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07 September 2012

Q & A Section (Offer and Acceptance)

This is a new section that I am introducing to my Blog.  We, the staff at Shepperson Attorneys, will answer various readers'questions relating to South African Property Law.  Please e-mail your questions to gareth@propertylaw.onmicrosoft.com

(Please note that the Blog Disclaimer applies and contact us directly if you require a detailed legal opinion.)

We are in a process of buying a property and as the application for the loan is now with the banks, we have been told that there are two offers to the property. How do I go about finding out whether there is a written and thus legitimate second offer? If there is no second offer, what is the remedy to correct this situation?

Naturally it is expected of people to be honest, fair and trustworthy in dealings with each other. These principles that form the foundation of good business are referred to as business ethics. However this is not always the case.
Until communication of the acceptance of the offer has been delivered, the seller may consider as many offers as he/she likes.
The rule of our law is that a contract is concluded the moment that an offer is accepted, provided the other essentials of a contract are present. Once the seller accepts the first offer, it becomes the binding agreement. If another potential buyer proposes an offer after the seller accepted and signed it, even if the offer is higher, the first offer will enjoy preference.
In the Bird v Summerville 1961 (3) SA 194 (A), the appellant, who wished to sell his property, was informed by an estate agent that the first respondent was interested in buying. The appellant signed a written offer to sell naming the first respondent as sole purchaser. However, the first & second respondents both signed as buyers. At the time of making the offer, the appellant had been unaware of the existence of the second respondent. The court found that although the appellant would have been prejudiced by both parties buying the property, the appellant was not bound to a contract of sale to both the respondents, because he never intended that his offer could be accepted by both of them.
 However, the seller will be able to consider other offers or second offers if maybe for some or other reason the purchaser is unable to get bond finance or the sale lapses. So if the seller accepts the first offer, he is bound to it and if the seller does not perform in terms of the offer the seller will be liable to pay damages.
In the De Vries Smuts v Dept of Economic Development & Environmental Affairs case, the plaintiff was claiming for damages arising from what the plaintiff refers to as repudiation by the defendant of an agreement concluded between the parties. Damages are based on what the plaintiff would have been entitled to, had the agreement not been breached.
Finding out if there is another offer to the property is not impossible, but in this situation there might also be a standard practice just as you have the doctor/patient or lawyer/client confidentiality, so it may be that if there is more than one bidder, each bidder’s offer be kept a secret from other bidders. This is what is called “blind” bidding unlike the “open” bidding process where bidders are aware of competing bids and can tailor their bids accordingly.
“Current buyers or would-be buyers should establish what they can comfortably afford and apply for a formal property loan pre-approval, which will ensure that sellers will take them seriously when they do make an offer”, says an expert.
Ø “Property is intended to serve life, & no matter how much we surround it with rights & respect, it has no personal being. It is part of the earth man walks on. It is not man.”  - MARTIN LUTHER KING, JR -
  There are certain steps when buying or selling that could be taken to ensure that the process runs as smoothly as possible.
Contact us for detailed advice whenever you are making or accepting an offer. Remember property is probably the biggest investment of your life and to do so without adequate specialised legal advice is extremely foolhardy.

03 September 2012

Banks more stingy with 100% homeloans.

Banks more stingy with 100% homeloans

A sharp drop in the number of 100% home loans granted in August compared with June and July indicates that the banks, concerned about the still-high levels of household debt, are once more tightening up on credit qualification requirements for prospective homebuyers.

So says Rudi Botha, CEO of BetterBond. "Our latest statistics show that the percentage of home loans granted for 100% of the property purchase price fell to 35% in August from 39% in July, and 41% in June.

"Obviously, the banks are worried by the fact that the average household debt to income ratio is still stuck at around 75% at a time when consumers are facing rising energy, water, transport, food, education and medical costs that will undoubtedly eat into whatever disposable income they have left, and limit their ability to make bond repayments.

"Consequently, they are looking to lower those repayments, and their own risk, by insisting that a greater percentage of home loan applicants pay a deposit."

What is more, he says, the average deposit required by those who did not obtain 100% bonds rose to 17,4% of the property purchase price in August, from 16,5% in July. "And for first-time buyers, the average deposit payable rose to 11,6% of purchase price from 9% in July, even though the average first-time purchase price dropped from R641 000 to R613 000."

There is, however, some positive news in the BetterBond statistics.

"For a start," says Botha, "the total value of new bonds being granted monthly through BetterBond has been holding steady for some time at around R2,4bn a month, indicating continued housing demand and growing stability in the market.

"In addition, first-time buyers still accounted for more than 40% of home-loan applications in August, and received 37% of all home loan approvals, which reveals a healthy influx of 'new blood' into the market that bodes well for the future. And of course first-time buyers are still receiving the lion's share of the 100% home loans that are being granted."

The BetterBond statistics also reveal that the majority of home loans currently being approved (38%) are for purchases in the R500 000 to R1m price category, which corresponds largely with the percentage of loans being granted to first-time buyers. A further 27% of loans are being approved for purchases of more than R1,5m, while 23% are going to those buying in the R1m to R1,5m bracket.

The figures also show that 40% of loan approvals are currently going to homebuyers aged between 30 and 40, with the next highest percentage (23%) going to buyers in the 20 to 30 age bracket. "This also bodes well for the future," says Botha, "as it means almost two-thirds of current buyers are young and will provide further market stimulus as they move up the property ladder."

BetterBond Press Release

Court forces Joburg council to fix billing mess

Court forces Joburg council to fix billing mess 

A property owner is so fed up with years of fruitless attempts to rectify faulty property rates and tax accounts with the Johannesburg Metro Council that he has turned to the Pretoria High Court.

Izak Fourie, a North West farmer who owned property in the Joburg area, said he tried to negotiate with the council to set his account straight - but in vain.

The council's billing system was in chaos and although he went to its offices many times to try to fix the mistakes, nothing had changed. He had declared a dispute with the council, yet month after month he received a "final notice".

"In the light of my fruitless attempts to solve the problems - [by] telephone, visits to their offices and written submissions - it is clear they have no measures to detect mistakes on accounts or rectify them," Fourie said.

Hiss gripes include "fictitious" arrears on accounts. He is also billed for property he does not own. He said he wanted only that the council listen to his problems and rectify them.

"I am not asking for anything [but] what the law prescribes the council has to do."

Fourie said he had for years made attempts to solve the billing problems, but to no avail.

One of his problems is that he had sold property he inherited to a buyer in 2004, and another to another buyer in 2009.

These properties had been registered in the names of the new owners, but he continued to receive accounts for rates and taxes for them. The council was also threatening him with legal action regarding a property "which does not exist".

Fourie said his attorney had taken up the problems with the council, but it had not responded.

He also owned property with offices and shops. For this property "fictitious amounts" suddenly appeared on his account. Fourie feared the council would disconnect his electricity supply, leaving his tenants in the dark. He was paying R10 000 a month on this account - far more than he should.

Fourie said papers relating to his application for an order compelling the council to attend to his problems had been served on the council more than two years ago. But the council had time and again asked for a postponement.

"The officials who have the power to resolve this dispute, do not know what is happening on the accounts and those who know... have no power to address the problems," he said.

In opposing this application, the council said there was no need for Fourie to turn to court. It acknowledged the dispute.

The council said it had given Fourie printouts of accounts, and"invited" him many times to "debate" his accounts, but "these offers were rejected".

Judge Roger Claassen ordered the council to meet Fourie within 30 days to identify the problems and to rectify them within three months of the meeting.

Pretoria News

Tshwane set sights on smart city tag by 2055

Tshwane set sights on smart city tag by 2055

By the year 2055 Tshwane should be a city where the use of smart technology will be at the centre of service delivery as the city boasts many research and innovation institutions.

The Innovation Hub, the CSIR and the three main universities in the city should be used to harness fresh innovations to advance service delivery in the city.

These were the sentiments expressed by residents, academics and municipal officials this week as they exchanged ideas on how to make Tshwane a "smart city" during one session of the eight-week discussions on the Tshwane2055 vision.

Most of those who attended the discussion were of the view that some services offered by the city to its residents should be simplified by using smart technology.

This included the issuing of electricity bills through e-mails and SMSes, and the ability to track enquiries or complaints online.

One resident said that even though there were a lot of things the municipality was doing to improve service delivery, lack of communication was the major cause of unrest.

"The municipality must be able to distribute SMSes to residents to inform them of things they are doing so that they always remain in the loop.

"People must also be able to do their business online instead of calling and having to hold on the phone for a long time," said the resident.

Among other services that need to be improved, residents said, were payment of traffic fines and the tracking of water leaks and faulty traffic lights. This, however, would also challenge the municipality to ensure that it had the capacity to respond to alerts that may be generated electronically.

However, Lungile Mginqi, a senior executive at Accenture, a company involved in a project to roll out smart meters in San Francisco in the US, gave examples of some of the disadvantages of electronic alerts.

"We had a situation where smart meters were installed and they were able to detect when there were problems with the metering.

"The challenge was that when the alerts came in, there were not enough resources or personnel to respond immediately to the alerts.

"It basically means that if you implement such an idea you must also change how you operate to improve your turnaround time," said Mginqi.

Municipalities and government department were, however, slammed for proving to be efficient with communicating messages meant to recover money, but not equally efficient in other aspects of communication.

"It seems to be a trend that when it comes to reminding a resident that their account is overdue, the communication is prompt and on time.

"However, the communication is not quite as efficient when it comes to resolving issues that affect residents such as when one has to be repaid a deposit.

"In this case one must go and stand in a queue for many hours just to collect the return of deposits," said another city resident.

The discussions continued at the Tshwane University of Technology's Soshanguve campus yesterday.

Although there was a thumbs-up for the use of computers and smartphones to access municipal services and to interact with the municipality, some who attended the session warned that there were still huge numbers of people who were illiterate and had no access to such technology.

"Even though 2055 might still be far, we need to start addressing those issues now because preparation for 2055 starts today," said a resident.

Pretoria News