THE 10 DEADLY SINS THAT ESTATE AGENTS COMMIT RESULTS 1. Death (contract is void) 2. Contract can die(voidable) 3. Civil claim 4. Embarrassment 5. Bad name 6. Cut commission 7. Complaint at IEAAB
SIN 1: ERRONEOUS DESCRIPTION OF THE PARTIES Essential Elements = Elements without which a contract will be invalid Parties Purchase Price Property Intention Parties = essential element Erroneous description = agreement void 1) Natural persons Name: Koos Smit Id: 620108 5126 062 Marital status Out * ANC In (Default) * no ANC Out of community Spouse 1 and Spouse 2 Spouse 1 or Spouse 2 In community Spouse 1 and Spouse 2
2) Marriages of Black people Ito Common Law In Out Ito Customary Law (Lobola) Before 15 November 2000 In community After 15 November 2000 In community Out of community ANC 3. Foreign marriages Purchase - 1 Spouse Sale or Spouse duly assists Bond
SIN 2 : ERRONEOUS PROPERTY DESCRIPTIONS Essential Elements = Elements without which a contract will be invalid Parties Purchase price Property Intention Property = essential element Erroneous description = contract void Identified or identifiable 2 Types of properties Full title o Erf 1, Eldoraigne x 1 o Portion 2 of Erf 1, Eldoraigne x 1 o Remaining extent of Erf 1, Eldoraigne x 1 All fixtures forms part Sectional Title Unit Section 1 in the scheme known as Villa Strelitzia SS 161/2001 Share in the common property Exclusive use?
SIN 3: VAT / TRANSFER DUTY Always VAT or Transfer duty Never VAT and Transfer duty Refer to Seller and ask 1. Registered for VAT? YES 2. Sale of vatable item? NO VAT transaction THEN: VAT act Purchase price includes VAT State if purchase price includes or excludes VAT Transfer duty paid by Purchaser? Purchaser registered for VAT Claim Transfer duty back as deemed VAT input tax
SIN 4: FITTINGS AND FIXTURES? Which fixtures are permanent Intention of person who attached it Way of attachment Damage if removed Difference in opinion Long complete lists be aware Specifically included Specifically excluded
SIN 5: LOANS AND GUARANTEES Pro forma contracts sequence of clauses are normally: 1. Purchase price is R2 000 000. A deposit of R500 000 is payable within 7 days and guarantees for R1 500 000,00 must be delivered within?x days 2. Bond Purchaser must obtain a bond for R1 500 000 within?y days Automatic extension of 14 days sometimes Question?1: How many days for bond Question?2: How many days for guarantees How many days after what signature bond approval - Automatic extension
What comes first? Bond or guarantees Process are Purchaser and Seller sign contract Purchaser applies for a bond Bank approves purchaser (jockey) AIP 21 Days Bank approves property (horse) Valuation Bank gives quotation Purchaser accepts quotation Bank gives grant Instruction electronically to attorney Attorney FICA purchaser and receives documents 7 10 Attorney prepares documents Days Purchaser signs documents Guarantees are issued Therefore loan is granted and thereafter guarantees are issued Loan / bond 21 days Guarantees 7 10 days after suspensive conditions have been fulfilled Why leave space open Preferably date and not over days
SIN 6: OCCUPATION 2 Elements 1. Date Which date is the best Thresholds 2. Occupational rent %? As per agreement To be agreed o Contract possibly void o Smit vs Walles
REGISTRASIE POOG OM DIE OKKUPASIE DATUM SO LAAT AS MOONTLIK TE MAAK INGEDIEN WAARBORGE GELEWER OKKUPASIE HUUR VOORUIT BETAAL KOSTES & HEREREGTE BETAAL ALLE OPSKORTENDE VOORWAARDES BETYDS AAN VOLDOEN VERBAND BETYDS VERKRY KONTRAKSLUITING DEPOSITO BETAAL
SIN 7: COUNTER OFFER Contract is concluded Offer (Purchaser) Acceptance (Seller)? Seller accepts but changes contract = Counter offer e.g. Amends occupational rent Section 2 of the Alienation of Land Act In writing Signed by all parties If purchaser does not initial again: non compliance with formalities No contract Rockbreakers vs Rolag
SIN 8: OPEN SPACES Agreements have certain legal requirements / formalities Common Law Formalities Statutory Law By agreement 1. Ito Common Law Essential elements Parties Intention Property Purchase price 2. Ito Statutory Law Section 2 of the Alienation of Land Act In writing Signed by Purchaser and Seller 3. By agreement - Eg Non variation - Pro forma agreements All terms are essential (implied) Open spaces?? Did the purchaser and seller reach consensus on all the aspects they have agreed upon to reach consensus on Solution - N/A - Clause Non material Left open Not void
SIN 9. NON VARIATION Section 2(1) Alienation of Land Act In writing Signed by all parties At least essential elements Parties Property Purchase price Intention
1. Sale agreement does not contain a non variation clause a) Amend essential elements - writing Section 2 (1) AOLA - signature b) Amend non essential elements Common Law verbal e.g. - gaurantee date - date of occupation - fixtures Evidence? Sale agreement contains a non variation clause Essential and non essential elements change Addendum in writing signed Section 2 of the AOLA Problem Example - Parties contact each other directly - Avoid at all means - Do not accept good faith - Attorney can only enforce contract Grandmas 80th birthday a. Not amended in writing b. Amended in writing
SIN 10: SUSPENSIVE CONDITIONS VS BREACH OF CONTRACT A. Bond 2 Aspects 1. Time When is bond approved ito National Credit Act? AIP? Valuation? Quotation? Acceptance? Grant Grant must be given before suspensive date lapses Can parties contractually agree to alter the date of fulfilment to the date the quotation is given? No
2. Amount Sufficient amount What if time period insufficient approved amount insufficient eg: The purchaser must obtain a loan for R1 500 000 before 30 October 2012 Condition is always in someones favour Purchasers favour Sellers favour Before date of expiry relevant party can: Unilateraliry give notice in writing Enter into addendum (preferrably) Suggestion: Add a clause to your contract Purchaser Seller Can unilateraliry amend
Breach of contract? Must a purchaser be placed on terms if 1. he does not obtain a bond timeously? NO 2. he does not obtain a bond for the sufficient amount? NO Contract lapses automatically
Future topics 1. Give us a break a tax break Come and listen how you can save your clients hundreds and thousands of rands before 31 December 2012 2. The missing link For those who still battle to link transactions together and how to word a proper exit clause without giving your competition the edge 3. Satisfaction guaranteed An explanation of how the finances behind a transaction work in the attorney s office. What exactly does it entail to issue guarantees and how do we as attorneys link it together with all the different transactions. 4. Sectional titles get the new Act right Are you aware of the new amendments on the Sectional Titles Act and how it influences you and your clients? 5. Estate planning Planning your estate In advising your clients it is necessary to know basic principles of estate planning as it pertains to tax and risk.