Thoughts Of The Week

The right of first refusal

A simple assumption unleashes unintended chaos

A right of first refusal is an ancillary or collateral agreement whereby one person binds himself to give preference to another person should he or she decide to sell his property.

Most of us have encountered sale or lease agreements with a right of first refusal. These clauses often come in harmless language such as –

The tenant shall have a right of first refusal to purchase the premises when the lessor intends to sell. The purchase price shall be negotiated when the lessor expresses such an intention.

This was the clause, almost verbatim from the recent case of Mokone v Tassos Properties CC 2017 CC. However, rather than being a simple and standard term of the lease agreement, the parties were embroiled in litigation all the way to the Constitutional Court with the tenant attacking the subsequent transfer of the property by the landlord to a third party. Read more here.

Your current bond over a home you are selling

When immovable property is sold, it is in most instances the purchaser that is liable for the costs of the transaction, ie to register transfer of ownership into his name.

However, where the seller has a bond over the property that was sold, the seller is liable for the costs of the separate, but related, transaction to cancel the current bond over the property.

The bond cancellation fee is payable to the conveyancing attorney that was instructed by the seller’s bank to attend to cancellation of the current bond. The formal registration of cancellation is necessary even if the bond has a nil balance.

View here for an explanation of which party is liable for which costs in a transaction or contact us at STBB for more information.

Dealing with a deceased’s immovable property

The legal requirements that ordinarily apply to the sale of land, also apply to property that is sold out of a deceased estate, namely that the agreement must be recorded in writing and be signed by both the seller and the buyer, either personally or by an agent authorised in writing to sign on that party’s behalf.

Who has the authority to sign on behalf of a deceased person’s estate? Only an executor whose appointment has been confirmed by the Master of the High Court (in the form of a document, called the Letters of Executorship) may deal with the assets and liabilities of a deceased’s estate. A sale agreement signed on behalf of a deceased person’s estate by anyone other than the executor so appointed by the Master is void and poses no legal obligation on the executor to honour same once he has been issued with Letters of Executorship. The Master’s consent to the sale is required.

For assistance in matters relating to deceased estates, contact STBB’s Estate Administration Department.

Taxed when making donations?

In South Africa we are subject to donations tax, so simply giving away or selling your assets for less than their actual market value, with no obligation to receive payment in return, may create a tax liability.

Donations tax is payable at a rate of 20% on the value of a property and must be paid by the person making the donation to the South African Revenue Services within three months of the date of the donation.

But note:

  1. Some donations are free from donations tax. See the list provided in the Income Tax Act here. These include donations between spouses and donations to approved public benefit organisations.
  2. Natural persons receive an annual donations tax exemption of R100,000 while all other donors pay donations tax on any donation exceeding R10,000 during any year of assessment.

If you have further questions in this regard, contact us at STBB.

Blacklisted due to a judgment? Apply for Rescission

Consumers applying for credit are sometimes denied access to financing due to judgments appearing against their name, often without their knowledge.

Relief can be obtained in applying for a rescission of that judgment in the event that the consumer has settled the debt to which the judgment relates. Alternatively, if the judgment was erroneously noted against a consumer’s name or if it was granted in the consumer’s absence and the consumer has a defence to the claim, it may be possible to rescind that judgment and defend the matter.

Remember, you are entitled to at least one free credit report a year and it is a good idea to visit the webpages of a known credit bureau and ask fopr a copy of the details they hold relating to you.

For assistance or more advice, contact our professionals at STBB.

Don’t miss due dates

Agreements typically have clauses requiring the parties thereto to do certain things by certain due dates, with consequences attached to non-compliance.

The phrases ”business days” or “calendar days” are often used, but sometimes parties just refer to “days”. Section 4 of the Interpretation Act states that if an agreement does not specifically say whether it is calendar or working days, the computation will be the following: The days are reckoned exclusively of the first day and inclusively of the last day, unless the last day falls on a Sunday or public holiday in which case the time shall be reckoned exclusively of the first day and exclusively also of such Sunday or public holiday.

Contact us at STBB should you require professional assistance in your agreements.

The tenant’s rights when you sell your house

One frequently receives queries with regard to a tenant’s position where the owner of the leased premises sells the property, mostly from tenants indicating that they were simply told to vacate before transfer.

The point of departure is however that in our law, a tenant is protected by the common law ‘huur gaat voor koop’ maxim. This means that the lease agreement will survive the sale and the new owner will effectively step into the shoes of and become the landlord on the same terms and conditions. The new owner will also be responsible to refund the tenant’s deposit, less any claim for damages that may exist. The Consumer Protection Act may also impact on the rights of the landlord and tenant and it is advisable to consult with an attorney when concluding a lease.

Contact STBB for assistance with all aspects of your lease agreement.

Annulment of a marriage: When is it an option?

Sometimes a client seeks annulment of a marriage rather than instituting divorce proceedings. When is this an appropriate choice?

The Marriage Act of 1961 provides for annulment of marriages that are either void or voidable. Void marriages are those that are not legal from the start. Examples are where the marriage officer, who solemnized the marriage, did not have the legal capacity to do so; where one of the parties are already married at the time of the conclusion of the marriage; or a marriage without witnesses.

On the other hand, a voidable marriage is one where, amongst other things, one of the spouses was a minor at the time of the conclusion of the marriage and the prescribed consents were not obtained; one of the spouses entered into the marriage under duress; one of the spouses at the time of the conclusion of the marriage, was pregnant by a third party and the other spouse was unaware thereof; or, the marriage was entered into based on a fraudulent misrepresentation e.g. where a spouse misled the other by using a fraudulent identity.

Speak to our Family Law Department on should you require any assistance.

What constitutes acceptance of an offer to purchase? | 26 September 2017

For an agreement to come into effect, consensus must be reached in respect of all the material terms.

If one party offers and the other accepts, but at the time of signing the latter makes alterations to the contract, can it be said that the first signatory accepted the changes to the contract, or does that person have to acknowledge the changes after they have been made?

This issue was addressed in the recent judgment of Cooper v Clark, where the Court referred to two previous Supreme Court of Appeal judgments. The one concluded that conditional acceptance of an offer does not constitute a contract, but rather a counter offer, and would only become a binding contract on acceptance of the alterations. The other emphasised that where such change amounts to a material alteration of the contractual terms, it constitutes a counter offer and that until accepted, is unenforceable.

Therefore, any material alteration made by one party after the other has signed the agreement, must be accepted by the latter to be enforceable.

Contact STBB for guidance in finalising your sale or purchase agreement.

Easy way to evict a tenant? | 19 September 2017

Many landlords and tenants make use of the Rental Housing Tribunal to resolve disputes that arise during the course of a lease. In the Tribunal, parties represent themselves and if legal guidance is needed, a party will consult with his attorney beforehand for advice as to his rights in the matter and the Tribunal’s procedure.

However, the Tribunal may not give an order evicting a tenant. A landlord seeking eviction must therefore approach a Magistrate or High Court and would need the services of an attorney.

The attorney and landlord will follow the procedures of the Prevention of Illegal Eviction and Unlawful Occupation of Land Act (PIE), these being designed to provide procedural protection to a tenant before eviction.

Speak to STBB for assistance in any issue relating to your lease agreement.