law
  • Trust Law
  • Liquor Law
  • Environmental Law
  • Administrative Law
  • Administrative Law Litigation
  • Corporate governance compliance and training
  • Energy Law

For references or notable cases, please contact Cindy directly.

Warren Parker
Managing Director

Qualifications

  • BComm
  • LLB
  • Notary
  • Conveyancer
  • Certificate in International
  • Trade
  • H Dip Tax

Focus Areas

  • Corporate and Commercial arbitrations, litigation and general legal advice
  • Contract Law
  • Tax Law
  • Construction Law
  • Municipal Law
  • Public & Procurement Law
  • Administrative Law
  • Constitutional Law

For references or notable cases, please contact Warren directly.