Property Law Update


Issue 10 – 2018

A FRIENDLY ‘BUY BACK’ NOT ALWAYS A ‘SALE’ THAT REQUIRES A WRITTEN AGREEMENT TO BE VALID

Loggenberg and Others v Maree (286/17) [2018] ZASCA 24 (23 March 2018)

The facts in this judgment tells a story of A, in an attempt to assist his friend B, that bought B’s property in an execution sale with the understanding that B will buy it back shortly after, when his finances improve. A subsequently sold the property to C and B approached the Court for assistance. A argued that the buy-back was a sale agreement of land and was invalid as it was agreed to orally. He was thus free to sell to C. The Court found that it rather resembled an oral agreement for the benefit of a third (stipulatio alteri) and a written recordal was not necessary.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the fifty-second set of notes for your STSMA Reference Guide, Prescribed Management Rule 31 is discussed.

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Prescribed Management Rule 31
(N.B. Print in landscape)

Issue 09 – 2018

PITFALLS IN EXERCISING A RIGHT OF FIRST REFUSAL

Tiekiedraai Eiendomme (Pty) Ltd v Shell South Africa Marketing (Pty) Ltd and Others (1206/2016) [2018] ZASCA 41 (28 March 2018)

In essence a right of first refusal in the hands of a tenant has two components: there is an undertaking by the landlord not to sell the property to a third party without giving the tenant the right of first refusal; and the landlord is obliged to offer the property for sale to the tenant at the price and on equal terms to that offered to the third party. Including a right of first refusal in a lease usually involves the obligation that all the detail of the third party’s offer be made known to the tenant, otherwise he is not able to exercise his rights. This judgment supports this logic and illustrates how things can go wrong if the third party’s full offer has not been presented to the tenant.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the fifty-first set of notes for your STSMA Reference Guide, Prescribed Management Rule 30 is discussed.

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Prescribed Management Rule 30
(N.B. Print in landscape)

Issue 08 – 2018

DOES ABSENCE OF APPROVED PLANS AND OCCUPANCY CERTIFICATE INVALIDATE A LEASE?

Wierda Road West Properties (Pty) Ltd v SizweNtsalubaGobodo Inc (1156/2016) [2017] ZASCA 170; 2018 (3) SA 95 (SCA) (1 December 2017)

The Supreme Court of Appeal was asked here to determine whether a tenant can escape its liabilities under a lease agreement by arguing that the lease agreement was invalid or at least unenforceable as there were no approved building plans or an occupancy certificate (as required in terms of the provisions of the National Building Regulations and Building Standards Act) in respect of the leased premises. Considering the penalties that are provided for in the Act for non-compliance, the Court held that it was not warranted to read into the wording of the Act that the legislature intended a further penalty of invalidity to follow.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the fiftieth set of notes for your STSMA Reference Guide, Prescribed Management Rule 29 is discussed.

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Prescribed Management Rule 29
(N.B. Print in landscape)

Issue 07 – 2018

TRANSFER DUTY CALCULATION: ARRANGEMENT TO SEPARATE BARE DOMINIMUM AND HABITATIO MAY REMAIN A SINGLE TRANSACTION ATTRACTING HIGHER TRANSFER DUTY

Commissioner for the South African Revenue Service v Short and Another (A289/2017) [2018] ZAWCHC 9 (7 February 2018)

Structuring a property purchase so that you buy the property (the bare dominium) and your partner a right of habitatio, could be an effective way of protecting the former against business risks of the latter. But remember that in determining the amount of transfer duty, calculated on a sliding scale, it is not so simple to argue that such an arrangement is two separate agreements and hence justifying a lower rate of transfer duty (calculated in respect of the separate transactions). In this case the Court agreed with SARS’s take that this was a single indivisible transaction and that transfer duty was payable on the whole amount of the transaction.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-ninth set of notes for your STSMA Reference Guide, Prescribed Management Rule 28 is discussed.

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Prescribed Management Rule 28
(N.B. Print in landscape)

Issue 06 – 2018

THE CPA AND LEASES: MUST NOTICE TO REMEDY BREACH MENTION THE 20 DAY PERIOD IN WHICH TO DO SO?

Transcend Residential Property Fund Limited v Mati and Others (14639/2017) [2018] ZAWCHC 40 (20 March 2018)

This matter dealt with exactly this question and held firstly, that a co-occupant is a ‘consumer’ and could invoke the provisions of the Consumer Protection Act (CPA). The landlord had sent a notice to the tenant after he had breached the terms of the agreement by failing to make prompt payment of the rental. The landlord’s subsequent letter of demand granted the tenant 7 days in which to rectify the breach. When the breach was not remedied, the landlord cancelled the lease, exactly 20 business days after hand-delivering the letter of demand. The question then arose whether this constituted compliance with the provisions of the CPA, which requires of a landlord to afford a tenant 20 days within which to remedy a breach, before a lease may validly be cancelled. The court answered in the affirmative.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-eighth set of notes for your STSMA Reference Guide, Prescribed Management Rule 27 is discussed.

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Prescribed Management Rule 27
(N.B. Print in landscape)

Issue 05 – 2018

TENANT IN MALL REQUIRED TO ACTUALLY CONDUCT BUSINESS ACTIVITIES?

Edcon Limited v Bay West City (Pty) Ltd (A5029/17) [2018] ZAGPJHC 39 (6 March 2018)

A shopping mall landlord wants to see that all stores are tenanted and attracting feet, for its own sake and also because there are reciprocal advantages for all the other tenants. This matter dealt with such a lease that contained a term obliging the tenant to continue trading from the premises. The tenant, for financial considerations, decided to close its store but continued paying the rental and performing other obligations under the lease. The Court was asked to determine whether this constituted a breach of the lease agreement. Although the judgment is therefore based on interpretation of the wording used in the agreement, it also highlights how important it is that such agreements deal carefully with the consequences of a paying tenant deciding no longer to run a store from its premises.

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The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-seventh set of notes for your STSMA Reference Guide, Prescribed Management Rule 26 is discussed.

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Prescribed Management Rule 26
(N.B. Print in landscape)

Issue 04 – 2018

MARITAL STATUS: AVOID THESE PITFALLS WHEN CONCLUDING AGREEMENTS

Broodie NO v Maposa and Others (1990/2017) [2018] ZAWCHC 18 (19 February 2018)

Most people are generally aware that in some large transactions, if they are married in community of property, they require the consent of their spouse. Less are aware that without such consent, the property transfer or donation could be invalid; and even fewer are aware of the fact that where a third party transacted with such a spouse in good faith, it is possible that the law will deem that there was consent. This judgment is a case in point where a man, married in community of property, donated shares in a CC that owns a property in Sea Point, to another woman with whom he had a longstanding affair.

The spouse did not consent to the donation and the question arose whether it could be deemed that the requisite consent was in place. A cautionary note for anyone dealing in agreements with someone who is married in community of property.

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The Judgment
Summary of the Judgment

BUILDING PLAN APPROVAL: HOW MUST THE MUNICIPALITY COME TO A DECISION?

City of Cape Town and Another v Da Cruz and Another (A313/17) [2018] ZAWCHC 5 (2 February 2018)

Despite a final ruling on the interpretation of section 7(1) of the National Building Regulations and Building Standards Act, the practical application thereof by officials in local authorities tasked with approving building plans remains a learning curve. This judgment is a case in point and explains the rule that where a local authority has an insignificant concern about, and finds it unlikely that a proposed building would disfigure the neighbourhood, would be unsightly or objectionable, or would derogate from the value of neighbouring properties, it is required to approve the application. The judgment illustrates how this works practically.

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The Judgment
Summary of the Judgment

Issue 03 – 2018

OSTRICH “ATTACKS” VISITOR ON PROPERTY: WHO IS LIABLE?

Van der Westhuizen v Burger (204/2017) [2017] ZASCA 178 (1 December 2017)

Does a property owner become liable for injuries sustained by a visitor who ran from an ostrich on the property which he thought was attacking him? Yes, this is entirely possible, but the facts of the incident must support a finding both of causation and liability, as the present matter illustrates.

The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-sixth set of notes for your STSMA Reference Guide, Prescribed Management Rule 25 is discussed.

Prescribed Management Rule 25
(N.B. Print in landscape)

Issue 02 – 2018

MUST A RIGHT OF FIRST REFUSAL (PRE-EMPTIVE RIGHT) IN RESPECT OF LAND REALLY BE IN WRITING?

Mokone v Tassos Properties CC and Another (CCT113/16, CCT291/16) [2017] ZACC 25; 2017 (10) BCLR 1261 (CC); 2017 (5) SA 456 (CC) (24 July 2017)

Yes and no. For long, and because of sound policy considerations, our law ruled that pre-emptive rights relating to the sale of immovable property must be in writing in order to be valid and binding. For example, a 12-month lease agreement contains a right of pre-emption in favour of a tenant. One further oral renewal of the lease follows and thereafter the landlord and tenant make a one-line entry on the ‘old’ lease mentioning it is extended for a further period. During this further period, the landlord sells the property subject to the lease. The lease expires and the tenant refuses to vacate, quoting the pre-emptive right that existed in the old lease. One of the findings in this matter was that the granting of a pre-emptive right is not an ‘alienation’ and therefore needs not comply with the “in writing and signed” requirements of the Alienation of Land Act, rendering the provision in the ‘old’ lease still valid. This is a dramatic change to the previous position. This despite, transparency and considerations relating to the accuracy of recall if the provisions of an agreement is not reduced to paper, still call for such agreements to be in writing.

The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-fifth set of notes for your STSMA Reference Guide, Prescribed Management Rule 24 is discussed

Prescribed Management Rule 24
(N.B. Print in landscape)

Issue 01 – 2018

IS A HARD-HITTING CONTRACTUAL TERM CONSTITUTIONALLY UNFAIR AND HENCE UNENFORCEABLE?

Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd (183/17) [2017] ZASCA 176 (1 December 2017)

X had regularly, for 35 years, maintained rental payments under a lease. However, due to oversight on X’s bank’s side, rental was paid late on two occasions, a few months apart. The lease agreement allowed for immediate cancellation of the lease on breach, as the parties did not include a clause providing that an opportunity to rectify the breach must be given to the defaulting party. The landlord cancelled and the tenant disputed its right to evict it in the circumstances and called on considerations of ubuntu to be read into the agreement. The Supreme Court of Appeal found in favour of the landlord and the judgment gives a valuable insight into all the interests that must be balanced in such an enquiry.

The Judgment
Summary of the Judgment

STBB’s STSMA REFERENCE GUIDE

In this, the forty-fourth set of notes for your STSMA Reference Guide, Prescribed Management Rule 23 is discussed.

Prescribed Management Rule 23
(N.B. Print in landscape)