Employees in South Africa enjoy strong protections under a raft of laws such as the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA) and the Employment Equity Act (EEA).

Failure to comply with these Acts, whilst perhaps tempting to many employers struggling financially in these hard times, is not only unfair to employees (many of whom are in equally dire straits), but also an extremely risky business from a legal perspective. The CCMA (Commission for Conciliation, Mediation and Arbitration) and our courts take a dim view of employers flouting these laws, and offenders will pay heavily for doing so.

So, what is a “casual worker”?

A commonly held and dangerous myth is that you don’t have to worry about these laws when employing “casual workers”. That is perhaps a hangover from the pre-1997 definition of “casual labourers” as those who worked for 3 days or less per week. 

However, that definition fell away with amendments to the BCEA in 1997, since when we have had no defined concept of “casual worker” or “casual employee”. What counts now is that employees who work for you for less than 24 hours per month are excluded from core BCEA protections – those relating to contracts, hours of work, overtime pay, leave, sick leave, termination and so on (the prohibitions against employment of children and forced labour still apply). 

There is nothing to stop you using terms like “casual employee” or “casual worker” but bear in mind that they have no legal effect – what counts is that anyone working for you for 24 hours or more per month, no matter how you refer to them, falls under the BCEA’s provisions.

What about independent contractors and excluded employees?

Turning now to anyone working for you for more than 24 hours per month (outside the strict ambit of this article perhaps but relevant for context and comparison) –

• The BCEA’s protections are limited in the cases of certain employees, such as those earning over a specified threshold, senior management, some sales staff, employees of smaller businesses, specific employees like National Defence Force members and so on, with Ministerial “sectoral determinations” also applying in some sectors.
• “Independent contractors” have no employee protections (they are explicitly excluded from the definitions of “employee” in the BCEA, the LRA and the EEA), with the vital qualification that they must genuinely be non-employees. As far as labour law considerations are concerned, there are presumptions to overcome, criteria to consider and requirements to meet, and you cannot get away with disguising an employer/employee relationship as an employer/contractor one (no matter what your contract says). A related but separate issue is that SARS will hold you liable to withhold PAYE unless the relationship meets its own specified criteria. This is a complex subject on its own, with many grey areas and pitfalls, so specific professional advice is essential in any doubt.

“For him to be forced out of a career of choice to start working in a different field at a time when many businesses are closing down, retrenchments and lay-offs being commonplace and individual[s] doing everything possible to survive and cope with the health and economic devastating effects of the covid 19 pandemic, is plainly unreasonable and contrary to public policy and constitutional values” (extract from judgment below)

Consider this unhappy (but not unlikely) scenario: For whatever reason, you part ways with your fellow director/shareholder (or perhaps a key employee), who goes off immediately to join (or found) the opposition. 

Now you have a major problem – he/she was privy to all your trade secrets and confidential information and they are now being used to compete against you. Your business could be crippled.

Using the time-tested restraint of trade clause

An effective and time-tested way of protecting your business from such a risk is to insist on all directors, shareholders and key employees signing restraint of trade agreements from the start. Such restraints are usually included as clauses in employment contracts and/or (less commonly) in shareholder agreements. 

However, it is vital to word the restraint clause correctly if it is to stand up to legal scrutiny.  Although our law has long recognised the right of businesses to enforce this type of contract so as to protect their “proprietary and protectable interests”, and although in general we are held by the law to the agreements that we conclude, there is always a balance struck with the employee’s constitutional rights to be economically active and to earn a living.

As the High Court put it recently: “It is settled law that restraints of trade are valid and binding and, as a matter of principle, enforceable unless, and to the extent that, they are contrary to public policy because they impose an unreasonable restriction on the former employee’s freedom to trade or to work. It is also settled that the onus of establishing that the restraint of trade is unreasonable falls on the former employee.”

A common mistake – going “too wide”

The most common mistake businesses make is to word the restraint of trade too widely (in one or more of type of activity, geographical area or time period). No matter how tempting it may be to do so, that is courting disaster. The wider the clause is, the greater the chances of a court holding it either totally invalid or only partially enforceable. Rather word your clauses tightly and defensibly.

Two recent High Court decisions illustrate both this principle, and the potential impact of the Covid-19 pandemic on our courts’ approach to the questions of reasonableness and time periods.

The impact of the pandemic on the “reasonableness” test

• A director, shareholder and employee of a company specialising in media and advertising solutions resigned as both director and employee after a breakdown in relations, the company owing him R1.2m in short-paid salary. He however retained his shareholding. 
• He was subject to restraints of trade (in both his employment and shareholder agreements) which prohibited him from working for a competitor, and from sharing confidential information and trade secrets with them, for 18 months in any of 29 African countries.
• He nevertheless joined a direct competitor (active in 2 of the 29 African countries) and acted in breach of the restraint by contacting customers and business associates. When sued in the High Court for enforcement of the restraint clauses, his main defence was that they were unreasonable and prevented him from earning a living.
• The Court confirmed the need to consider all the relevant circumstances, not only at the time a restraint is entered into, but also at the time that the business tries to enforce its restraint. In this case, the company’s attempts at enforcement encompassed the period March to July 2020 – a time of strict lockdowns and economic turmoil.
• The upshot – the Court rejected the company’s suggestion that the ex-director could remain economically active in another field for which he was qualified, commenting: “For him to be forced out of a career of choice to start working in a different field at a time when many businesses are closing down, retrenchments and lay-offs being commonplace and individual[s] doing everything possible to survive and cope with the health and economic devastating effects of the Covid-19 pandemic, is plainly unreasonable and contrary to public policy and constitutional values”. The restraints were rejected as unenforceable.

The impact of the pandemic on time periods 

Another recent High Court decision saw the Court reducing a 2-year restraint, on sales employees who resigned in March and April 2020 respectively, to 14 months. 

In doing so the Court took what it considered to be a reasonable base period in the circumstances of 12 months and added 2 months “to compensate for the lockdown period”, also commenting that “…I am aware that our society is living in strange times. The COVID-19 pandemic has played havoc with, inter alia, our economy. Businesses have been prevented from operating and the ability of the applicants to appoint and train new salespersons will undoubtedly have been blunted by the state of the economy. This is of some relevance when considering the length of the period of restraint…”.  

So – are restraints of trade valid in times of pandemic and upheaval?

Neither decision means that restraints are necessarily unenforceable or only partially enforceable during times of economic turmoil and high unemployment. Each case will be decided on its own merits, but in assessing whether your own restraint clauses will be considered reasonable and enforceable, they are clearly factors to be borne in mind.

Expectant parents who lose a pregnancy before 26 weeks (the age set by the Births and Deaths Registration Act (BADRA) in its definition of “still-born”) have until now had no right to bury their foetus, which had to be incinerated as “medical waste”.

That has changed with a recent High Court order declaring the relevant provisions of BADRA unconstitutional. That order is suspended to give Parliament an opportunity to amend BADRA, plus it must also go to the Constitutional Court for confirmation. But in the interim the Court has allowed burial (via the issue of a “stillbirth certificate” or “declaration of stillbirth”) on request by the bereaved parent or parents. 

The Court declined to extend this new choice to foetal deaths resulting from human intervention (“voluntary induced termination”) so for now at least this new freedom to choose is available only to grieving parents in the case of natural deaths (miscarriages).

Flu season is upon us again, and it is not to be underestimated with between 7,000 and 12,000 flu-related deaths historically reported in South Africa every season. Whether or not this year’s lockdown precautions will reduce infection levels to the same extent that they did last year, take the time to make sure that you, your family and (if you are in business) your colleagues and employees are prepared.

Go to Medical News Now for “Evidence-based resources to help keep you and your loved ones healthy during the 2020–21 flu season” on its Flu page (its “Flu v Covid-19” section is particularly informative).

Be aware that there could be a run on the flu vaccine with articles like “Flu shots linked to fewer severe Covid-19 cases – US study” on News24 doing the rounds. 

“I am a marvellous housekeeper. Every time I leave a man, I keep his house” (seven-times-divorced actress Zsa Zsa Gabor)

Historically 44% of South African marriages have ended in divorce, and there has reportedly been a 20% surge in new divorce applications since lockdown.

For those unfortunate couples whose marriages do eventually fall apart, often the most important asset in play from both a financial and an emotional perspective is the family home. So it is crucial for any couple contemplating marriage, or currently married but considering a split, to understand what our law says about who gets what on divorce. 

Your divorce order as issued by the divorce court will be the “final word” here. If you have been able to agree on a split of assets and liabilities your agreement will typically be contained in a “consent paper”, and agreement is of course very much “first prize” here. Particularly if you have children – exposing them to a bitter fight over assets and to the risk of having to leave their childhood home and neighbourhood will only add to the disruption and trauma in their lives. In any event if you can’t agree terms, you are in for some emotional, time-hungry and expensive litigation before a court finalises the split for you.

A variety of factors will be at play here, all linked to the question of what “marital regime” applies to your marriage so the first question you need to ask is whether you are married in or out of community of property – and if out, does accrual apply?

If you are married in community of property

This is the default marital regime for South African marriages, and if you didn’t sign an ante-nuptial contract (“ANC”) before you married, all your assets and liabilities at date of divorce (with a few specific exceptions) will automatically belong to both of you in “undivided shares” i.e. 50/50.  

Typically, your divorce order and/or consent paper will provide for one spouse to become the 100% owner, with a suitable financial adjustment between you to account for the value of the other spouse’s 50% share.

No formal transfer of the property in the Deeds Office is needed, your attorney will just arrange for an endorsement on the property’s title deed to transfer ownership. 

If you are married out of community of property 

You have two separate estates and what you bring into the marriage remains yours, as does any growth in asset value during the marriage. 

As to who keeps (or gets) the house, and as to how much if anything the other spouse must pay in return, that will depend on a host of factors including the terms of your ANC and whether you were married with or without “accrual”. 

“With accrual” is the default unless you specifically opt to marry “without accrual”. In practice most modern couples specifically opt for accrual, in which event the combined growth in value during the marriage of your two estates will be split between you.

If the house is currently registered in only one of your names and that spouse is to keep the house, no formal transfer nor endorsement of the title deed will be necessary. If however the other spouse is to become the registered owner, a full transfer of ownership in the Deeds Office is needed. Although an exemption from transfer duty applies in this case, there will still be other transfer fees and costs to consider.

If you are co-owners of the property (in other words, if you are jointly recorded as owners on the title deed) you will almost certainly want to transfer full ownership to the one spouse. Again, a full transfer will be needed (see above re costs). There is however nothing to stop you agreeing on a temporary or permanent continuation of the co-ownership after divorce, perhaps to minimise disruption to your children’s lives, or perhaps while you jointly market and sell it at the best price (in which event your agreement should specify in detail who will pay what costs, what the minimum purchase price will be and so on).

Who pays off the mortgage bond?

If you are currently registered as co-owners, both of you will be equally liable for the full remaining debt owing to the bank. If one of you is the owner and the other is to take transfer, the current owner remains solely liable for the loan debt until released by the bank.

Whichever spouse keeps (or takes over) sole ownership of the house will have to make a new loan application to the bank in his/her own name and be substituted as the sole debtor/mortgagor. 

If you get the house, how will you pay out your ex-spouse?

As above, normally there will be a financial adjustment between you to compensate the other spouse, and if you don’t have the funds available you may need to ask the bank for a second mortgage. 

You could of course also agree to sell the house and split the proceeds after settling the existing bond. 

What if our house is owned by a trust or company?

Houses and other properties have historically often been held in trusts or companies for estate planning and asset protection purposes, and our courts are regularly called upon to resolve bitter disputes along the lines of “it was all a sham, the house never really belonged the trust, so please Judge order the trust to put it back into the pot as a personal asset”.

The spouse making such a claim will generally have to prove some form of “abuse” of the trust before a court will order that the house in fact belongs to the other spouse personally. But there are grey areas here and professional advice specific to your particular circumstances is essential.  

Prevention being better than cure….

Your house could well be your marriage’s most important asset both financially and emotionally. Rather than fight over it when divorce looms, seek professional advice before you tie the knot on what marital regime is best for you, and on how best to sort out who gets the house if you should be unlucky enough to part ways down the line. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advices

© LawDotNews

“This virus is unprecedented in our lifetime and requires an unprecedented response” (António Guterres, UN Secretary-General)

Most of us will celebrate the day we are offered a COVID-19 vaccination, but here in South Africa as overseas it seems inevitable that a significant number of people will refuse to be vaccinated. The reasons given for this stance have been many and varied, some mainstream and reasonable, others less so.

Perhaps some of those refusing will reconsider if and when they find they are denied opportunities available to those vaccinated – travel restrictions spring to mind but another example could be establishments like hotels and restaurants getting sticky on the issue if customer demand for safety grows.

A knotty problem for employers

Nevertheless, there will still be many “refusers” – all convinced that they are being entirely reasonable in refusing – and they could pose a knotty problem for you as an employer. On the one hand you have both legal and moral obligations to keep your workplace as safe as possible, but on the other hand refusers have their own strong legal and moral rights, both as citizens and as employees. For example, health, bodily integrity and privacy concerns, and concerns related to religious and cultural beliefs, raise issues of constitutional protection.

It boils down to a series of competing questions. Can you fire employees for refusing vaccination? Can your vaccinated employees and/or health officials hold you accountable for allowing unvaccinated employees into the workplace? Can employees who are vaccinated at your behest hold you liable if they suffer adverse reactions or health problems?

Between a rock and a hard place…

That all leaves employers walking a tightrope between competing sets of risks and employee rights, with the added complication of statutory requirements to provide a safe working environment. 

There is unfortunately no clarity on what line our courts will take when addressing the many disputes that will inevitably arise, but amidst all the speculation there does at least appear to be broad consensus that a case-by-case approach is probably the safest and the fairest way to proceed. 

That suggests that the most prudent course, at least until there is some clarity from the courts, is to tread carefully and lightly, and to act strictly in line with the general principles of our employment laws. 

Some general principles to bear in mind

• Government has made it clear that despite our unprecedented National State of Disaster, vaccination is voluntary. It will try to persuade us to get the jabs, but it won’t force us to. So, expect no intervention from that source other than on the educational side – see for example “COVID-19 Coronavirus vaccine myths and facts” on the Government Information website. 
  
• The fundamental employment law principle of fairness in both procedure and reasons for dismissal will remain critical to the outcome of any legal dispute.
  
• Beware “automatically unfair dismissal” in the form of discrimination on any “arbitrary ground”, specifically including grounds such as “…age, disability, religion, conscience, belief, political opinion, culture…” – any or all of which might underlie an employee’s objections to vaccination. 
  
• Amongst other constitutional protections we all have the right to “bodily … integrity” so it is vital to adequately address individual health concerns, such as those around adverse reactions and side-effects. Ongoing reports of some vaccines being paused from use internationally (at date of writing, said to be an over-reaction by the countries in question) will contribute to these concerns, and the cautious will need reassurance.
  
• As always, and without losing sight of the need to address each individual employee’s concerns on a case-by-case basis, aim for agreement and consensus in the workplace via consultation. A full risk assessment specific to your workplace, and the educational resources mentioned above, could be invaluable here. 
  
• Set a workplace policy on vaccination – contravention of a fair and reasonable policy will lay the groundwork for any charge of misconduct. Decide whether a flexible policy would suffice or whether mandatory vaccination is essential. Consider every possibility and circumstance – for example, can concerned staff be allowed to work remotely? Would employee fears be alleviated by access to specific medical advice? Do you operate in a sector (health care or retirement perhaps) where vaccination will be considered essential? And so on…

Every business will have its own particular business activities, needs and employees. So most importantly, take advice specific to your workplace!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“…the mere exercise of majority shareholding voting rights does not amount to oppression…” (extract from judgment below)

What happens when a company’s directors and shareholders fall out and cannot reconcile their differences? 

“Relief from oppressive or prejudicial conduct”

If you should find yourself in such an unfortunate situation, our Companies Act offers you several possible remedies. 

Professional advice specific to your case is essential here but be aware of a particularly versatile remedy in the form of a court application for relief from “oppressive or prejudicial conduct”. This relief is available where –

1. “any act or omission of the company, or a related person, has had a result that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant”,
   
2. “the business of the company, or a related person, is being or has been carried on or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant”, or
   
3. “the powers of a director or prescribed officer of the company, or a person related to the company, are being or have been exercised in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant.”

If you can prove any of the above, the court has a wide discretion to make any order “it deems fit”, including (a long but not exhaustive list) an interdict against the improper conduct, liquidation if the company is insolvent, business rescue if appropriate, amendment of the Memorandum of Incorporation, “to create or amend a unanimous shareholder agreement”, issue or exchange of shares, appointing additional or replacement directors, declaring persons “delinquent or under probation”, refund of consideration paid for shares, varying or setting aside transactions and agreements, requiring production of financial statements or an accounting/reconciliation, compensation orders, rectification of company registers or records, or trial of any issue.

The critical part, as a recent SCA (Supreme Court of Appeal) judgment shows, is to be able to prove one of those three categories of wrongful conduct. Without that, and no matter how bitter the dispute between you and your nemesis may be, the court has no discretion to grant any of the above relief.

The facts and outcome of the SCA matter are a case in point –

Majority shareholder v fired director

• In a long-established and closely-held fencing manufacturer with only two shareholders but substantial value (the total value of the shares seems to be in the region of between R46m and R74m), the two fell out over a range of issues.
  
• The fall out culminated in the minority (46.67%) shareholder being removed from his directorship by the majority (53.33%) shareholder. After his removal as director he was also dismissed from his employment as a general manager after being found guilty at a disciplinary hearing of four counts of gross misconduct (one of which involved dishonesty). The misconduct complained of included abuse of trust, conflict of interest and abortive attempts to have the company placed under business rescue and liquidation. 
  
• Long story short, the dispute ended up first in the High Court and ultimately before the SCA, the minority shareholder alleging that he had been excluded from the management of the company, denied management and financial information, excluded from decision making, removed as director to be replaced by the majority shareholder’s husband and brother-in-law, and unlawfully and unfairly dismissed from employment.
  
• The Court however found on the facts that he had failed to prove that the majority shareholder’s conduct towards him was oppressive or unfairly prejudicial, or that his interests had been unfairly disregarded. He had been validly removed as a director of the company at a properly constituted shareholders’ meeting (as the Court put it “…the mere exercise of majority shareholding voting rights does not amount to oppression…), and his dismissal as general manager did not amount to oppressive or prejudicial conduct. 
  
• That finding, held the Court, meant that none of the avenues of relief listed above were available to the minority shareholder despite findings that the shareholders’ relationship had broken down irretrievably and was not capable of being resolved. 
  
• As a result, the High Court’s order that the majority shareholder sell her shares to him – an attempt by the High Court “to design or craft a mechanism which would result in a ‘clean break’ between the parties” because “it was not in their best interests to remain ‘in the same bed’” could not stand. Equally the minority shareholder’s new request that the majority shareholder be ordered to buy his shares from him could not succeed. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Domestic employees” are now covered under the Compensation for Occupational Injuries and Diseases Act (COIDA) and will now be entitled for compensation from the Compensation Fund in the event they are injured or contract diseases while on duty.

The new benefits

Note: The benefits set out below are recorded in summary only and awards are subject to conditions and to limits; so seek specific professional advice in need. 

Compensation payable to a qualifying employee by the Fund

Temporary Total Disablement (TTD) 

This is for an employee booked off for 4 days or more by a doctor to recuperate, maximum 24 months

Permanent disablement lump sum    

A permanent disablement lump sum is paid to an employee who has received a final medical report from the treating doctor indicating that the employee has reached maximum medical improvement. The permanent disablement should be 1 – 30% disablement for the Compensation Fund to pay this benefit. 

Permanent disablement pension   

The permanent disablement pension is paid to an employee who has received a final medical report from the treating doctor indicating that the employee has reached maximum medical improvement. The permanent disablement should be 31 – 100% disablement for the Compensation Fund to pay this benefit. 

Compensation payable to dependants of employees who died as a result of injury on duty or occupational disease

Under this heading there is cover for some funeral expenses, a widow’s lump sum award, a widow’s pension award, a child pension award, a partial or wholly dependency award payable to parents or siblings in the absence of a surviving spouse or child.

Orthotics and Rehabilitation 

Qualifying applicants can claim for youth bursaries, a “Return to Work” programme, “assistive devices” like wheelchairs and prosthetics, and rehabilitation and re-integration programmes.

Medical benefits

Medical benefits/claims and chronic medication are provided for in this section.

Employers – you must now register, submit annual returns, and pay annual tariffs

All employers of domestic employees are now obliged to register as employers with the Compensation Fund and to submit the necessary returns. You will be assessed and billed annually. To calculate how much your annual tariff payment will be, take the employee’s annual salary, divide it by 100 and multiply it by the current “assessment rate” applicable to domestic employees (1.04) – e.g. at a monthly salary of R4,500 the calculation is: R4,500 x 12 / 100 = R540 x 1.04 = R561-60 for the year. 

Although there is reportedly no deadline for registration set at the moment, keep an eye on the media as this is bound to change. 

For more detail, download the Department of Employment and Labour’s “Notice on The Registration of Domestic Worker Employers in Terms of Section 80 of The Compensation for Occupational Injuries And Disease Act As Amended” from GPW Online. See page 9 for the registration procedure and “Industry Classification” (get this right, high-risk industry employers pay a lot more!), page 10 for the ROE (Return of Earnings) and assessment procedures (plus how to register online) and page 11 for the claims submission process. The necessary forms are on pages 12 onwards. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Creativity is intelligence having fun” (Albert Einstein)

Continually nurturing creativity and innovation in your business is not just a profit driver, for most businesses it’s a matter of survival – there is always a disruptor or two in the wings just waiting for you to stagnate and fall behind. 

But as Dr Srini Pillay (a South African-born, Harvard-trained psychiatrist, brain scientist, technology entrepreneur and musician) points out: “Creativity is not just for artists or people in business. Creativity is for any person who wants to find an unusual way to take their lives to the next level.” Listen to the full article “Train your brain to unlock creativity and innovation” on Maverick Life.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Owning a home is a keystone of wealth… both financial affluence and emotional security” (Personal Finance Expert Suze Orman)

When you buy or sell your “Home Sweet Home”, particularly for the first time, the process can seem complicated, the terminology confusing, and the risks of making a costly mistake intimidating. You are after all dealing with quite possibly your most important asset!  

To help you navigate the process, as either seller or buyer, here are some common questions, with answers.

1. Where can I get a simple guide to the process?   

When you come down to the details it certainly is important to get everything right, but a simple, broad overview to start with will go a long way to de-mystifying the process and to setting you safely onto the right path.   

Have a look at the Law Society of South Africa’s “Buying or Selling a House: What You Need to Know”. Download it in any of four languages here.   

Simply and clearly written, the guide is full of really important information and advice, both practical and legal – take the time to read it in depth!   

Turning now to a few of the other more common questions you will no doubt have…

2. Do I really need legal advice?     

Our law reports are full of court disputes that could have been avoided with a simple upfront request for legal advice. The danger of not doing so is that many pitfalls await the unwary and you will be held to anything you agree to. It’s only sensible therefore to take advice early – well before you appoint an agent, start looking for a house, or get involved in submitting offers and negotiating sale agreements.   

Not having your “offer to purchase” or “agreement of sale” legally checked is a recipe for disaster. Once you sign on the dotted line you are on the hook for everything in the document. With very limited exceptions our law holds you to your signature and it is no good saying later “But I didn’t read the document, it all looked like the normal standard stuff” or “I had no idea I was agreeing to term x or condition y” – tough, you are bound.   

Bottom line – chat to your attorney before you do anything else! 

3. Whose name/s should I put the property in?

Should you buy the house in your name or in your spouse’s name? Should you buy jointly? Does it matter what marital regime applies to your marriage? What if you are in a permanent cohabitation arrangement rather than a formal marriage? Or perhaps you are wondering whether you should put the house into the name of a company or family trust.

Your choice now will have far-reaching legal, tax and practical consequences; and with some complex areas of law involved, specialist upfront advice is a no-brainer. 

4. What else should I ask my attorney?

Common areas of dispute and litigation include “bond clauses” and “72-hour clauses” in sale agreements, confusion over the need to identify or disclose both visible and invisible defects, disagreements over what is a “fixture” that comes with the house and what isn’t, misunderstandings over neighbours’ rights to build and encroach on views and the like, not checking for building plans and municipal Certificates of Occupancy (you will have a problem if a previous owner built or extended without proper plans), not checking the zoning and title deed restrictions (which could put a damper on any plans you have to extend, go up a storey, build a home office, or the like), servitudes or other rights of use over the property, limited “home business” options and so on.

(Tip: Take lots of “before and after” photos of the house and property with your cell phone – a dated picture is hard to argue with!)

Other “homework” items to ask about – what paperwork you will need (do you know where your title deed is?), how long your particular transfer is likely to take (and a linked question “what date of occupation should we agree on?”), to whom deposits and any occupational rental must be paid (and who gets paid the interest earned on monies held in trust), what compliance certificates you need, how to find the best bond rates, whether you might qualify for a FLISP (Finance Linked Individual Subsidy Program) subsidy, how to cancel and open municipal service accounts, the rights of any occupiers (not just tenants, also “unlawful occupiers”), and so on – you will have your own list.

5. What about planning my finances?

Ask your lawyer for a breakdown of who will pay what and when. Think deposits, bond and transfer costs, transfer duty, agent’s commission, bond settlement balances and so on. Cash flow forecasting, and a clear understanding of the timelines involved, are critical here to avoid unpleasant surprises down the line.

As a buyer, factor into your “affordability budget” not only bond repayments and your projected regular monthly costs (rates, services, insurance premiums, security costs etc) but also an emergency fund to cover any unexpected costs that may crop up. 

On the subject of finances, cyber-fraud is a growing issue when it comes to electronic communications and payments so agree with your lawyer on measures to ensure that neither of you falls victim. Fraudulent “here are my new bank account details” emails are flavour of the month, but the scams are constantly evolving.   

6. Should I buy-to-let in the current market?    

Buying-to-let can be an excellent investment channel, and for a whole host of reasons this time of pandemic and disruption has opened up an abundance of opportunities to prospective landlords. Just don’t rush in blind – choose the right property in the right area, go into the process with your eyes fully open, and in particular beware the common pitfall of failing to minimise your risk of having to fight a difficult, destructive or non-paying tenant. Residential property occupiers enjoy strong protections against eviction even in normal times, and these protections are even stronger for the duration of the National State of Disaster.

It is essential also to understand the impact of the Rental Housing Act on the landlord/tenant relationship – do you know for example the specific requirements around rental deposits and joint property inspections? “Ignorance of the law” is no excuse, and non-compliance could cost you dearly.   

7. Who appoints the conveyancer and why do I need one?

In a nutshell, you need to appoint a specialist lawyer (a “conveyancer”) to pass transfer of ownership from the seller to the buyer in the Deeds Office. That’s because only on registration of the transfer does the buyer become the legal owner of the property.   

As a seller, insist on choosing the conveyancer – pick a firm you can trust to act with professionalism, integrity and speed.    

8. What about buying into a complex? 

 Owing a house and living in a community scheme come with substantial benefits, just understand exactly what you are letting yourself in for both on a practical level and in regard to the various rules and regulations you will be agreeing to. 

Our courts regularly have to sort out bitter (and unnecessary) disputes around owners desperately – and almost always unsuccessfully – trying to get out of complying with body corporate and Home Owners Association rules. Common areas of complaint are home businesses, pet ownership and control, vehicle parking, noise, nuisance objections and the like. 

9. What records and paperwork should I keep?     

One thing is certain – the document you don’t keep on file is the one you will be desperately searching for in 10 or 20 years’ time! So when in doubt about a particular item keep it, but at the very least have a file (backed up electronically) with –

• Your title deed (also called a “deed of transfer”) from the conveyancer. If your property is bonded the bank will keep the original in which event keep a copy plus a note as to which bank has the original. If you lose your title deed you can get a copy but there are delays and costs attached which you really want to avoid when you come to sell again down the line.
• The full signed agreement of sale and annexures,  The conveyancer’s final statement of account and associated invoices,  
•  All bank loan and bond documents,
• Your municipal Certificate of Occupancy if you undertook any building work (construction, renovations, extensions etc),
• A running list with supporting documents of all tax-relevant expenses. For example, keep a running Capital Gains Tax schedule with –
  
  • A list of expenses relevant to the house’s “base cost” (purchase price, transfer costs and legal fees, bond costs, agent’s commission, costs related to the sale or purchase like advertising, architect’s fees etc) and 
  • Ongoing capital expenses i.e. improvements and renovations (but not repairs or maintenance).  
    
• “Before and after” photos of the house and property,
• Ask your lawyer if there is anything else you should keep relevant to your particular property and transfer. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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