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Unfair Rental Practice Regulations

The Rental housing act includes a reference to Unfair Practice Regulations. These are published from time to time by the provincial minister of housing.

A copy of the current regulations is available here. Unfair Practice Regulations

Disputes arising from a breach of these regulations should be referred to the Rental Housing Tribunal (RHT). There is some disagreement as to wether the RHT is required to hear these disputes or if a party can approach a court directly. It seems for the time being better to take all disputes to the RHT first before approaching the courts to resolve any disputes.

 Unfair_Practice_and_Exclusive_Jurisdiction_Rental_Housing_Tribunal

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Plumbing, Electrical, Beetle and Gas Inspections

The seller is generally responsible fHome inspectionor providing compliance certificates in respect of Plumbing, Electrical, Beetle, Gas and Electric fencing. The obligation to provide these certificates can be waived or transferred to the seller in the sale agreement.

From time to time problems arise because buyers / sellers do not understand the scope of work carried out in preparing certificates.  The remainder of this post sets out the scope of work  for each of these certificates.

ELECTRICAL

What is inspected – The test is a visual, physical inspection and test of circuits, earthing and safety.

What do they look for – There must be electricity at the premises when the tests are performed. All rooms, outbuildings, garages and distribution boards must be accessible.  The test performed Electrical inspection – whats covered.  Appliances such as stoves, ovens, geysers, pool pumps, gate motors, door openers, globes are NOT tested. NOTE  All flex wire extensions, extension leads are deemed to be FIXED and will have to be rewired correctly. If possible remove any of these extensions before an inspection and do not replace them before transfer.

Who performs an electrical inspection – Electrical contractors registered with the Electrical Contractors Board (ECB) or the Department of Labour (DOL has taken over responsibility for this function from the ECB). Certificates supplied by unregistered contractors are invalid. Call 021 441 8172 to verify the registration of your contractor.

How long is an electrical compliance certificate valid – Certificates are valid for 2 years. If there have been any changes to the electrical installation (renovations or new light fittings installed) a new certificate is required or a certificate in respect of the changes can me attached to the initial certificate.

What happens if the property does not comply with the requirements of the regulations – The inspection company will provide a quote for the remedial work and once carried out they will issue a compliance certificate. If the home owner does not accept the quotation they remain responsible for the inspection fee – a certificate will not be issued.

It can happen that after a sale the buyer is concerned that the property is NOT compliant even though the seller has provided a certificate. In this event (provided the certificate was issued by a registered electrical contractor) the buyer should raise the issue with the the contractor.  The Electrical Approved Inspection Authority will provide resources to adjudicate disputes.

PLUMBING

What is inspected – Hot water Cylinder, water meter, storm water and pipework. The inspection is a visual inspection only.

Maintenance issues do not form part of the inspection – the inspection excludes – leaking waste pipes, cracked sanitary ware, missing taps, sewage and storm water blockages, leaking terminal fittings when open, pressure or flow issues.

What do they look for –

Hot water cylinder must comply with SANS 10252 and 10254 if installed after 2006. All must be done in metallic pipe except for temperature and pressure valves.

Water meter must stop registering when all terminal fittings are closed and must begin registering when one terminal valve is opened.

Ensure that no storm water runs into sewage lines – no down pipes into sewers, no paving sloping towards storm water

No lose pipework or terminal fittings – no lose pipe in roof space, no lose sanitary ware or garden taps and no cross connections between clean water and dirty water. i.e. no well points or boreholes corrected directly to council water.

Who performs a plumbing inspection – Registered plumbers, the certificate is only valid on the day of inspection.

What happens if the property does not comply with the requirements of the regulations – if the water meter is faulty the owner must report the fault to the city council and receive a reference number for the reported fault. If this is the only fault the plumbing certificate can be issued as the council has been advised. For all other faults the inspection company will provide a quote for the remedial work and once carried out they will issue a compliance certificate. If the home owner does not accept the quotation they remain responsible for the inspection fee – a certificate will not be issued.

BEETLE

What is inspected – All accessible wooden portions of the building are inspected. The inspection can only include  wood that is visible (wooden flooring under wall to wall carpets is NOT inspected).

What do they look for – Your deed of sale will provide clarity. The deed of sale should specify which types of beetle are included (it might only include Oxypleuris Nodien and Hylotrupes Bajulus) and can exclude wendy houses, picket fencing and other timber not forming part of the house. It is a good idea to make sure that the inspector has a copy of the relevant clause in the deed of sale so that the report covers exactly what is required.

Who performs a beetle inspection – Inspectors registered with the Department of Agriculture in terms of Act 36 of 1947.

What happens if the property does not comply with the requirements of the deed of sale – The inspection company will provide a quote for the remedial work and once carried out they will issue a compliance certificate. If the home owner does not accept the quotation they remain responsible for the inspection fee – a certificate will not be issued.

GAS

What is inspected – All Built in gas fires, braais, stoves, hot water systems and similar appliances. Any person selling a property with gas appliances installed must have a certificate of conformity.

What do they look for – Inspectors ensure that the gas installation complies with the specified regulations. The requirements vary for installations depending on whether the gas bottle is inside or outside. There are also regulations for the manner in which gas is piped behind cupboards and through walls. See Gas installations – drawings

Who performs a Gas inspection – Inspectors acting in terms of Regulation 17(3) of the pressure equipment regulations.

What happens if the property does not comply with the requirements of the regulation– The inspection company will provide a quote for the remedial work and once carried out they will issue a compliance certificate. If the home owner does not accept the quotation they remain responsible for the inspection fee – a certificate will not be issued.

ELECTRIC FENCE

The user of an electric fence installed after 1 October 2012 must have an electric fence compliance certificate which is issued by an approved electric fence installer. Transfer of any property after 1 October 2012 will require an electric fence certificate (not sectional title properties). The certificate is transferable provided no alterations have been made to the fence since the last certificate was issues.

COC Checklist

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What happens if a party to a sale passes away before transfer?

Sellers and Purchasers are unlikely to ever encounter this situation but it is handy to know where you stand in the event that you do.

If the Seller passes away after the offer has been accepted the sale agreement remains valid and should be upheld by the executor of the sellers estate.

If the Purchaser passes away, the executor of the estate has the option or choice to proceed with the purchase or not.

In any event the transfer is likely to be delayed somewhat while the executor is appointed and paperwork is set in order.

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Its still a sellers market but don’t over do it – Market update July 2015

Market Volume Growth
Market Volume Growth

Solid volume growth over the past few years flattened out in the first part of 2015. This is not altogether surprising since it reflects the realities of a stagnant economic environment in South Africa.  In an interest rate hiking period (albeit small increments) and little real economic growth; one would expect volumes to remain stagnant.

Total sales value is almost back to the levels last seen in 2007, however in real terms (adjusted for CPI) the market is still almost 40% below the boom time sales level.

From an individual home owners perspective things are not all doom and gloom. The shortage of good homes on the market means that your home can sell quickly at very good prices. You should however avoid the temptation to over price your home. Buyers are turning over their pennies and will not over pay.

For more information; FNB-Property-Barometer_Property_Transaction_Volumes_and_Values_Trends_Jul_2015

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Choosing Your Neighbourhood

Purchasing a home is an important,  long-term investment, it is vital to spend time doing research and finding out as much as possible about your new neighbourhood. There are several factors that make a neighbourhood and community what it is, and having an idea of what these factors are will provide buyers with a snapshot of what’s it will be like to live in that area. There are five aspects to consider when determining whether or not a neighbourhood is the right fit:

  1. Is the area an up-and-coming area or still in transition?

While home prices in a certain area could be relatively low now, there are several factors that could influence that in the future, such as upgrades or new amenities. When looking at the future potential of a neighbourhood, a buyer can start by researching the current home values and trends. Other aspects to consider would include the crime rate in the area, development plans and proposed or new businesses. A real estate professional specialising in the area will be able to provide some of the information, while other information can be obtained from local officials and the deeds office. Homes in a neighbourhood which is up-and-coming could prove to be a good investment.

  1. What are the schools like in the area?

Regardless of whether the buyer is in the life stage of having children or planning to have them in the future, schools have an impact an area’s price performance. Neighbourhoods with excellent, high-ranking schools will be sought-after and will tend to maintain higher resale values. School zoning generally only allows children living in proximity to the school to attend, which is why neighbourhoods with good schools experience consistent demand.

  1. What surrounds the area?

A buyer should have an idea of what is important to them and then explore the surrounding of the neighbourhood they are looking to buy in to see whether it matches their criteria. Things to keep in mind are proximity to amenities such as shopping malls, medical facilities, recreational facilities, parks or green spaces and schools. Aside from the fact that being close to amenities makes life easier and is more practical, these elements also make it easier to meet and interact with people within the community, set up play dates or walk the dog.

  1. Distance from work

Considering most people commute to and from work on a daily basis, the distance from home to the office is an important aspect to bear in mind. Potential buyers should time the commute by doing a test drive during the time of day they are most likely to go to and from work. Depending on where the property is situated, it may be a more feasible option for the buyer to explore other means of transport. In addition to offering an alternative to driving, good public transportation near a home can have a positive effect on the property’s value – the introduction of the Gautrain to areas in Pretoria, Sandton and Rosebank is a prime example.

  1. Is it Safe

Buyers should consider aspects of the area that make it a safer place to live, such as a neighbourhood watch, well-lit streets, walkways, security systems and little or no signs of vandalism. These are generally signs of a safe neighbourhood.

When buying a home, its location is a very important factor in the decision. The neighbourhood will largely determine the home’s appreciation value as well as the homeowner’s enjoyment of their time there. Selecting the right neighbourhood is as important for a buyer as is finding a home that fits all of their needs.

Safety and security are a top priority for the majority of South African property buyers. Buyers should consider aspects of the area that make it a safer place to live, such as a neighbourhood watch, well-lit streets, walkways, security systems and little or no signs of vandalism. These are generally signs of a safe neighbourhood. When buying a home, its location is a very important factor in the decision. The neighbourhood will largely determine the home’s appreciation value as well as the homeowner’s enjoyment of their time there. Selecting the right neighbourhood is as important for a buyer as is finding a home that fits all of their needs.

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Ownership of exclusive use areas – sectional title

exclusiveWhen purchasing or selling a sectional title property there are often Exclusive Use rights attached or claimed to be part of the sale.

Owners sometimes believe they have an Exclusive Right to use a piece of garden or a parking bay only to find that the “right” does not exist or is inadequately recorded. This can have a fundamental impact on the value of a section.  It is therefore important to ensure that one understands exactly how Exclusive Use rights are secured.

Exclusive Use of a particular area in a sectional title scheme can be recorded or defined in a number of ways, they are listed below.

Please consult a legal adviser with sectional title experience if necessary.

1. Notarial Deed – Exclusive Use rights recorded / transferred by notarial deed can’t be unilaterally removed. They can be sold, generally together with the sale of a sectional title unit or in certain instances they can be sold separately to the owner of another section.

2. Rule 27A – Exclusive use rights recorded in terms of 27A can be less secure than those on a notarial deed. Depending on the wording of the rule, changes may require unanimous consent of all the unit holders before a right can be altered. However if the wording does not require it then the voting rules of the Body Corporate (BC) would apply. An exclusive use right could under these circumstances be removed by a simple majority vote of members in a properly constituted meeting.

3. Right allocated by the Body Corporate – These are rights to use a part of the common property allocated by the BC or the trustees. These can be changed at anytime (provided the due process as defined in the BC rules is followed) normally by a decision of the trustees. Rights allocated in this manner obviously have less value than those allocated by Notarial Deed or a well written Rule 27A.

When purchasing a sectional title unit make sure you understand how the Exclusive Use rights are recorded. Avoid the unhappiness and stress related to finding out that your rights are not as secure as you had thought and the value of your investment is eroded.

Your sale agreement should make specific mention of the Exclusive Use rights transferred by notarial deed. Other Exclusive Use rights need not be specifically mentioned as long as the agreement includes ANY other Exclusive Use rights attached to the section.

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Rental Housing Tribunal (RHT)

Despite the RHT having been in existence since 2001 some landlords and tenants that are unaware of its services.

This is a pity because the tribunal provides an invaluable service to all participants in the rental market.

It is essentially a free dispute resolution service staffed by independent professionals. They investigate cases reported by either landlords or tenants. They mediate and facilitate a resolution of the dispute and if necessary they conduct hearings and make findings.

They should be the first point of call if a dispute arises that can not be resolved by the parties concerned. Visit this website for more information.

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Levy Clearance Certificate’s

FetchImageA body corporate’s power to prevent the transfer of a unit if the seller owes money to the body corporate, is contained in section Section 15B(3)(a)(i)(aa) of the Sectional Titles Act, 95 of 1986 (the Act).

Levy clearance is an assurance from the trustees, or managing agent, that the owner does not owe any money.  This covers “all monies” not just “contributions”. This means that the body corporate may withhold the certificate until all costs or potential costs have been paid or an arrangement for payment has been made that is acceptable to the body corporate.

Section 15B(3)(a)(ii) also refers to a clearance certificate but it applies to developers who hold rights to extend the scheme in terms of section 25. Section 37(1)(bA) says the body corporate must charge the developer for any expenses it has in respect of the area subject to the future development rights.

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Early Termination of Lease Agreements

Prior to the commencement of the Consumer Protection (CP) Act, in April 2011, the law of contract and the common law covered the issue of when and how a tenant went about cancelling a lease agreement.

Prior to April 2011; both parties were pretty much bound by the terms of the lease agreement and this was very weighted in favour of landlords and against tenants.

Landlords often refer to an early cancellation of a lease agreement by the tenant as “a breach of contract.” This is not the case.

In terms of the Consumer Protection Act, tenants have the RIGHT to cancel their leases, as long as they do so while fulfilling ALL the cancellation criteria or requirements. Tenants who do this must do so in writing and must give at least 20 days’ notice. The rental for those 20 days is payable by the tenant; and they must pay same; pro rata, if applicable, to the landlord for that period. This action DOES NOT amount to a breach of contract.

Once the landlord or his agent have received the written notice of cancellation, they should make a note of the date on which the lease is now due to end; and should start advertising immediately for a new tenant for the property. This responsibility lies squarely on the shoulders of the landlord or his agent to find a new and suitable tenant. The costs of so advertising however should also be noted, as these costs can be charged to the tenant, as part and parcel of the “reasonable penalty” that the landlord is entitled to hold the tenant responsible for; as a result of the early cancellation of their lease agreement.

Although the landlord is entitled, in terms of the Act, to hold the tenant liable for a “reasonable penalty” fee for early cancellation of the lease; this does not and is not meant to be used to penalise tenants; but rather is intended to allow the landlord to recoup any losses she may have suffered as a result of the early cancellation of the lease agreement; and the tenant vacating before the lease has run its course.

The costs that may be included in such a penalty would for example include the credit check costs for a prospective new tenant; and any other reasonable incidental costs relating to the new tenant and which have been reasonably incurred by the landlord in finding that replacement tenant; such as advertising costs and would also include the rental lost by the landlord if and during the period that the property was to stand vacant. It is not however a carte blanche penalty which the landlord can simply impose as he sees fit; eg 3 months’ rent. That will not be acceptable to the Rental Tribunal. It must be based on her actual financial damages. It has justifiably been described as” a penalty which cannot be charged upfront. They can only be calculated once a new tenant has been found and the landlord cannot gain financially or benefit from the tenants cancellation penalty costs. He is simply reimbursed.”

On this basis; penalty clauses in lease agreements which purport to agree a cancellation penalty in advance will simply not hold up in court.

The inconvenience for a landlord caused by an early cancellation will no doubt be both annoying and time consuming; but it is clear that a tenant has the RIGHT to cancel a lease. The landlord is only then entitled to recover his actual loses in an early cancellation penalty clause.

The CP Act is however vague in that it does not define a “reasonable penalty;” and only states that a reasonable penalty may be charged for early cancellation. In practice however and in SA Law; a person who suffers damages as a result of another person’s actions is only ever entitled to recover those damages which he has actually sustained; and can prove. In practice also; it normally does not take more than a month to find another tenant.

This begs the question: what, exactly, can the landlord charge? Unfortunately the Regulations as they stand do not provide a convenient, easy formula for calculating the penalty. Thus, pending the publication of a few nuggets of wisdom from South Africa’s panel of judges, the calculation of cancellation penalties remain the subject of debate and negotiation. Presumably, the landlord will be able to claim reimbursement for lost rental for the time the property stands empty while the landlord finds a new tenant. A word of caution: this does not mean that the landlord can rest on his laurels and allow time to quietly slip away without searching for a new tenant, expecting the tenant to reimburse him in the process. The Act requires the landlord to “act diligently” in finding a new tenant, thereby mitigating loss all around. As things stand, though, it appears that it will not be possible to calculate the cancellation fee with certainty upfront.