by tpg | 24, 02, 22 | Uncategorized
It’s important to beware of scams and to take the necessary precautions to protect your money. In the past two weeks, we have heard of two incidents where parties in a conveyancing transaction have paid money to criminals posing as a firm of conveyancers. One payment was R100 000,00 and the other was R500 000,00. Hopefully, the banks will assist the victims to get their money back but this may be difficult if the criminals have withdrawn the money.
These issues are becoming more common and usually work like this:
- The conveyancers and the purchaser exchange a few emails regarding the property transaction. Often the purchaser has a Gmail or Hotmail account.
- Criminals infiltrate the Gmail or Hotmail “network” and use highly sophisticated software to search through all email accounts to locate words such as “deposit”, “trust account” or “property transfer”. Once the software finds these phrases, the criminals access the linked emails and catch up on the history of the matter.
- The criminals then create an email address that looks similar to the one used by the conveyancers and send the purchaser an email asking for the deposit or costs to be paid into a different account controlled by the criminals.
- The purchasers accept the email because it contains just enough detail to be plausible, and don’t scrutinize the email address properly or phone the conveyancers to confirm the change in banking details.
- The purchaser then makes the payment and sends proof to the incorrect email address.
- The incorrect payment is usually picked up a few days later when the conveyancers contact the purchaser to ask why the payment hasn’t been made into their trust account. By that time the criminals have withdrawn the money from the incorrect account.
- Banks find it difficult to assist in this situation because the problem had nothing to do with the banking system – the purchaser simply paid the money into the wrong account.
Most attorneys are careful to include words in their letters or emails stating that they will not change their banking details, and attorneys need to continue to try to educate their clients in this regard.
If you are ever required to pay money to a conveyancer (or any other party for that matter), please remember that criminals are out there and you need to do at least the following to avoid becoming another crime statistic:
- Check the sender’s email address. For example, johnsmith@lawyer.co.za is not the same as johnsm1th@lawyer.co.za (the “i” has been changed to a “1”).
- Look out for any factual errors in the email itself.
- Always be suspicious of PDF attachments to emails – they can be doctored.
- Phone the conveyancers to confirm the banking details. Don’t use the phone number in the email – it could also be fake. Verify the phone number from the conveyancer’s website.
Please beware of scams and stay say by taking the proper precautions with our money.
by tpg | 23, 11, 21 | Uncategorized
Nobody wants to leave behind a mess after they die. You, therefore, need to choose the right executor to ensure that your estate is wound up properly in due course. But who is the right person to do the job – a professional (who will charge), a family member, or both?
Your choice of executor in your will is a very important one. Your executor will be responsible for winding up your estate and ensuring that your debts are paid and that your assets are delivered to your beneficiaries in accordance with the provisions of your will.
An executor is entitled to charge a fee for winding up an estate. The statutory fee is currently 3,5% (excluding VAT) of the gross value of the estate as at date of death, plus 6% (excluding VAT) of any income earned by the estate after death. This fee can be significant for larger estates, although some executors do negotiate the fee.
To try to soften the pain of the executor’s fee, some testators do one of the following:
- try to “keep it in the family” and appoint a family member to wind up the estate. The problem with this option is that the family member will (in most cases) have no idea how to wind up an estate and the Master usually insists in these cases that the family member get help from a professional (who will charge for the service), which defeats the purpose of appointing the family member in the first place. Of course, the family member may be able to negotiate a lower fee at the time, but in most cases, the family member is grieving and won’t want to haggle over money before the winding-up process even starts.
- appoint a professional and a family member as co-executors. This option also has problems:
- The process of obtaining letters of executorship can be delayed because more documents need to be signed and the non-professional executor will not be familiar with these documents. The non-professional executor may also live far away.
- The allocation of the work will need to be negotiated. In most cases, the professional will do most, if not all of the work.
- The signing of documents (for example for the opening of the estate bank account and the liquidation and distribution account) will be delayed because both executors will need to sign.
- The splitting of the executor’s fee – if the professional is doing most of the work, the professional will want most of the fee.
The reality is that winding up an estate costs money and it needs to be dealt with properly. The best way for a testator to deal with the nomination of an executor is, therefore, to nominate one professional (not co-executors) and to make sure that the executor’s fee is provided for either by allocating an investment for winding-up costs or through an insurance policy. The testator can also attempt to negotiate a fee with the executor in advance
To the extent that a testator is concerned about the beneficiaries not being kept informed about the progress made in winding up the estate, the Administration of Estates Act obliges the executor to perform his/her duties within a specific timeframe and to advertise the liquidation and distribution account. An executor can be removed from office for failing to perform his/her duties properly. Choosing a professional executor who knows the family will also help to keep beneficiaries informed of developments.
For assistance or advice on drawing a proper will, please contact us.
by tpg | 23, 09, 21 | Uncategorized
A buyer who signs a sale agreement is obviously willing to buy your property, but is the buyer able to do so? Does the buyer have sufficient access to the funding required to pay the purchase price? What happens if the party providing the funding requires certain conditions to be met before advancing the money?
There’s a reason they say “cash is king”, especially in property transactions. A cash sale has only a slim chance of failing because the buyer is both willing and able to buy the property on the date of signature of the sale agreement. These deals normally register quickly (even with COVID-associated delays in government departments).
For most transactions, however, a buyer needs either to sell the buyer’s existing property first (“a prior sale”) or to obtain a bond from a bank to finance the purchase price. Each option can wreck the deal if not handled correctly.
Prior sales can delay your transfer because your buyer must first sell his/her property and your buyer’s buyer must come up with the finances to pay for it. Only when this prior sale is conclusive will your sale be conclusive. The prior sale then needs to be registered before (or simultaneously with) your transfer so that the funds can be unlocked to pay for your transfer. It often happens that chains of transfers are created where each sale is dependent on a prior sale and, if anything happens to one transfer, all of the successive transfers in the chain are affected.
Bond approvals can also cause problems. Sometimes a bank will grant a bond either for a lesser amount or with conditions. In the former case, the sale agreement must provide for the buyer to make up the difference in cash, or for the agreement to lapse so that another (able) buyer can be found. In the latter case, the conditions must be scrutinized carefully. Sometimes a bank grants a bond subject to the buyer cancelling a different bond on another property, which means the buyer must sell the other property. This creates another chain which the seller was not aware of at the time of the sale. Another possibility is that the bank grants a bond subject to a third party standing surety, and the third party refuses to do so.
Where you as a seller have a sale which is subject to bond approval or a prior sale, you need to make sure that you are not prejudiced. The sale agreement must give you the right to continue marketing the property and, if another “more liquid” offer comes along, you should be able to place your first buyer on terms to match the more liquid offer, failing which you should have the right to cancel your first sale agreement and sell to the more liquid buyer. If you don’t get a more liquid offer, you need to make sure that the agreement gives you appropriate remedies if the prior sale or bond approval cause unreasonable delays.
Should you require guidance with your proposed sale agreement before it is signed, kindly contact our conveyancing department on 031 266 2530 or conveyancing@fouriestott.co.za.
by tpg | 27, 08, 21 | Uncategorized
2021 has not been for the faint of heart, particularly for South Africans. A deadly global pandemic, civil unrest, and a recession fuelled by tepid economic growth and lockdown restrictions. A time to vasbyt. It is an unfortunate reality that times such as these also lead to increased levels of opportunism. We need to beware of opportunists in difficult times
In the last few months we have encountered:
- A fraudulent purchaser wishing to take occupation of an upmarket property before the transfer date. He undertook that the full purchase price would be deposited and provided “proof of payment” from his bank. The funds never arrived and we were able to prevent him taking occupation.
- A fraudster ostensibly contracting on behalf of various vehicle dealerships. After payment by our client, some of the vehicles arrived; most did not. The dealerships have no record of this individual.
One truism in life is that forewarned is forearmed. Another is that if it seems too good to be true, it probably isn’t. Before contracting with any party, do your homework! The following should be the initial basic queries:
- Whom are you contracting with? Is it an individual, or a legal entity such as a company or close corporation? See our May 2021 blog in this regard.
- If a legal entity, is the individual duly authorised to represent that entity? Is the legal entity still in business?
- Is the party listed on a credit bureau? Are there adverse comments on Hellopeter?
- What measures do you have in place to ensure prospects of recovery should the worst-case scenario occur?
Remember that, even if you have the best attorneys in the country, getting them to “unscramble an egg” may be impossible. You need to be wary of opportunists and prevent disasters before they happen. Should you need our advice in advising you before contracting, or recovering damages for you after contracting, please contact us on 031 266 2530, or email one of our associates.
by tpg | 29, 07, 21 | Uncategorized
Buying immovable property from a company? Do your due diligence!
Buying a property from a company in these difficult times can be a minefield. Many companies adversely affected by the COVID-19 pandemic have become desperate to sell their major asset (their property) in order to create enough cash flow to continue trading. Desperation often tempts persons to take shortcuts and, if you are the unlucky purchaser in this example, you will struggle to get your transfer over the line.
One example of where your transfer can come unstuck is at the level of authority. Where a company wishes to sell its major asset, it is obliged to get a special resolution of shareholders in accordance with sections 112 and 115 of the Companies Act. If these sections are not followed to the letter, one or more shareholders can challenge the sale in court, which at best will cause a significant delay.
A second example relates to rates and utilities. As part of the transfer process, the conveyancers need to obtain a rates clearance certificate. A seller in distress often stops servicing the bond and the utilities over the property in the hope that, if the seller can sell the property quickly, the seller can use the sale proceeds to bring these arrears up to date. Problems arise if the seller doesn’t resolve the problem quickly and the debts end up being higher than the purchase price. This is known as a distressed sale and can take a long time to resolve.
In order to avoid the above problems, it is imperative that you do proper due diligence when buying property from a company by asking for the appropriate resolutions and utility bills either before signing your sale agreement or within the due diligence period given to you in your sale agreement.
For assistance with and advice on dealing with companies that are selling their major asset, please contact Stuart at stuart@fouriestott.co.za or Marchelle at marchelle@fouriestott.co.za
