About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
Please visit our website at www.prop-law.co.za for more details.
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

12 December 2012

Middle segment property values rise 5% on Absa index

Middle segment property values rise 5% on Absa index

Middle segment property values increased by 5 percent year on year last month following a revised 3.3 percent year-on-year rise in October, according to the latest Absa house price index released yesterday.

However, Absa said average house prices in the first 11 months of this year were unchanged compared with the corresponding period last year.

In addition, Absa said although the year-on-year growth in the average value of homes in the middle segment of the housing market increased further last month, month-on-month house price growth continued to be on a downward trend.

This trend commenced at the middle of this year and was expected to affect year-on-year house price growth "in the near future", said Jacques du Toit, a property analyst at Absa Home Loans.

Du Toit said real price deflation was still evident in the middle house segment up to October but the downtrend was being arrested, with the smalland medium-sized categories showing some real year-onyear growth in October. Real house prices are adjusted and deflated to take account of the impact of inflation.

Du Toit added that relatively low nominal house price growth was forecast for the next 12 months and with headline consumer inflation projected to average around 5.5 percent next year, some real house price deflation might still occur for most of next year.

FNB reported last week that while the housing market, along with house price growth, did experience some improvement in strength earlier this year, the pace of improvement appeared to have been tapering off and was reflected in the slower growth in house prices.

Its house price index slowed further last month with yearon-year house price growth dropping to 0.5 percent.

John Loos, a household and property sector strategist at FNB Asset Finance, said this was the eighth consecutive month of tapering growth since the relatively impressive 8.4 percent peak in year-on-year growth reached in March this year.

FNB said the average value of home transactions on its index was R819 733 last month.

Business Report

Super rich flock to Sandton, Cape Town central

Super rich flock to Sandton, Cape Town central :

Where do South Africa's wealthiest people live? A report from London-based consultancy Wealth Insight sheds some light on their geographical distribution.

With 36 multimillionaires, Sandhurst accounts for the largest proportion of Johannesburg's ultra high net worth individuals (UHNWIs). Bryanston accounts for the second-largest percentage, "although it is a significantly larger suburb than the likes of Sandhurst, Hyde Park and Westcliff ", the report notes.

"The area known as Sandton, which includes Sandhurst, Sandown, Morningside, Hyde Park, Melrose, Atholl and a number of other suburbs, is home to over half of Johannesburg's UHNWIs."

The report also notes that a number of South African companies moved their head offices to Sandton, following a rise in crime in Johannesburg's city centre between 1990 and 2000. "Most notably, the JSE moved to Sandton in September 2000 from the central business district. Sandton has continued to grow strongly between 2000 and 2011 and is considered to be the banking and wealth centre of South Africa."

Central Cape Town accounts for the highest proportion of that city's UHNWIs (17 percent). The bulk of these are based in the Waterfront Marina, Higgovale, Green Point, Oranjezicht and Tamboerskloof.

According to Wealth Insight research, Camps Bay, in second place, is home to the largest number of South African homes worth more than R20 million, while Clifton, in third place, is home to the largest number of South African homes worth over R50m. Clifton is also the most expensive residential area in the country.

Clifton and Bantry Bay in particular are hotspots for wealthy foreign billionaires who own some of the largest properties in these areas. The report notes: "These individuals are not included in our count as they are based in other countries. Other wealthy Cape Town areas with more than one billionaire include Hout Bay, Newlands, Upper Claremont, Kalk Bay and Simon's Town."

Business Report

10 December 2012

Diepkloof Square community shopping centre opens in Soweto

Diepkloof Square community shopping centre opens in Soweto

Soweto entered a new era of convenient, quality retail when Diepkloof Square community shopping centre opened, fully let, on November 29.

Diepkloof Square in Soweto opened last month.

The 16 108 m2 community centre is anchored by Pick n Pay in a 3 112 m2 store and features 50 shops, including a new 1 720m2 Food Lover's Market.

"Diepkloof Square is a really exciting project," says Food Lover's Market group property and business development manager Graeme Liebenberg. "Diepkloof holds a special place in the heart of many South Africans.

"It was one of the earliest communities in Soweto and many influential South Africans live, have lived or passed through this suburb."

In the epicentre of affluent Soweto, Diepkloof Square is positioned in an exciting setting in a growing community in Diepkloof Extension 3 near the N1, with excellent visibility and access from the main arterial road serving Diepkloof, Immink Road.

"Diepkloof Square will provide quality retail in a smart, modern setting - giving residents easy access to tailormade convenience shopping," says Jason McCormick, the managing director of developer McCormick Property Development.

"The centre pays meticulous attention to top design, apt retailer mix and the daily shopping needs of one of the wealthiest township suburbs in the country."

Highlighting its thoughtful design, McCormick points to Diepkloof Square's covered food court as a vibrant space for the community. "Diepkloof Square is more than a shopping centre, it's a town square - a place to meet and share a sense of community."

McCormick Property Development has pioneered retail development in South Africa's emerging markets since 1983 and has 49 completed developments to its name.

For Diepkloof Square's development, McCormick partnered with leading African black-owned and managed investment holding company Shanduka Group.

Leasing Diepkloof Square is Retail Network Services - a full-service specialist retail leasing company with successes such as Pan Africa Shopping Centre in Alexandra, Protea Glen Shopping Centre in Soweto, Tsakane Mall in Springs and Jabulani Mall in Soweto to its name.

Gavin Tagg, of Retail Network Services, says the shops and services at Diepkloof Square mirror its upmarket setting.

Yet despite this they still offer a large assortment of grocery and food stores to cater across income groups.

"Diepkloof Square features an array of leading retailers which appeal to everyday needs of this growing local market," he says.

In an area previously underserviced by shopping, retailers have lined up to satisfy Diepkloof 's consumer needs. Besides Pick n Pay and Food Lover's Market, its retail mix includes Ellerines, Beares, OK Furniture, JD Group, McDonalds, King Pie, Steers, Debonairs, KFC, Old Mutual, Nedbank, Standard Bank, Cashbuild, Roots, Vodacom, Pep, Modjo Hair, Randcon Paints and Diepkloof Medical Centre.

With its prime location, modern design, exciting retail mix and unmatched local shopping experience, Diepkloof Square also offers generous parking and excellent access to public transport with an adjacent existing taxi rank.

"Diepkloof is a strong community with ample amenities that create a vibrant node for its residents and form a natural retail node," says Tagg.

"It is attracting an increasing number of middle-class and aspirant residents.

"Diepkloof Square is set to become the dominant retail node in the Diepkloof area and its surrounding suburbs."

Weekend Argus (Sunday Edition)

How to build a credit history for your home-loan

How to build a credit history for your home-loan

Contact us for advice and assistance. (www.prop-law.co.za)

In today's real estate market it is imperative for consumers to establish an excellent credit record and maintain it.

By establishing a credit history, consumers ensure their best possible chance of bond approval, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

"Having a favourable credit record is essential for consumers who aspire to own property. While lending criteria is not as stringent as it was when the National Credit Act (NCA) was initially introduced, the requirements in the current market are still strict and it is likely to remain that way for some time," he says.

"Just as important as a positive credit score is an established credit history that shows that the consumer can conduct their credit responsibilities in a favourable manner. A consumer's credit history will have an impact on whether or not the loan is granted and if the loan is granted, it will influence the interest rate at which the bank will finance the deal. Financial institutions use this information to assess the probability of the applicant defaulting on their payments, which will in turn give them an idea of whether or not granting the loan is a high risk. Those who have finished their studies and are preparing to enter the job market will need to ensure that they take the necessary steps to build a good credit history."

According to Goslett, financial institutions will generally look at how a prospective homebuyer has conducted their credit accounts over the last six months, so if an applicant wants to ensure an optimum chance for approval, they will need to have an excellent credit record and history for at least the six months prior to submitting their application. He notes that establishing a credit history is slightly more challenging due to the fact that lenders are extra cautious of new applicants. Goslett offers a few tips for so those who want to establish a credit history and are applying for credit for the first time:

•Easy does it

Don't apply for too much credit at once and only apply with a reputable credit provider. Goslett says that it is best to start off slowly and only apply for small amounts that are easily manageable. He explains that applying for too much credit will send the incorrect message to the lender and they will think that you are desperate. It is also important to only make one application at a time, as too many applications for credit facilities will have a counterproductive effect that could negatively impact the consumer's credit score. Pay down accounts as soon as possible, and be sure you don't take out more credit than you can afford to pay back.

•The power of three

As a general rule the consumer will require at least three lines of credit. With less than that the credit history might be considered to be too thin, however with more it may be considered too much. Goslett says that the golden rule is for consumers to make sure that they always leave a 30% or higher gap between what they owe and the credit limit as lenders will look for this minimum gap. It is also vital to still have the necessary disposable income required for bond approval in the future, so work out a strict budget and stick to it.

•Have different types of credit

The credit score algorithm likes to see different kinds of accounts. Applicants should not just have revolving credit, but where appropriate, a closed-end loan or account such as a car loan. Goslett says that how the various accounts are managed is more important than the variety of the credit. He notes that is very important that all accounts are paid according to the loan agreement and no late payments are made. This will reflect responsible financial behaviour.

•Deposit money into a savings account

Start to build a good bank account balance by depositing money into a savings account each month for your home loan deposit, as this will show financial stability. Goslett says that the fact that you have a deposit saved up will stand you in good stead and improve your bond approval chances.

Goslett concludes by saying that consumers should remember that even with an established credit history and excellent record, homeowners will need to be able to afford their monthly repayments. Affordability and disposable income will remain the crux of the bond approval process in the year ahead.

RE/MAX Press Release

06 December 2012

New N1 interchange proposed for Tshwane

New N1 interchange proposed for Tshwane

Plans are under way to tackle problems related to traffic congestion in the Ashlea Garden/Garsfontein area. Tshwane Metro Council will construct a new interchange as part of the plans for the area.

This will result in the closure of Matroosberg and Dely roads, between Garsfontein and Matroosberg roads, Ashlea Gardens, to make way for the Garsfontein/N1 interchange.

Garsfontein Road will be upgraded to a four-lane road between the Garsfontein/N1 interchange and Selati Road.

The construction of the Garsfontein/N1 interchange is aimed at improving accessibility to and from the N1.

According to the municipality, traffic volumes are expected to grow significantly on roads such as Garsfontein, Dely, Brooklyn and Selati, "which would have a significant impact on the residential environment between these gateways".

Executive mayor Kgosientso Ramokgopa said council would ensure that the residential character of those areas was protected.

"We would like to minimise rat running in those suburbs and to ensure that their residential character is protected," he said.

Ward councillor Siobhan Muller said it was encouraging to see the municipality protect the residential character of the suburbs.

"Too often, the rights of developers have been allowed to overshadow the rights of residents who lived in the suburbs long before the developers moved in," she said.

Muller said it was essential to protect the suburban streets from rat racing due to the high volumes of traffic on high order roads to accommodate office and retail development.

"It is essential to prevent gridlocks of traffic on the higher order roads which guarantee rat racing through the quieter suburban roads.

"In this particular case, this closure is critical to the survival of the residential character of Ashlea Gardens."

According to Muller, developers had already eyed the area and started to move in, over the mid-block line, into the residential area.

"They had hoped to bully the residents into accepting intrusion into their quiet suburb. This closure will make sure that residential and development of office space each has a place."

Pretoria News

Tshwane claims progress in turning Pretoria CBD around

Tshwane claims progress in turning Pretoria CBD around

Tshwane Metro Council has recorded several successes under its "I can" project aimed at ridding the city of crime and grime and ensuring that by-laws are adhered to.

These include the recovery of 37 municipal rubbish bins; the issuing of 27 notices for contravening the by-law on health and solid waste; the closure of a tavern on the corner of Sophie de Bruyn (Schubart) and Boom streets and the arrest of 83 illegal immigrants.

Deputy city manager, service delivery co-ordination and transformation management, Ronnie Boshielo stated in a report that "I Can", was aimed at among others, the removal of illegal posters, the removal of illegal structures on council-owned road reserves, addressing trade, illegal transport activities.

The project is also aimed at fixing broken street lights and traffic signals, damaged street signals and potholes, and cleaning the urban environment by concentrating on roads and road reserves, open spaces, cutting of trees and enforcing town planning and national building regulations.

Boshielo said informal trade in the inner city faced many challenges that restrained its development and growth.

These include the lack of adequate amenities like sanitation , insufficient demarcated area for trading, the lack of overnight facilities for traders and congestion, especially in Church Mall, between Lilian Ngoyi (Van der Walt) and Thabo Sehume (Andries) streets.

Boshielo said interventions, to be introduced in phases, had been identified and these included the conversion of Barolak building in Johannes Ramokhoase Street (Proes) into an informal traders' market, the paving and erection of trading shelters in Lilian Ngoyi Street (Van der Walt) and the "decluttering" of Church Mall.

DA councillor Clive Napier said one of the biggest failures of the municipality was its inability to vigorously enforce its by-laws.

He said there were by-laws to address many of the issues referred to in the report.

Napier added that the metro police should be involved in the tracking down of advertisers who put up illegal posters that bore their phone numbers on their advertisements. "The same illegal advertisements have been appearing for a year or more. Why are the perpetrators not jailed?" he asked.

Napier said a few years ago, the mayoral committee took a decision to prohibit national and provincial government departments from relocating from the inner city to the periphery of the CBD.

He said grand plans were announced some years ago, backed by money from the province for the Lilian Ngoyi Square, on the corner of Lilian Ngoyi (Van der Walt) and Helen Joseph (Church) streets.

"We want to know what is happening in this regard," said Napier.

The member of the mayoral committee responsible for economic development and planning, Subesh Pillay, said there had been a marked increase in the number of commercial entities that were coming back into the inner city.

Pillay said the council was of the view that Lilian Ngoyi Square was not ideal for an informal market.

"We want to move the informal market to Marabastad," he said.

Pillay said a new design had been developed for Lilian Ngoyi Square.

The new-look square will, according to Pillay, be an open-flow system which will integrate with the pedestrianisation of Helen Joseph (Church) Street.

It will have a stage where artists can perform and a monument to honour the women who took part in the anti-pass law march in 1956. "We want to create something along the lines of Time Square (New York), which will be integrated into the State Theatre."

Pretoria News

05 December 2012

Work on Pretoria's Paul Kruger Street to start in June

Work on Pretoria's Paul Kruger Street to start in June

Work is expected to start next year on the beautification of one of the main routes in Pretoria's inner city, Paul Kruger Street.

Member of the mayoral committee for economic development and planning, Subesh Pillay, said yesterday work would start around June next year.


Paul Kruger Street is expected to be closed to certain types of traffic, with the route reserved for the proposed Bus Rapid Transit (BRT) project. Line 1A of the BRT project is expected to run from the Rainbow Junction (Pretoria North) to Nana Sita Street (Skinner) along Paul Kruger Street.

Stations will be situated on Paul Kruger Street, south of Church Square; on Paul Kruger, between Struben and Johannes Ramokhoase (Proes) streets; and on Paul Kruger, north of Boom Street and at Mansfield Road in Eloffsdal.

A report submitted to the city council said the BRT would be located on a transit mall on Paul Kruger Street.

The mall would have 6m-wide pavements to be pedestrian-friendly. Only BRT buses and emergency vehicles would be allowed to operate around the transit mall.

No on-street parking would be allowed at the transit mall or within the Church Square precinct.

Pillay said arrangements would be made for business people to access their premises via Paul Kruger Street.

"We have conducted an audit of all businesses and government departments that access their premises on Paul Kruger. All these will be communicated with directly to inform them of these arrangements."

Pillay said the municipality had undertaken a traffic impact analysis that indicated where the spill-over traffic "will likely route to".

The metro police would deploy members to conduct traffic-flow management operations, he said.

Pillay said a significant number of people entered the city centre on public transport.

"This has also been studied and appropriate arrangements are being finalised as part of the pre-implementation arrangements.

"It is expected that there will be increased congestion on alternative routes. These will in part be mitigated by the deployment of metro police as well as the capacity increases proposed.

"But... the ultimate intention is to migrate greater numbers of people out of private vehicles into public and non-motorised transport."

Pillay said the congestion would invariably cause inconvenience.

"But this is regrettable and almost unavoidable as we pursue the implementation of our public transport strategy and enhanced urban management of the Tshwane inner city."

Pretoria News

When the state expropriates private property

When the state expropriates private property

Governments or their agencies have the power to take away privately-owned land or property - usually for public use.

Most governments compensate the deprived owner for the expropriated property. In some countries, like the US, an owner's permission to expropriate property is not needed, although the owner is "justly compensated".

The South African constitution requires the government to pay the owner the market value, or what is "just and equitable" in a particular situation.

Does a tenant have any claim for compensation if the owner's property is expropriated?

Take the case of an owner who agrees to his property being expropriated in return for payment.

He is allowed to continue occupying the property as a tenant, but later discovers that the municipality has changed the purpose for which the property would be used.

Does he have a claim against the municipality for "misleading" him, or can he have the expropriation reversed?

Legal complications may follow when properties are expropriated for a specific use, but are later used in a different manner.

The previous owner may challenge a municipality for unjust administrative action in the wrongful expropriation.

Such was the case that started in 1997 when the Richards Bay Council (later to become the Umhlatuze Municipality) expropriated John Rex Harvey's properties ( Harvey v Umhlatuze Municipality & others).

Together with other properties that formed "The Ridge" that was rezoned as public open space, the council intended to develop, for public use, a passive recreational open space and

e-mail cil's appeal committee was dismissed in January 2008 and by February, Crystal Lagoon Investments 44 CC was awarded the tender.

Harvey eventually took the matter to the KwaZulu-Natal High Court, Pietermaritzburg, challenging the council to have his properties returned to him at market value.

The court, in a lengthy judgment in which the laws on expropriation of a number of countries were examined, found that the council did not violate Harvey's constitutional rights.

The only right Harvey had was that of a tenant, and any eviction would follow the due legal process.

He was not entitled to have his properties back, despite the fact that the council had changed its declared purpose regarding the properties.

The council was the owner of Harvey's properties through expropriation and did not violate "any of its constitutional and legal obligations" to Harvey.

"In our country there is no principle of law whereby 'property that was expropriated for a public purpose that was never realised (or for a purpose that ceased to exist) should be returned to the original owner, even if compensation was paid for it'. Such a principle cannot be extracted from the jurisprudential framework established by the Constitutional Court..."

The case was dismissed and no cost order was made against Harvey since the case raised a unique and novel issue, which, in turn, raised important constitutional and legal considerations.

For tenant's rights' advice, contact Loshni Naidoo or Pretty Gumede at 031 304 6451

Dr Sayed Iqbal Mohamed
Chairperson, Organisation of Civic Rights
Daily News

04 December 2012

Joburg set to pay high fee to rebuild its tarnished image!

Joburg set to pay high fee to rebuild its tarnished image!

How much is fixing Joburg's reputation worth? R145 000? R10 million? Five times that?

The City of Joburg is fed up with its bad reputation and is looking for a professional reputation management company to help clean up its image, and has received some expensive offers.

"Being the biggest municipality in South Africa, the city enjoys a lot of media attention. Therefore, a good reputation is key," the city document outlining the problem said.

"Group Communication and Tourism has therefore identified a need to obtain the services of a well-established reputation management company for the purpose of assisting the city manage and enhance its image and reputation."

Joburg has been strongly criticised by its residents over recent years for its shambolic billing system.

The city is prepared to pay for a good reputation fix.

"This contract exceeds R10 million," states one section of the document.

Bids closed last week and four contractors are interested, according to the city's list of the bids.

Meropa Communications has bid R145 464, Brightspark Communications bid R3.4m, Vuma Reputation Management asked for R29.3m and Barolong Group bid R55m.

The document said a good reputation would help to secure customer loyalty.

"The city understands that a good reputation cannot be created overnight. The city also understands... that communication must be based on a clearly defined strategy."

The services which the city wants include reputation management workshops, crisis management, "thought leadership", "key messaging", media training, management of media placing and press releases.

The company must show the city a list of at least five current clients, and show at least one reputation management contract it has completed. It must have experienced staff to deal with the city's account. City spokesman Nthatisi Modingoane said the contract was still being adjudicated.

The Star asked how such spending was justified.

"The three-year tender caters for all city departments and municipal entities, and the amount stated serves as a ceiling for maximum spend. Suppliers are paid according to a project delivered," Modingoane said.

The Star asked if this was an attempt to whitewash over problems like slow delivery and billing problems.

"The city has never denied the challenges it faces and has continuously communicated actions taken to deal with these challenges.

"Moreover, the city has proactively initiated a process of establishing an ombudsman office," Modingoane said.

The Star

What are a property's fixtures and fittings and what aren't?

What are a property's fixtures and fittings and what aren't?

It is not uncommon for disputes to arise between a buyer and a seller regarding what is classified as a fixture and fitting and what isn't.

"In many cases there are certain items that a seller has installed and would like to remove from the property and take with them when they move," says Goslett of RE/MAX Southern Africa.

"Sellers often ask whether they are allowed to do this and the simple answer is yes, provided that both parties are in agreement. Alternatively, if the agreement of sale excludes any specific item, the seller is entitled to remove it."

He points out that the general rule when it comes to fixtures and fitting is that the when the purchaser buys a property, they receive the land, the permanent physical improvements such as any buildings erected on the land, along with all items that are permanently attached to the improvements or buildings that are erected on the land.

Goslett notes that in the instances when disputes do occur it is normally when the agreement of sale is vague and simply states the property is sold 'as is' or voetstoots and includes all upgrades, fixtures and fittings of a permanent nature. In cases such as these it is important to determine what is regarded as permanent nature. In order to do this, three questions must be asked, which are:

•What is the nature and purpose for which the item was attached? The item must be attached to the land or the structure erected on the land. It should be of a permanent nature or intended to always serve the land.

•How and to which degree was the item attached? It should be sufficiently attached so as to become part of the land or structure. If removing the item will cause substantial damage to the structure, it should be considered permanent.

•What was the intention of the owner when attaching the item? If the intention of the owner was to permanently attach the item, then that should be taken into consideration.

Goslett says that generally if the item is bolted down, cemented, sown or planted and has taken root it normally becomes permanent. He notes that some items such as Wendy Houses and Pergolas or other similar structures can be contentious issues. If they are permanent structures that will remain on the property, plans should be provided by the seller to buyer.

"It is very important that the sale of agreement between the buyer and seller covers all aspects of the transaction to ensure that nothing is to left to interpretation by either party. There are some agreements that do not refer to fixtures and fitting at all, however taking the time and care to ensure proper drafting of your agreement could save you possible frustration later on," says Goslett.

"Ensure that all aspects and agreements are in writing, do not rely on verbal communications and always create a paper trail. If a dispute does arise, the court will consider all the surrounding circumstance, facts and even the conduct of the seller. Therefore the seller should always be aware whether or not his action may be creating a certain impression with the purchaser as to whether or not an item is included in the sale."

According to Goslett, the seller should prepare a list itemising exactly what is to be sold with the house prior to listing the property with an estate agent. "The list should be incorporated into the mandate to sell so that the agent can point out to potential buyers any items that will be removed by the seller at a later stage," he says.

He adds that a basic clause regarding the fixtures and fittings should be included in the agreement of sale, otherwise referred to as the offer to purchase. The clause should be similar to the following:

The property is sold inclusive of all existing fixtures and fittings of a permanent nature, which the seller warrants are his/her exclusive property, fully paid for and in working condition, including but not limited to: the existing garden, trees, shrubs, plants, curtain rails, rods, pelmets, fitted carpets, the light fittings, stove and/or oven, hanging mirrors, towel racks, shelves, as well as special tap fittings, removable kitchen units, tennis court net, fire place grate/blower, fitted kitchen storage units, awnings, post box, burglar alarm system, doorbell/knocker, the television aerial and accessories (if applicable), pool filter, pump and all cleaning equipment including automatic pool cleaner (whether fixed or movable, if applicable), swimming pool equipment, inner and outer door keys.

"It is clear that the list could be endless and it is therefore important for the seller to consider exactly what they are intending to sell. If any items are to be removed by the seller, both parties will need to agree and remove the item from the clause stated in the agreement. Open communication channels and ensuring all items are covered in the agreement will ensure that conflict is avoided by both parties," Goslett concludes.

RE/MAX Press Release

03 December 2012

Fais Ombud orders Sharemax broker to repay R800 000

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Fais Ombud orders Sharemax broker to repay R800 000
The Ombud’s finding will worry brokers who sold shares in Zambezi and The Villa.

Financial advice ombudsman Noluntu Bam delivered her first negative finding against a Sharemax broker last week. Her determination may spark fear among those who sold shares in the property syndication company’s two biggest projects, Zambezi and The Villa. It may also encourage other investors to lay complaints against their brokers.

Sharemax is one of the country’s two largest sellers of property syndication schemes. Investors, many of them elderly, have placed about R4.5bn in its numerous schemes. The Villa and Zambezi together account for R2.5bn of investors’ funds. They are also two of the most troubled schemes.

On Wednesday Bam ordered financial adviser Deeb Risk to repay his client, 72-year-old retiree Elise Barnes, R800 000 she had invested in Zambezi. Barnes actually invested R1.4m in the scheme, but the Ombud’s office is only empowered to adjudicate on losses up to R800 000.

A copy of Bam’s order can be downloaded here.

Risk declined to comment on Bam’s finding. He would only say that he will appeal it.

Some commentators have claimed that a complaint against Sharemax brokers would be premature because it is yet to be determined how much investors stand to lose. Moneyweb has previously argued that this should not prevent investors from laying complaints against their financial advisers, and the Ombud’s ruling confirms this view.

Says Bam in her ruling: “The issue is not whether some monies will be recovered by [Barnes] at some future unknown date. The test is whether the advice, given [Barnes’s] circumstances was appropriate. The advice provided was patently flawed.”

Bam had some harsh words for Risk, who she says meant to sell the Zambezi product to Barnes “whether it made sense or not, whether it was inconsistent with [her] circumstances or not”.

But it is Bam’s comments about the Zambezi scheme in general that should be of more concern to Sharemax brokers.

“Had [Risk] read and understood the prospectus he ought to have appreciated the deficiencies,” says Bam.

She describes how the public company into which investors’ money was placed, had only one asset: a shareholding in a private company, Zambezi Retail. “Herein lies the danger,” Bam explains. “Private companies do not have their affairs being subject to public scrutiny.” Bam also notes that Sharemax ensured that at least three of its own directors will be at Zambezi Retail for five years from the date of registration of the prospectus.

“A provider acting with due skill and in the interest of his client would have asked himself, if the two major players, namely the two private companies, are controlled by the same persons, how is accountability, transparency going to be enforced and how is investor protection going to be ensured?”

Bam found that Risk had, among other things:
  • Failed to disclose that Sharemax Zambezi was a long-term, illiquid investment. His own documents revealed that Barnes would need her capital in one-three years;
  • Failed to disclose the risk inherent in the Zambezi scheme;
  • Failed to disclose the investment’s costs;
  • Did not recommend a product commensurate with his client’s risk tolerance;
  • Failed to act with due skill, care and diligence in the interest of his client and the integrity of the financial services industry.

Gareth Shepperson

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'Don't give up on bond application too soon'


'Don't give up on bond application too soon'

Although the ongoing publicity on the National Credit Act and the continued tightening up of the banks' criteria for issuing bonds is to be welcomed in general, it has had the unfortunate effect of deterring many potential home owners from trying to realise their dreams.

This is according to Mike van Alphen, national manager for the Rawson Property Group's bond origination division, Rawson Finance.

"Although Rawson Finance has had a 20 percent increase in the number of bond applications and a 15 percent increase in the rise of approvals this year, we know that many people who could actually qualify for a bond have given up," he says.

"Very often such people have been deterred by a refusal at one bank, but bond originators may be able to help. Bond originators will be able to establish what size bonds they qualify for and, with the help of the credit bureaus, find out what obstacles there may be.

"If they do have tarnished credit records, it is often possible to rectify matters and most bond originators have professional contacts in the credit reinstatement field to whom they can refer applicants.

"Time and again we come across tenants who are paying a very high percentage of their salaries in rent, when they might qualify for mortgage bonds over 20 years, which, with the same or a slightly increased monthly outlay, would have a value of anything from R600 000 to R950 000.

"With prime at a 31-year low of 8.5 percent, and with banks often willing to offer fixed rates for up to five years, this is a good time to be borrowing money."

After talking to a bond originator, he says, the first step should always be to start saving, if only because 100 percent bonds are difficult to come by and banks will look far more favourably on applicants who can put down 10 percent to 15 percent deposits.

"Household debt in South Africa is running at well over 60 percent and all the records show that unsecured debt rises month-by-month. We have to get the message across that, in the long run, it will be far more satisfactory to spend that extra cash on becoming a home owner," says van Alphen.

Weekend Argus (Sunday Edition)

Machanik admits guilt, regrets actions


Machanik admits guilt, regrets actions

Former estate agent Wendy Machanik deeply regrets the actions that led to her conviction on 90 counts of theft, she wrote in a newspaper opinion piece yesterday.

"I'd like to hereby state clearly and unambiguously that, yes, I am guilty of unlawfully accessing my company's trust fund to the value of R17 million, but not in the manner or for the reasons portrayed," Machanik wrote in the Sunday Times.

Machanik was fined R1.5 million by the Johannesburg Specialised Commercial Crimes Court last month under a plea agreement in terms of which she admitting to 90 counts of theft totalling R27m, and two of failing to keep proper records of her company's trust fund. She wrote yesterday that her business, Wendy Machanik Properties, was hit by the economic downturn in 2007 and that she borrowed from the trust in an attempt to save her employees' jobs.

"Looking back now, I know what I should have done. I should have allowed the company to fold, declared bankruptcy and walked away...

"But I felt it was my responsibility to my employees and their families..."

Machanik said she paid back the money, but was later contacted by people who wanted to extort money from her in exchange for their silence.

She was now virtually penniless and was about to start a sentence of long-term house arrest.

The court fined Machanik R1 000 (or a year's imprisonment), suspended for three years, for failing to keep and audit accounting records.

She was also sentenced to three years' correctional supervision and fined R1.5m.

The Mercury

29 November 2012

Tshwane to probe illegal land sales

My question is: What about all the squatters who have set up camp at the side of the roads in suburbs like Faerie Glen? 

Just take a drive out Atterbury, Garsfontein and Hans Strydom Streets and you would think that Tshwane Camping Grounds have opened along these roads.



Tshwane to probe illegal land sales

The Tshwane Metro Council has warned that land invasions will not be tolerated in its area of jurisdiction and drastic action will be taken against those who illegally sell and invade land.

"We will not hesitate to take drastic action against those involved in land invasion or the illegal sale of land," said Joshua Ngonyama, the member of the mayoral committee responsible for housing.

This comes after a group of residents were allegedly sold stands in Soshanguve Extension 6, near Rosslyn.

The residents built shacks on the land earlier this week and the Red Ants were called in to dismantle them.

Some of the residents said they had paid about R16 000 for the stands.

They said they knew the people who had illegally sold them land.

A resident - who did not want to be named for fear of victimisation - claimed he had been trying to blow the whistle on the scam.

He told the Pretoria News that he had information on those behind the illegal sale of land.

The man said what worried residents was that people from as far afield as Hammanskraal and Mamelodi had been allocated stands in the area.

He claimed that most of the stands in Extensions 12 and 13 were occupied by people who had been allocated land illegally.

Ngonyama said the city would investigate all aspects of the issue, especially allegations that council employees were involved.

"If those involved in the illegal sale of land are [council] officials they will be dismissed," Ngonyama said.

"We will also lay criminal charges against those involved in the scam."

Ngonyama said there had also been rumours that some ward committee members were involved in the illegal sale of stands.

"We will not hesitate against these people."

Ngonyama said those who paid money for stands should come forward and state their case in an affidavit.

"We need written proof in the form of an affidavit to be able to act against those involved in the scam."

Ngonyama said the council's investigative unit would move into the area soon to probe the illegal sale of land.

Acting ward councillor Sello Huma said he had instructed people who had paid for the stands to write affidavits.

The affidavits would be warded to the metro police.

Huma said "land mafias" in the area were illegally selling land.

He said most of these "land mafias" worked with developers, who promised they could build houses for those who purchased land.

"What they are doing is illegal and we cannot allow this to happen."

Huma said he was not aware that any ward committee members were involved in the illegal sales.

"The information I have is that area committee members are the ones who are involved in the illegal sale of land."

Huma said illegal land invasions had increased in the Soshanguve area.

"We cannot allow these people to illegally occupy sites."

Most of the people who bought land illegally were from outside Soshanguve.

Huma said the area where the illegal occupation took place was earmarked for an RDP housing project.

The RDP houses would be allocated to people who qualified, Huma said.

"These beneficiaries are on the housing waiting and they are entitled to those RDP houses.

"People cannot just jump waiting list for RDP houses.

"They should also not spend their money on buying land illegally."

Pretoria News

21 November 2012

Landlords can't take the law into their own hands


Landlords can't take the law into their own hands

When a tenant does not pay the rent, some landlords resort to unlawfully disconnecting the water and electricity supply to the tenant.

What if the contract states that failure to make payment gives the landlord the right to shut off the water and electricity? Would the landlord's action be justified? Would a consumer then have recourse to a legal remedy, such as an urgent interdict (spoliation), to have the services restored?

A closer look reveals that it is the by-laws that allow for the disconnection of basic services in the event of non-payment.

The Strand Magistrate's Court granted a spoliation order to property owner Marcel Mouzakis Strümpher compelling the City of Cape Town to reconnect the water supply to his Strand property.

The water supply was disconnected on August 17, 2007, when Strümpher failed to pay accumulated arrears of R182 000. An urgent court application was successful and the City of Cape Town's action was declared unlawful. It was ordered to reconnect the water immediately.

Strümpher had earlier complained to the city that the meter recorded water consumption even when no water was used.

The city investigated and found the meter to be faulty. It replaced the meter and the mains connection. Soon after, Strümpher was asked to replace several pipes that caused leakage. The water usage recorded subsequently dropped, but the municipality threatened to disconnect the supply if the arrears were not settled within two days.

Strümpher's attorney questioned the account amount, and declared a dispute, as provided for in the municipality's Credit Control and Debt Collection Policy. But the city ignored the letter and later in 2007 disconnected the water supply.

When the magistrate granted the spoliation order, the city appealed to the full Bench of the Western Cape High Court. Judge Siraj Desai and Acting Judge AJ Gassner.

The high court confirmed the magistrate's order, but granted the city leave to appeal to the Supreme Court of Appeal.

On appeal (City of Cape Town v Strümpher (104/2011) (2012) ZASCA 54 (March 30, 2012), the city contested Strümpher's argument that he was entitled to a spoliation order as the disconnection of the water supply violated his statutory water rights. A disconnection could only follow a court decision in the city's favour that the arrears were due.

On March 30, the Supreme Court of Appeal handed down its judgment rejecting the city's appeal, confirming the magistrate's court order and upholding the high court's judgment.

The city argued that there was a contractual relationship with the owner in terms of the its water by-law, and the credit control and debt collection by-law.

Also, the monthly billing statement reminded the owner/consumer that the payment for service due to the city could not be withheld, even in the instance of a dispute.

According to the Supreme Court of Appeal, the city's contention that it had the right to limit or shut off water supply in terms of the Water Services Act and other by-law for nonpayment was not lawful.

The city is required to follow specific procedures, including a dispute resolution, to ensure that the outcome is fair and equitable.

The city failed to follow its own procedures and took the law into its own hands by shutting off the water supply.

In a unanimous judgment, the appeal was dismissed with costs. The judge said there was no justification for the city to cut off the water supply to the property.

As for the granting of the spoliation order, the judge said that it was an appropriate remedy.

"A spoliation order is available where a person has been deprived of his or her possession of movable or immovable property, or his or her quasi-possession of an incorporeal," the judge said.

"A fundamental principle at issue here is that nobody may take the law into their own hands. In order to preserve order and peace in society, the court will summarily grant an order for restoration of the status quo where such deprivation has occurred, and it will do so without going into the merits of the dispute.

"The evidence... shows that the respondent [had] for the past 37 years received an uninterrupted supply of water from the city at the time when that service was summarily terminated.

"I have already alluded to the fact that the respondent's rights to water were not merely personal rights flowing from a contract, but public law rights to receive water, which exist independently of any contractual relationship the respondent had with the city.

"The respondent's use of the water was an incident of possession of the property. Clearly interference by the city with the respondent's access to the water supply was akin to deprivation of possession of property."

Dr Sayed Iqbal Mohamed
Chairman, Organisation of Civic Rights
Tenant Matters
Daily News

20 November 2012

Body corporate ordered to restore property owner's access right

Body corporate ordered to restore property owner's access right

The Fisher v Body Corporate of Misty Bay (2012 94) SA 215 (NGP) decision highlights the consequences a body corporate should consider before summarily denying an occupier the right of access to a complex.

According to the body corporate of the Misty Bay Complex (the respondent), an owner of one of the units (the applicant) had fallen into arrears in respect of his rates and levies.

Due to the applicant's failure to make the necessary payments, the respondent made the hasty decision to suspend his access tag. This suspension resulted in the applicant being unable to enter and exit the complex as and when he pleased.

Reacting to this decision, t he applicant brought an urgent application in the North Gauteng High Court for "the restoration of the applicant's possession and access to the house".

In defence of its actions, the respondent's legal representatives submitted two arguments. The first was that the applicant's car, rather than the applicant himself, had been barred from accessing the complex.

Thus the respondent submitted that the applicant was only restricted "when using his vehicle", as opposed to being restricted in general.

The basis for the second argument was that even if the court found against the respondent on the first submission, the respondent was nevertheless entitled to suspend the applicant's access on account of the arrears.

To bolster this second submission, the respondent submitted that the rules of conduct of the Misty Body Corporate stipulated that a failure to pay rates and taxes entitled the body corporate t o suspend occupiers' access tags.

Judge Legodi Phatudi dismissed the technicality of the first argument, saying such an action amounted to spoliation.

He went on to discuss the rules relied on by the respondent and concluded that the rules contained no reference that justified the respondent's actions.

More importantly, Judge Phatudi pointed out that even if such a rule had been found to exist, it would not have entitled the respondent to "take the law into its own hands", which, according to the court, is exactly what the respondent did in this case.

Interestingly, Judge Phatudi expressed the view that the suspension of access amounted to spoliation of the house as well as the vehicle. Accordingly, he suggested that the applicant's request in his notice of motion should be amended to include the restoration of the motor vehicle. For no apparent reason, the applicant declined to take advantage of this opportunity.

Judge Phatudi went on to point out that the robust remedy of mandament van spolie is applicable only i n circumstances when the access in question is required for the "use of the house and/or motor vehicle".

In other words, the peaceful and undisturbed possession of the property must be dependent on the right of access to the premises in order for the remedy to apply.

In drawing to the close of his judgment, Judge Phatudi took exception to the respondent's insistence, which continued right up to the hearing, that it was entitled to restrict the applicant's access to the complex. To demonstrate this distaste, he awarded a punitive costs order against the respondent.

The Misty Bay decision reveals the harsh stance the court takes in circumstances where a party takes the law into its own hands. It is clear that the provision for such action in the rules of a complex does not exempt a body corporate from following the due process of the law.

Lucia Erasmus and Lara Thomas, Cliffe Dekker Hofmeyr.

Weekend Argus, Saturday Edition

Property market remains subdued

Property market remains subdued

The local property market remained subdued during the first three quarters of 2012, Absa said on Thursday.

"The planning phase of new housing continued to contract up to September, while the construction phase showed some marginal growth over the nine-month period compared with a year ago," said Absa property analyst Jacques du Toit.

Residential building activity was likely to remain subdued in 2013, he said.

FNB said the figures continued to show a settled picture.

The size of completed residential buildings were similar to the late 1990s, before the economic boom, said FNB property strategist John Loos.

Growth in square metres for completed residential buildings, on a three-month moving average, reached 2.37 percent in September.

This was slightly down from the second quarter's seven percent.

The residential replacement cost gap had also flattened.

This reflected the percentage difference between a home's existing value and its replacement cost.

This gap narrowed from 24.1 percent in the second quarter to 23.5 percent in the third quarter.

"As yet the decline is not significant, with the gap still remaining well above the virtually zero level at a stage in 2007," said Loos.

"That was a situation which facilitated the peak of the residential building boom in that year, as back then it was very easy for the development sector to compete price-wise with the existing home market."

The residential building sector continued to battle to gain traction at a time when it faced heavy competition from a well-supplied existing home market, he said.

The replacement cost gap made it difficult to compete price-wise with the existing market, said Loos.


The cost of sectional and full title properties are converging

The cost of sectional and full title properties are converging

House prices between different segments of the market had seen a general narrowing in the gaps in the third quarter of 2012, according to FNB housing data released on Wednesday.

"The average price growth rate of full title homes, at 6.7 percent year-on-year, no longer far exceeds the 4 percent growth for sectional title homes, as was the case a few quarters ago," John Loos, property strategist at FNB said.

Sectional title refers to separate ownership of units or sections within a complex or development.

Full title segment is where the consumer buys the ownership rights of the property and the land on which it is built.

It was expected that the various segments' price growth rates will move increasingly closer to each other in the near term, with relative affordability advantages having been reduced over the past few years.

At stages during the pre-2008 house price boom, the average price of a three-bedroom sectional title home was in excess of 20 percent higher than the average for a three-bedroom full title home.

The gap was still very significant as at 2009, just after the recession.

"However, thereafter this gap has steadily narrowed to a virtually insignificant 0.6 percent, as full title house price growth has exceeded sectional title price growth in recent years."

Loos said the full title market's affordability advantage that was built up in the boom period had probably come to an end.

From a price affordability point of view there was no longer much of an advantage in buying a three-bedroom full title home compared to a three-bedroom sectional title home.

"The average price gap in this segment has virtually disappeared as a result of superior full title house price growth over the past few years."

The percentage by which the average sectional title-two bedroom price exceeded that of two-bedroom full title had also significantly reduced.

The four-bedroom sectional title average values were back below average four-bedroom full title values since late-2009.


Victory on rates for Joburg business property owners

Victory on rates for Joburg business property owners

I am very proud of my friends at SAPOA for pursuing this all the way and ultimately succeeding.  Well done Adv. Portia Matsane, SAPOA Staff and their legal team.

We have been discussing this for many months at the meetings of the SAPOA National Legal Committee and I am very pleased that it all turned out well in the end.


'The clock is ticking' for tax-friendly property transfers

'The clock is ticking' for tax-friendly property transfers

The government has created a valuable  and unique opening for persons owning property in Companies, Close Corporations or Trusts to take advantage of a window of opportunity to secure MASSIVE Capital Gains Tax (CGT) savings.

I am surprised that it has not been seized upon by many more property owners and why more Estate Agents have not actively and enthusiastically marketed this to their clients.

Now the window is about to close, so please contact me urgently at gareth@propertylaw.onmicrosoft.com if you still want to take advantage of this CGT opportunity.

Gareth Shepperson