Monthly Archives: December 2015

Suspensive conditions in a deed of sale: Know your obligations

Posted on by

A4BImagine signing a deed of sale for your dream house and later discovering that the contract lapsed because you obtained bond approval one day too late. The situation could be worsened if the Seller receives a better offer for the house and accepts that better offer.

If a deed of sale is made subject to a suspensive condition it will lapse if such condition is not fulfilled in time. This was confirmed in the case of Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C) (hereinafter referred to as “the Marais case”). There is then no contract for the sale of the property between the two parties and the Seller can sell the property to another purchaser.

Examples of suspensive conditions are obtaining bond approval before a certain date, or the sale of the Purchaser’s current property before a certain date. It is very important for both the Seller and Purchaser to take note of the wording of these conditions and ensure that they understand them.

The following is an example of the wording of a suspensive condition relating to a bond, also sometimes referred to as a “bond condition”:

This Deed of Sale is subject to the Purchaser obtaining bond approval from a financial institution for the amount of R1 500 000 before 2 December 2013, failing which this agreement will lapse.

In the above example, if only R1 400 000 is approved before 2 December 2013, in other words R100 000 less than the required amount, then the condition is not met and the contract will lapse. Similarly, if a bond is approved for R1 500 000 but only on 5 December 2013, then the condition is not met in time and the contract will lapse, as was decided in the case of Meyer v Barnardo and another 1984 (2) SA 580 (N).

The parties can however agree to extend the time during which the suspensive condition must be fulfilled. Such extension must be in writing and signed by both the Seller and Purchaser as per the requirements of the Alienation of Land Act 68 of 1981. It must also be done before the time limit of the suspensive condition expires. In the above “bond condition” clause example, this would mean that the parties would have to sign the extension before 2 December 2013 to prevent the Deed of Sale from lapsing. In the Marais case the court held that even if the suspensive condition had been inserted in the contract for the exclusive benefit of the Purchaser, the Purchaser would have had to communicate his intention to waive the requirement before it lapsed.

In the Marais case the parties entered into a written agreement of sale with a suspensive condition that a bond in the amount of R10 149 072 needed to be obtained by 15 August 2005. The Purchaser, however, only obtained a mortgage bond in the amount of R9 650 000, which was granted on 2 August 2005. The respondent’s attorneys argued that the suspensive condition had been substantially fulfilled because the shortfall was, in their opinion, only a “minor shortfall” and therefore an insignificant amount compared to the purchase price. The court did not agree with this and found that it could not be said that the parties intended the suspensive condition to be fulfilled in any way other than what was expressly stipulated in the Deed of Sale. The court found that the contract had therefore lapsed.

If a suspensive condition will not be fulfilled in time, rather take the necessary precautions beforehand to avoid a lapsed Deed of Sale. We advise that you contact a professional for advice in this regard.

References: Kontraktereg, UNISA 2004

 Self Study Conveyancing Course for Attorneys, Gawie le Roux, 2013

 Alienation of Land Act 68 of 1981

 Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C)

 Meyer v Barnardo and another 1984 (2) SA 580 (N)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Maintenance

Posted on by

A3BWhat can you do to enforce a maintenance order against a person who is responsible for paying maintenance, but fails to do so or is paying too little?

When someone fails to pay maintenance in terms of a maintenance order you have the option of lodging a complaint against them with the Maintenance officer, stating that the person is legally liable to maintain, for example, yourself or your minor child(ren) and is not doing so. The Maintenance officer must investigate the complaint and may then institute an enquiry in a maintenance court. The Maintenance officer, not the complainant, decides whether to institute an enquiry.[1] In investigating a complaint about maintenance, the Maintenance officer may obtain statements or any relevant information pertaining to the payment of maintenance. An enquiry under the Maintenance Act is a procedure which empowers people to enforce their rights and those of their child(ren) at the State’s expense. During the course of a maintenance enquiry the parties usually come to an agreement and seek to withdraw the proceedings, or have the terms of the agreement made an order of court, which cannot be disregarded by the magistrate.[2] If the parties cannot come to an agreement the matter will be referred to the maintenance court.

Whenever a person against whom a maintenance order has been issued under the Act fails to make any payment in accordance with that order, the order is enforceable in respect of any amount that person has failed to pay, together with any interest:

  1. by execution against property;
  2. by the attachment of emoluments; or
  3. by the attachment of debt.

If a maintenance order made under the Act remains unsatisfied for a period of ten days from the day on which the amount became payable or the order was made, the person in whose favour the order was made may apply to the maintenance court in which the order was made: 1) for authorisation of the issue of a warrant of execution, 2) for an order for the attachment of emoluments or 3) for an order for the attachment of debt. The application must be accompanied by a copy of the maintenance order or other order in question and a statement under oath stating the amount that the person against whom the order was made has failed to pay.[3]

Subject to the defence that failure to make a payment in terms of a maintenance order is due to a lack of means, a person who fails to make a particular payment in accordance with a maintenance order is guilty of an offence and liable to conviction with a fine or imprisonment for a period not exceeding one year, or to imprisonment without the option of a fine.[4]

On the application of the public prosecutor and in addition to or instead of imposing a penalty, a court convicting any person of the offence of failing to make a payment in accordance with a maintenance order may grant an order for recovery from that person of the amount he or she has failed to pay, together with any interest.[5]

Your best option would be to approach the Maintenance officer in order to reconcile the outstanding amounts. Thereafter, if the person still fails to effect payment, you can approach an attorney to either proceed with execution of the order, if the person has sufficient movable or immovable property, or obtain an emolument order which will be served upon the employer of the person (ordering the employer to pay the maintenance), or you may approach the maintenance court for an order for the attachment of any debt accruing, then or in the future, to the person responsible for paying maintenance.

[1] The Maintenance Act 99 of 1998.

[2] Young v Young 1985(1) SA 782 (C).

[3] The Maintenance Act 99 of 1998.

[4] Ibid.

[5] Ibid.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Extending a sectional title unit: What you should know

Posted on by

A2BResidents in a Sectional Title Scheme are subject to the rules and regulations of the Body Corporate. These rules and regulations are governed by the Sectional Titles Act.

When you intend to make structural alterations to your unit there is a procedure prescribed by the Act that should be complied with before you start with the alterations. Any alterations that extend the boundaries or floor area of the unit will be seen as an extension.

The legal requirements that must be adhered to are discussed below.

Step One:

The Act stipulates that you should first obtain the consent of the Body Corporate. Usually the trustees will hold a general meeting and the members must pass a special resolution to agree to the alterations. You will require the consent of 75% of the owners who are present at the meeting for the special resolution to be passed. This, however, could be time-consuming as the members have to be notified of the meeting thirty days in advance. Alternatively you can also obtain a special resolution by approaching all the owners individually and obtaining the consent of 75% of all the owners.

Step Two:

Once the Body Corporate’s consent has been obtained, plans of the extension should be drawn up and approved by the Local Authority.

Step Three:

A Land Surveyor should be appointed to draw up new Sectional Title Plans of the Scheme to incorporate the extension. These plans have to be approved by the Surveyor General.

Step Four:

Consult with your attorney who will submit the necessary application for the registration of the amended Sectional Title Plan, as well as the noting of the extension of the unit to the Deeds Office.

If the unit is bonded the attorney will have to obtain consent from the mortgagee of the unit.

With the application to the Deeds Office a transfer duty receipt from SARS must be lodged based on the increase in value of the property. It is advisable to obtain two estate agents valuations based on the pre- and post-alterations value of the property.

The Surveyor must stipulate on the Sectional Title Plan that there is not a deviation of more than 10 percent in the participation quota of the unit as a result of the alterations. If there is a deviation of more than 10% the attorney must obtain the consent of the mortgagees of each and every unit in the Scheme.

It is very important that Sectional Title owners adhere to the legalities as an omission could cause extensive delays when the property is sold.

References:

Section 24 of the Sectional Titles Act

Sectional Titles, Share Blocks and Time Sharing, Vol 1, Prof CG vd Merwe

Demystifying Sectional Title, M Constas and K Bleijs

Sectional Title on Tap, Vol 1, Tertius Maree

Article by J Paddock

Article by Rob White

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Dealing with marriage and estate planning

Posted on by

A1B
It is important to understand the legal implications of the marital property regime, especially when drafting a Last Will and Testament and also when entering into a marriage, as the regime chosen by the estate planner is going to affect his/her assets.

The most important forms of marriage are: marriage in community of property, marriage out of community of property (without accrual), and marriage out of community of property (with accrual).

Marriage in community of property

  1. There is no prior contractual arrangement, apart from getting married;
  2. Spouses do not have two distinct estates;
  3. There is a joint estate, with each spouse having a 50% share in each and every asset in the estate (no matter in whose name it is registered);
  4. Applies to assets acquired before the marriage and during the marriage;
  5. Should one spouse incur debts in his own name it will automatically bind his/her spouse, who will also become liable for the debt;
  6. If a sequestration takes place (in the case of insolvency), the joint estate is sequestrated.

Marriage out of community of property without the accrual system

  1. An antenuptial contract (ANC) is drawn up by an attorney (who is registered as a notary), before the marriage;
  2. Where there is no contract, the marriage is automatically in community of property;
  3. The values of each spouse’s estate on going into the marriage are stipulated in the contract;
  4. A marriage by ANC means that all property owned by spouses before the date of the marriage will remain the sole property of each spouse;
  5. Each spouse controls his/her own estate exclusively without interference from the other spouse, although each has a duty to contribute to the household expenses according to his/her means;
  6. To allow for assets acquired by spouses during the marriage to remain the sole property of each spouse, the accrual system must be specifically excluded in the ANC.

Marriage out of community of property with the accrual system

  1. The accrual system automatically applies unless expressly excluded in the antenuptial contract;
  2. The accrual system addresses the question of the growth of each spouse’s estate after the date of marriage.

ESTATE PLANNING

Donations between spouses are exempt from donations tax and estate duty.

Marriage in community of property

  1. In the event of the death of one spouse, the surviving spouse will have a claim for 50% of the value of the combined estate, thus reducing the actual value of the estate by 50%. The estate is divided after all the debts have been settled in a deceased estate (not including burial costs and estate duty, as these are the sole obligations of the deceased and not the joint estate).
  2. When drafting a Last Will and Testament, spouses married in community of property need to be aware that it is only half of any asset that he or she is able to bequeath.
  3. Upon the death of one spouse, all banking accounts are frozen (even if they are in the name of one of the spouses), which could affect liquidity.
  4. Donations or bequests to someone married in community of property can be made to exclude the community of property; in other words, if the donor stipulates that the donation must not fall into the joint estate, then the donee can build up a separate estate. However, returns on such separate assets will go back to the joint estate.

Marriage out of community of property without the accrual system

Each estate planner (spouse) retains possession of assets owned prior to the marriage.

Marriage out of community of property with the accrual system

A donation from one spouse to the other spouse is excluded from the calculation of each spouse’s accrual; in other words, the recipient does not include it in his growth and the donor’s accrual is automatically reduced by the donation amount.

DIVORCE

In the event of divorce, the marriage will be dissolved by court decree, which will address such aspects as child maintenance, access, guardianship and custody, spousal maintenance, the division of assets, division of pension interests and so on.

COHABITATION AND DEFINITION OF “SPOUSE”

Cohabitation is defined as a stable, monogamous relationship where a couple who do not wish to or cannot get married, live together as spouses. The Taxation Laws Amendment Act has extended the definition of “spouses” to include “a same sex or heterosexual union which the Commissioner is satisfied is intended to be permanent”.

Many pieces of legislation, including the Pension Funds Amendment Act and the Taxation Laws Amendment Act, now define spouse to include a partner in a cohabitative relationship, the effects of which are that cohabitees will benefit from the Section 4(q) estate duty deduction in the Estate Duty Act, and the donations tax exemptions of the Income Tax Act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)