A Valid Fidelity Fund Certificate

A Valid Fidelity Fund Certificate

Property Practitioners Need to Have a Valid Fidelity Fund Certificate

 

Administrative problems at the Estate Agency Affairs Board (“EAAB”) have made life difficult for some estate agents, particularly with regard to the claiming of commission on sales of immovable property. The Estate Agency Affairs Act (recently repealed) prohibited an estate agent from claiming commission on a sale unless the estate agent had a valid fidelity fund certificate (“FFC”) at the time of the sale.

FFC’s are necessary to protect sellers and purchasers (and their money) from rogue estate agents. The need for an FFC, however, caused problems in the industry where an estate agency or estate agent had complied with the requirements for obtaining a valid FFC but the EAAB hadn’t issued the relevant FFC timeously.

The courts tried to come to the assistance of estate agents finding themselves in this situation.

On 10 June 2020 in Signature Real Estate (Pty) Ltd v Charles Edwards Properties and Others (415/2019) [2020] ZASCA 63 the Supreme Court of Appeal allowed a claim for commission where an estate agent had complied with the requirements for a valid FFC to be issued, but the EAAB had failed to issue an FFC timeously. The Court also stated that a claim would exist where the EAAB had made an error on the FFC.

It is difficult for estate agents to prove to a seller or conveyancer that they have complied with the requirements for an FFC, so this case will have little practical value.

The new Property Practitioners Act (“PPA”) has tried to rectify this problem by requiring the EAAB to issue the FFC within 30 working days (or provide reasons for an extension which does not exceed 20 working days), which will hopefully help. However, the PPA goes further than the Estate Agency Affairs Act by prohibiting conveyancers from paying a claim for a commission without first receiving a valid FFC. This means that estate agents will have to work together to resolve the administrative issues in the EAAB so that FFC’s are issued timeously.

Should you have any conveyancing queries, please do not hesitate to mail our conveyancer, Marchelle Botha or contact her at 031 266 2530.

Transfers: Rates Department Operations During Lockdown

Transfers: Rates Department Operations During Lockdown

Rates Department Operations During Lockdown

 

The Municipal Rates Department operations during lockdown have changed. From 13 May 2020, municipalities are allowed to perform various legislated functions including operations relating to municipal services and revenue collection. Each municipality will still have to adhere to the social distancing guidelines imposed by the government.

 

As the rates departments begin to operate, we should be mindful that there will be backlogs of:

  1. Processing of payments for the issuing of rates clearance certificates;
  2. New applications for rates clearance certificates which may have expired during the lockdown; and
  3. New applications for transfers anticipated to be lodged in the Deeds Office.

Therefore, the municipalities will take some time to attend to these backlogs as well as doing so with a limited amount of staff.

 

eThekwini Municipality advised that they will be operating from 13 May 2020 as follows:

  1. The rates clearance certificate department will open with a skeleton staff on a rotational basis, working daily from 07h00 to 18h00. This also applies to all other departments involved in the Revenue Clearance value chain.
  2. Due to Social Distancing guidelines and in the best interest of the health and safety of the Clearance staff, no outsiders (i.e. conveyancers, estate agents, buyers or sellers) will be allowed into the rates clearance department.

Conveyancers are also permitted to contact the municipality regarding their rates clearance certificates which expired between 27 March and 31 May 2020 so hopefully, the issue of replacement certificates will be quicker.

 

The following municipalities are already working with skeleton staff:
 Amahlathi Municipality Ekurhuleni Springs Metsimaholo Municipality
Beaufort West Municipality Ekurhuleni Tembisa Mossel Bay Municipality
Bela Bela Municipality Endumeni Municipality Mtubatuba Municipality
Bitou Municipality George Municipality Ndlambe Municipality
Breede Valley Municipality Govan Mbeki Municipality Newcastle Municipality
City of Cape Town Greater Tzaneen Municipality Okhahlamba Municipality
City of Mbombela Hessequa Municipality Oudtshoorn Municipality
Collins Chabane Municipality iLembe Municipality Polokwane Local Municipality
Dihlabeng Municipality Inkosi Langalibalele Municipality Ray Nkonyeni Municipality
Ekurhuleni Alberton Kannaland Municipality Saldanha Bay Municipality
Ekurhuleni Benoni Knysna Municipality Stellenbosch Municipality
Ekurhuleni Brakpan Kokstad Municipality Thaba Chweu Municipality
Ekurhuleni Edenvale Lephalale Municipality Ugu Municipality
Ekurhuleni Kempton park Matatiele Municipality Umdoni Municipality
Ekurhuleni Nigel Matjhabeng Municipality uMzinyathi Municipality
Uthukela Municipality

Should you have any queries on the transfer process, please do not hesitate to contact our conveyancer, Marchelle Botha or visit our website.

Utilising the common property during lockdown

Utilising the common property during lockdown

Is utilising the common property prohibited during lockdown?

 

We have received queries from various clients as to whether owners are restricted in terms of the lockdown to their units, or whether they are entitled to continue utilising the common property.

In terms of the Sectional Titles Schemes Management Act, ownership of a sectional title unit is defined as comprising of the unit or a section or an undivided share in the common property forming part of such unit.

In terms of the Disaster Management Regulations issued in respect of the lockdown by Dr Nkosazana Zuma, MP:

  • Gatherings are defined as an assembly, concourse or procession, all of which are prohibited save for funerals.
  • Lockdown means the restriction of movement of persons during the period for which the regulations are in force and effect.
  • In terms of Regulation 11B (1) (a) (i) for the period of lockdown, every person is confined to their place of residence, unless for selected emergency services or obtaining essential services.

It is therefore unclear as to whether, in respect of community schemes, the owners of the units and common property are then entitled to utilise the common property. To this end, Graham Paddock, an expert within the field, together with Professor C.G Van der Merwe, has drafted a letter to the government asking them to clarify this and has included the suggested amendments. We have a copy of the letter should you want to see it.

It is further submitted that if it does become lawful that owners be entitled to utilise common property, this would be subject to principles of social distancing being set out by the trustees or directors.

If there are any further developments on this, we shall let you know otherwise you can contact us for more information.

Transfer Duty Changes

Transfer Duty Changes

Transfer Duty Changes: How does this affect your purchase?

 

The recent budget speech has changed the method of calculating transfer duty on the sale of immovable property. Any sale concluded after 1 March 2020 will have transfer duty payable in accordance with the following scales:

2021 Period (1 March 2020 – 28 February 2021)

Value of the property (R)

Rate

1 – 1 000 000

0%

1 000 001 – 1 375 000

3% of the value above R1 000 000

1 375 001 – 1 925 000

R11 250 + 6% of the value above R 1 375 000

1 925 001 – 2 475 000

R44 250 + 8% of the value above R 1 925 000

2 475 001 – 11 000 000

R88 250 +11% of the value above R2 475 000

11 000 001 and above

R1 026 000 + 13% of the value exceeding R11 000 000

If you concluded your sale before 29 February 2020, the previous scales will still apply as per the below:

2020 Period (1 March 2019 – 29 February 2020)  

Value of the property (R)

Rate

0 – 900 000

0%

900 001 – 1 250 000

3% of the value above R900 000

1 250 001 – 1 750 000

R10 500 + 6% of the value above R 1 250 000

1 750 001 – 2 250 000

R40 500 + 8% of the value above R 1 750 000

2 250 001 – 10 000 000

R80 500 +11% of the value above R2 250 000

10 000 001 and above

R933 000 + 13% of the value exceeding R10 000 000

What does this mean?

 

If you purchased a property for R950 000,00 in the 2020 period, then you would pay duty on R50 000,00 at a rate of 3%, therefore R1 500,00 transfer duty would be payable.

If the same property is purchased for the same amount of R950 000,00 in the 2021 period, the transfer duty is at a rate of 0%, therefore the amount of transfer duty payable would be R0,00.

The calculation of the transfer duty on the above scales is dependent on the date the sale agreement was signed by all parties (date of last party signing). It is not dependent on the date that suspensive conditions are met, even though suspensive conditions make the sale conclusive.

Please also take into account, when transfer duty is calculated, SARS may determine that the higher amount between a municipal value or purchase price be used in determining the amount of transfer duty payable. Therefore, if a municipal value is higher than the purchase price, you might be liable to pay a higher amount of transfer duty. In these instances, SARS usually requires two independent estate agent valuations in support of determining the value of the property.

Should you need to calculate the amount of transfer duty payable on your purchase price, please refer to our Conveyancing Costs Calculator on our website. Should you have any other queries regarding the transfer process, please email our Conveyancer, Marchelle Botha or call 031 266 2530.