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Presented By: Drienie Brand, D Brand Attorneys

Langebaan, Western Cape

D Brand Attorneys
Attorney, Notary &
Conveyancer
D Brand Attorneys
Attorney, Notary & Conveyancer

Drienie Brand
info@dbrandattorneys.co.za
022 772 0044
www.dbrandattorneys.co.za

Practising in Property Law, Conveyancing, Notarial Practice, Immigration


and Liquor Licences since 2000.

Situated in Langebaan, West Coast, Western Cape


Residential Property Management

1. An overview of the purchase, sale and letting of


residential property;
2. Law of contract in relation to the purchase, sale
and letting of residential property;
3. Legislation dealing generally with the purchase,
sale and letting of residential property;
4. Understanding the essence of building
supervision and maintenance;
5. An introduction to affordable and social
housing;
6. Successful negotiation skills and understanding
the dynamic of landlord-tenant relations and
proper reporting to lessors within established
time-lines;
1 Overview of the Purchase, Sale and
Letting of Residential Property
High Onus on Estate Agents

 Know aspects of contracting;

 Explain to clients full extent of completing


and signing the Contract;

 High degree of skill and professionalism;

 Skills necessary to conclude a valid


Agreement;
High Onus on Estate Agents

 Good day when Offer of Sale or Lease is


completed and signed;

 Not good day when it falls through because


anything was invalid or when parties are
angry at Agent for not advising on all
aspects;
High Onus on Estate Agents

 Therefore: Imperative for estate agent to:


 Know all the implications of every clause
in Agreement;
 Explain clauses to their clients to prevent
them from holding estate agent liable;
 Stay on top of latest developments in law
and all aspects of being an estate agent;
 Know more than their clients;

REMEMBER: The most successful agents out


there know and understand the legal and
practical implications of everything they do!
Law of Contract in Relation to the

2 Purchase, Sale and Letting of


Residential Property
The Purchase and Sale of Residential
Property

 Utmost importance - the Offer to Purchase


complies with all the basic laws covering the
validity of immovable property sales;

 Any fatal defects will give the Seller or the


Buyer right to withdraw from the sale with
the result that Agent not entitled to his/her
commission;

 Alienation of Land Act - an agreement with


regard to immovable property should be in
writing and signed by the parties thereto.
The Purchase and Sale of Residential
Property

 The following are the essential features that


have to be included in such an Agreement of
Sale:
 The Parties to the Agreement
 The Purchase Price
 The Property Description
 No further formalities have to be complied
with for the contract to be valid!
 Further terms and conditions contained in an
Offer to Purchase = avoiding disputes between
the parties and providing clarity, security and
safety.
Signatures

 Very important – Offer to Purchase duly completed


and signed by the Seller and the Buyer or their duly
authorized representatives
 The following parties can enter into and sign an
Offer to Purchase:
 Seller or Buyer;
 An agent of the Seller or Buyer acting with
written authority on behalf of such party;
 A nominee for a Company or Close Corporation
to be formed;
 A representative of a juristic person, such as a
director of a company, a member of a Close
Corporation or Trustee on behalf of a Trust.
Remember to obtain a Resolution!
Changes/Amendments to the Offer to
Purchase and Counter Offers

 Parties will often want to amend the Offer to


Purchase either-
– as part of a counter offer; or
– after final conclusion of the Agreement.
 This is quite admissible provided that the
Agent is fully aware of the implications and
what has to be done.
The following formalities
must be observed in such
circumstances:
Changes/Amendments to the Offer to
Purchase and Counter Offers Formalities

 Initial to any alterations, crossing out and


changing of any part of the Offer to
Purchase;
 Let the parties initial at any insertion or
addition in the Offer to Purchase;
 Not necessary or advisable for the parties to
initial alongside every paragraph with open
spaces in the agreement;
 a Counter offer is not a valid contract until
the Buyer accepts the changes made and
initials to it.
Changes/Amendments to the Offer to
Purchase and Counter Offers Formalities

 Where a written portion is in contradiction of


a printed portion of the agreement, the
written portion of the agreement will prevail
over the printed portion;

 Any major amendment to the main Offer to


Purchase be contained in a separate
document, an Addendum to the agreement.
Addendums should be carefully drawn and
must be signed by both parties. Always
consult with your conveyancer or office
manager in this regard.
Uncompleted spaces and leaving
out terms

 Actual terms might not be completed and


certain portions of the agreement might
simply have been left blank;

 What are the implications of this?


Uncompleted spaces and leaving
out terms
 Depending on the importance of the clause, it
can invalidate the whole agreement. The Agent
should complete all applicable open spaces;

 It is better to delete blank sections in the


agreement in order to prevent one of the parties
from inserting something in an open space which
was not part of the original agreement;

 Every estate agent should exercise great care in


ensuring that all essential terms of a contract are
completed and complied with.
The standard Estate Agency Offer to
Purchase

 The reason for all the detail in the Offer to


Purchase is to prevent serious
misunderstandings between the parties to
the Agreement in the absence of any one of
the clauses in the Offer to Purchase;

 For example: Where the Agreement does


not make provision for a “Sold” board to be
put outside the property after the sale. The
Seller might not want the Agent to put a
board outside his property.
The standard Estate Agency Offer to
Purchase

 The standard Estate Agency Offer to


Purchase usually contains all the necessary
detailed clauses. These clauses will now be
shortly discussed:
The standard Estate Agency Offer to
Purchase

 Parties to the agreement


It must be clear who the parties to the
Agreement are;
 Property being sold
Be sure to insert the erf number and
address as well as the Door and Unit
number in the case of Sectional Title
Units;
The standard Estate Agency Offer to
Purchase

Purchase price and method of payment


Full Purchase Price including the
commission
Method of payment
Deposit – amount and when payable;
Balance Purchase Price – amount and
when payable;
Bond
Guarantee
Payment to Conveyancer
In the instance of Bond or Guarantee need
to deal further with it in Agreement of Sale
The standard Estate Agency Offer to
Purchase

 Suspensive conditions
Bond
Certain date or extended date
Amount must be inserted
Selling of Purchaser’s property
Date must be inserted by which
the property must be sold
72 hour clause can be inserted
Any other suspensive conditions
The standard Estate Agency Offer to
Purchase

 Possession, risk, commission and breach of


contract;

 Jurisdiction, transfer, transfer costs, fixtures


and fittings, domicile, electrical and beetle
certificates;

 “Other provisions” where parties can agree


on certain other things.
Letting of Residential Property

 Rental Housing Act 50 of 1999 regulates the


relationship between landlords and tenants
and it provides for dispute resolution by the
rental Housing Tribunal;
 This Act contained a few shortcomings and
the Rental Housing Amendment Act was
introduced, most important of which that
Lease Agreements will also need to be in
writing from the effective date of the
Amendment Act;
 Imperative that agents advise all their clients
that Lease Agreements should be in writing
and signed by the parties.
Letting of Residential Property

 Same contractual principles that are


applicable to Purchase and Sale Agreements
are applicable to Lease Agreements, but with
Lease Agreements specifically, the following
principles apply:
 It is much better to have a written lease in
place than an oral lease;
 The terms of the Lease Agreement have to be
kept simple and be explained to both parties.
Letting of Residential Property

It is very important to deal with certain matters


in your lease agreement, such as the following:

 The Rental Amount and deposit as well as


payment method and date of payment;
 Percentage of annual increase;
 The commencement and end period of the
Lease;
 The Cancellation of the Lease;
Letting of Residential Property

 The responsibilities of the Lessor vs that of


the Lessee with regard to maintenance of
the property;
 Option to renew the lease;
 Use of the premises in accordance with
municipal and other Body Corporate / HOA
regulations;
 Alterations by the tenant;
 Access to the premises for viewing by future
buyers / tenants.
Cancellation of Residential Lease
Agreements

Cancellation of Lease Agreements are regulated


by:

a. The terms of the Agreement;


b. The Rental Housing Act;
c. The Consumer Protection Act;
Cancellation by the parties in terms of
the Agreement

 Parties can cancel the Agreement by mutual


Agreement;

 Agree in Rental Agreement that Lease can be


cancelled with notice period.
Cancellation by the parties in terms of
the Agreement

 Then the Parties can also breach the


agreement: For example if the Tenant not
paying rent in time or not paying rent at all,
the Landlord is entitled to give notice to the
Tenant in terms of the Agreement, such as 7
(seven) days written notice to rectify his/her
breach.
Cancellation by the parties in terms of
the Agreement

 If the breach is serious and in the instance


that the Lessee does not rectify his / her
breach, the Lessor can then cancel the
Agreement or enforce the terms of the
Agreement in the applicable legal forum.

In this instance the Lessee will be an illegal


occupant and the Lessor can initiate the
eviction process in terms of the PIE Act.
Early Cancellation by the Lessee

 The Consumer Protection Act affords the


Lessee, as consumer, the opportunity to give
one calendar months’ written notice to the
Lessor of his / her intent to cancel the Lease.
 The Lessor then has the option to claim
his / her damages for early cancellation
from the Lessee;

 This amount of damages can be pre-


estimated in the Lease Agreement, for
example one months’ rent and / or
advertising costs to find a new tenant.
Early Cancellation by the Lessee

 If the parties disagree on the cancellation


and a dispute ensues, the parties can
approach the Rental Housing Tribunal and /
or a mediator/arbitrator and/or the
appropriate Magistrate / High Court as the
case may be.
Legislation dealing with the Purchase,

3 Sale and Letting of Residential


Property
 Alienation of Land Act 68 of 1981 – formalities of
Agreements of Sale;
 Deeds Act 47 of 1937 – registration of property in
Deeds Office;
 National Credit Act 34 of 2005 – regulating
lending;
 Consumer Protection Act 68 of 2008 – buyer’s
and tenant’s rights;
 Insolvency Act24 of 1936 – when a party is
insolvent;
 Companies Act 71 of 2008 – authority to bind
Company, selling assets;
 Close Corporations Act 69 of 1984 – authority to
bind CC; etc
 Trust Property Control Act 57 of 1988 – authority
to sell/buy;
 Deceased Estate Act 66 of 1965 – what happens
after death;
 Prevention of Illegal Eviction from and Unlawful
Occupation of Land Act (PIE Act) 1998 – eviction of
tenants;
 Rental Housing Act 56 of 1999 – lease agreements;
 Sectional Titles Act 95 of 1986 – Sectional Title
Sales and Registrations;
 Constitution of Republic of South Africa 108 of
1996 – constitutional right to land and distribution
and human rights;
 Public Finance Management Act – Public
Properties;
 Estate Agency Affairs Act 112 of 1976;
 The Preferential Procurement Framework Act;
 The Financial Intelligence Centre Act – FICA;
 Labour Relations Act – Labour Relations;
4 Understanding the essence of Building
Supervision and Maintenance
Building Supervision

 Professional supervision of building works is


necessary to ensure;
 Works are executed with a high level of
quality;
 The work matches all agreed plans;
 Experienced construction site supervisors are
necessary to regulate the building project;
 Requires knowledge of:
 Building parts and systems;
 Building practices and methods in different
areas;
 Usability of current building practices and
methods;
Building Supervision

 A supervisor also needs to be able to do cost


calculations –
 he must be aware of current prices and
cost levels to be able to advise his clients
correctly; and
 to pre-estimate the total building project
cost;

 He must also be able to listen to his client’s


needs and he must have good social skills to
work with;
 Employees
 Tradesmen
 Service and product providers.
Building Supervision

 Comprehensive quality control services guarantee


that the materials used, equipment and systems
are of good quality, function well and conform to
building standards.
 The supervisor must also see to it that safety
requirements are being met.
 The benefits of skilful supervision are:
 The project can be completed in time within the
expectations of the client;
 The project can be properly executed;
 Safety regulations can be adhered to;
 Quality, functioning and standard conformity of
materials, equipment and systems can be met;
Maintenance and Repair

 Maintenance and repair of properties are also


aspects that need careful consideration;
 It is not only a process of supervising
employees and hiring contractors but also
requires skilful communication levels between
owners, landlords and tenants as well as
contractors;
 Maintenance requires clearly-defined written
procedures for setting priorities and making
necessary repairs;
 Owners and Tenants must be kept informed
about the status of planned repair projects.
Building and Maintenance

 Furthermore, in order for the banks to


approve a building loan, they require an
NHBRC Registration and Enrolment
Certificate, Municipal approved plans and
Building Contracts / quotes signed by the
client and the builder, a schedule of
finishes and Builders All risk Insurance
Policy;

 The Building Supervisor can attend and


regulate all these factors.
5 An introduction to Affordable and
Social Housing
Affordable and Social Housing

The South African Government provides


housing settlements to improve the quality of
life for the poor through access to
accommodation, basic services, tenure and
affordable mortgage finance.
Affordable and Social Housing

According to the national Government it is


estimated that 1,5 million housing
opportunities will be provided by 2019.
 During 2014 at the National Settlements Indaba
it was estimated that more than R250 billion will
be spent on:
 affordable bonded housing investment by
banks
 rental accommodation developments by the
private sector and agencies
 government subsidies
 housing investments by big employers and
mining companies
 bulk services development for townships and
human settlements
 upgrading of current informal settlements
infrastructure and community infrastructure
like schools, churches, business sites and
other amenities.
Gap Housing and Subsidies

 Provision will be made for “Gap Housing”


which describes the gap between the market
for residential units supplied by the State
and houses delivered by the private sector;

 People who earn between R3 500 and


R15 000 per month will be accommodated
by receiving certainty of being granted loans,
bonds or mortgages by banks and other
financial institutions through the National
Housing Finance Corporation.
Successful negotiation skills and

6 understanding the dynamic of


Landlord-Tenant Relations and proper
reporting to Lessors within
established time-lines
Successful Negotiation Skills

 During the times when you are negotiating


the sale or lease of property, your
negotiation skills becomes critical;

 The ability to interact and influence others


are essential for your personal and career
success;
Successful Negotiation Skills

 One of the most positive results which can


emerge from developing good negotiation
skills is the ability to persuade;

 Becoming persuasive can only occur when


we learn to understand the nature of the
problem and through our ability to
effectively connect with the other person;
A few negotiating skills can be
summed up as follows:

1. Know what you want: The clearer you


are on your interest and goals, the better
your chance of success.

2. Know the other party’s needs and


interests. Use your people skills to
ascertain the personality type of the
person that you are negotiating with.

3. Consider the timing and method of


negotiations.
A few negotiating skills

4. Prepare and plan. Plan in detail what the


other party may want in advance.

5. Offer benefits for accepting your offer.

6. Frame your negotiation around one or


two key points.

7. Know when to walk away from the


transaction with the relationship with the
other party still intact.
A few negotiating skills

8. Prepare creative options for mutual gain;

9. Listening is the most powerful negotiation


skill. You learn the interest of the other
party through listening.;

10. Immediately put your negotiated agreement


in writing.
Understanding the dynamic of landlord-
tenant relations and proper reporting to
lessors within established time-lines:

 The following matters are very important if


you are the Agent involved in the entering
into the Lease Agreement and if you will be
involved in the collection of rental and
monitoring the whole process of the Lease:
 Thorough scrutiny of the Tenant by
attending to the following checks with the
prior written consent of the Tenant:
 Previous Landlord check;
 Employment check;
 Criminal record check if possible;
 Credit Bureau Checks.

 It is very important to enter into separate


agreements as agent with the landlord as
well as the tenant to ensure that all
applicable provisions are dealt with that
regulates the relationship between the
landlord and the tenant.
 The inspection of the property before the
entering into the Lease Agreement – the
defects at the time of entering into the
Lease should be stipulated in the Lease as
an Annexure upon inspection by both the
Lessor or agent and the tenant;

 The inspection of the property upon the


tenant vacating the property. If a joint
inspection is not done at these points, the
Lessor will not have the right to deduct any
damages from the deposit or claim any
damages from the lessee for damage to
the property.
 The deposit of the tenant must
immediately be invested in an interest
bearing account;

 Invoices for rent must be sent to the


tenant timeously and on the same date
of each month. The landlord must be
paid promptly upon receipt, his portion
of the rental after any deductions as
agreed;
Always report fully and extensively to
your Landlord, but especially in the
following circumstances or events:

 Immediately upon the Tenant signing the


Lease Agreement, any amendment or
addendum thereto;

 Advising your Landlord when it is time for


renewal or cancellation of the Lease;
Always report fully and extensively to
your Landlord, but especially in the
following circumstances or events:

 When the Tenant has any problem with the


property – report to the Landlord to enable
the landlord to make a decision on, for
example, contacting his / her Home Owners
Insurance company for assistance or be
available to contact service providers to
rectify the situation;
Always report fully and extensively to
your Landlord, but especially in the
following circumstances or events:

 When the Tenant is late or short with rental


payments;

 When you inspect the property – always


report to the existence of any defects or
problems with the property;

 When your tenant breaches the Lease


Agreement in any other way or form and ask
the Landlord’s instructions as per the
Agreement between you and the Landlord.
Research and Sources

 Butterworths Forms and Precedents


 Derebus.org.za
 Gov.za
 Privateproperty.co.za
 Uhab.org
 Fixforward.com
 Inspecta.com
 Acadameia.edu
 Negotiationtraining.com.au
 Negotiations.com
 Notrademeonline.com
 Extension.Harvard.edu