by Vicky | 02, 05, 19 | Uncategorized
Do you have to secure bond approval before a sale agreement?
Many sale agreements require the purchaser to secure bond approval before the agreement becomes binding. Sometimes it is not clear when this is actually obtained because there are different stages to the bond approval process.
When is your sale agreement secured by a bond?
Sale agreements often use terms such as “Pre-approval”, “Approval in Principle”, “Bond Granted or Approved”. And sometimes a reference to a quotation or offer letter in terms of the National Credit Act.
What does “Pre-approval” mean?
Pre-approval is when the financial institution uses basic information available to it to evaluate the highest value of bond you can qualify for in terms of your income and expenses . Pre-approval is research potential buyers do before making an offer on a home. Not all financial institutions process pre-approval applications as they require a signed sale agreement or accepted offer to purchase. Pre-approval is not sufficient for the purposes of a sale agreement because there is no guarantee the financial institution will proceed with a bond once it does a formal affordability assessment.
What does “Approval in Principle” mean?
Approval in Principle means the financial institution has done a thorough search into your financial circumstances and has approved an amount for a bond based on your personal affordability. A financial institution will only do this type of evaluation after an offer to purchase or a sale agreement for a property has been accepted by the seller. At this stage the bond is still not approved/granted as the financial institution still has a requirement to do a valuation of the property to be bonded and whether the property will provide enough security for the financial institution.
What does “Bond Granted or Approved” mean?
Bond Granted or Approved means the financial institution has done its search into your personal affordability as well as the valuation of the property and found it to be sufficient security for providing financial assistance.
And a “National Credit Act Quotation”?
NCA Quotation has the same effect as Bond Granted or Approved. It means the financial institution has assessed you and issued a formal quotation in terms of section 93(2) of the National Credit Act. This quotation is binding on the financial institution for 10 days and requires acceptance by the purchaser before the financial institution will instruct its attorneys to proceed with the bond registration process.
Therefore, your sale agreement needs to be specific on when the condition relating to bond approval is actually met. If the agreement refers to “Pre-approval” or “Approval in Principle” there is a risk that the purchaser will be locked into a sale agreement and, if the financial institution subsequently declines the bond, find him/herself unable to come up with the purchase price. If the sale agreement is then cancelled because the purchaser cannot fulfill its obligations, the purchaser may still be liable for estate agent’s commission or other damages the seller may suffer.
Should you be unsure about when the condition relating to bond approval is actually met (or should you have any other queries about your sale agreement), please feel free to contact us before you sign the sale agreement.
by Vicky | 16, 04, 19 | Uncategorized
The Sectional Title Schemes Management Act 8 of 2011 and the Community Schemes Ombud Service Act 9 of 2011 came into operation in 2016. Both Acts introduced various changes to sectional title law in South Africa. One of the notable changes is the establishment of an Ombud service to resolve sectional title disputes.
In terms of the Community Schemes Ombud Service Act (“the Act”) any person may bring an application to the Community Schemes Ombud Service (“the CSOS”) where they are a party to or are materially affected by a dispute falling within the jurisdiction of the CSOS. Some examples of disputes falling with the jurisdiction of the CSOS are sectional title financial and governance issues, meetings and management services.
Where a Body Corporate or owner or affected person has a sectional title dispute, they can now lodge an application with the CSOS.
Where a Body Corporate or owner or affected person has a sectional title dispute, they can now lodge an application with the CSOS. The matter will be allocated to the CSOS personnel and if there is a prospect of settlement the matter will be referred to an informal meeting for conciliation. If conciliation is unsuccessful then the matter will be referred to adjudication and an order handed down. If either party is unhappy with the adjudication order, they can appeal to the High Court within 30 days of the date of delivery of the adjudication order.
As the dispute resolution service by the CSOS is paid for by the CSOS levy now payable by all Body Corporates, this dispute resolution process is a cost effective process. At this stage the CSOS is proving to be a good forum for resolving a wide array of disputes as provided for in the Act.
Legal representation at the CSOS is only allowed in certain circumstances and legal costs are not generally awarded unless in exceptional circumstances. We can however still advise you on whether your dispute falls within the CSOS jurisdiction and assist you with your preparation for conciliation and/or adjudication and appeals to the High Court.
For professional advice concerning sectional title disputes please contact Chris Salmon.
by Vicky | 11, 04, 19 | Uncategorized
Witness: What does this word mean?
A witness in the context of written documents is a natural person who is physically present when a party signs an agreement to confirm that he/she saw that party sign the document. A competent witness is commonly defined as a person of at least 14 years of age and competent to give evidence in a court of law. This means that he/she should be of sound mind and should not have a personal interest in the agreement being witnessed. An example of an incompetent witness would be someone who is intoxicated.
What are the legal consequences?
Most agreements don’t require a witness in order to be valid and enforceable. However, there are certain exceptions, namely:
- If the parties have previously entered into an agreement that requires any amendments to be signed by the parties and witnessed, then the agreement requirements must be met;
- Section 2(1)(a)(ii) of the Wills Act 7 of 1953 requires the testator to sign his/her will in the presence of two or more competent witnesses;
- Section 95 of the Deeds Registries Act 47 of 1937 requires any power of attorney purporting to give authority to deal with a deed capable of registration in the Deeds Registry to be attested by either two competent witnesses or a magistrate, justice of the peace, commissioner of oaths or notary public;
- Section 15 of the Matrimonial Property Act 88 of 1984 requires the consent of a spouse married in community of property to be obtained and for such consent to be attested by two competent witnesses in certain circumstances.
Our tips:
For evidentiary purposes we recommend that agreements be witnessed, even if there is no legal requirement for this.
If the sole purpose of a witness is to provide evidence at a later date that the agreement was signed by the parties, it is imperative that you are able to easily identify and locate such witness. For this reason it is recommended that the witness be someone who is known to at least one of the parties to the agreement or their agent/s. The full name and ID number of the witness be clearly indicated next to his/her signature for ease of reference. If you are needing more information or require assistance in this regard, please don’t hesitate to contact us.
by Vicky | 25, 03, 19 | Uncategorized
Breach of Contract – What does this mean?
A breach of a contract means the failure of one party to meet that party’s obligations in an agreement. This can come about by either doing something a person was obliged not to do or failing to do something they were obliged to do.
What are the legal consequences of this clause?
The legal consequences of a breach of contract will depend on the remedies provided for in the agreement and whether the breached term was a material term of the contract.
A typical breach clause in a contract will provide for a notice of breach to be delivered from the one party to the party in breach and a time period within which the breach is to be rectified.
If the agreement does not set out the time period, then a period that would be considered reasonable must be provided in the notice of breach. What is reasonable will depend on the circumstances.
If the notice period expires and the breach is not rectified, the usual remedies available are to either cancel the agreement or seek enforcement of the agreement by calling for specific performance. Compensation could also be claimed for any loss or damages suffered as a result of the breach.
Our tip for dealing with the Breach clause
Ensure that the breach clause provides remedies for both parties in the event of breach. For example, some lease agreements only set out remedies for the landlord in the event of breach by the tenant, but not the other way around. You should also ensure that the time period provided for the rectification of the breach is appropriate for the circumstances of your agreement.
For more information, please contact us or send an email to vicky@fouriestott.co.za.
by Vicky | 13, 03, 19 | Uncategorized
Domicilium citandi et executandi – What does this mean?
Domicilium citandi et executandi, roughly translated, means the physical address at which legal notices and process (eg summons) can be served on you. A post office box address is not sufficient for the purposes of service of legal process and should be avoided.
What are the legal consequences of this clause?
The legal consequence of this clause is that delivery of a legal notice, e.g. Letter of Demand, or process at this address is sufficient for the purposes of legal action. You will be deemed to have received a legal notice or document if delivered to that address, whether or not you actually receive it.
If the legal notice or document is delivered to this address but you do not receive it, there can be dire and costly legal consequences for you. For example, default judgement may be awarded against you without your knowledge, simply on the basis that the summons was served on your domicilium address.
Our tips for dealing with Domicilium clauses:
- When nominating an address for service of legal notices and process, ensure that you use an address where you will actually receive any delivered notices.
- If you do not reside at the address, make sure that those who do live there will give you any documentation delivered there.
- If you move, make sure that you notify all relevant parties of your change in address in accordance with the terms of your agreement with them.
- You should provide an email address as well as a physical address, as notices may be delivered by email if the agreement provides for this. The email address provided must be one that you check regularly and will remain active or you will need to notify the relevant parties of a change in your email address as you would a change in physical address.
