November news

The year is drawing to a close - time to reflect on the year behind us, and make plans and set goals for 2012. If you think of selling or buying property within the next year, there are two articles below which may interest you. There are things you can do now to make sure that the buying or selling process runs smoothly.

The newsletter also includes an article on subdivision - something you may have contemplated but never had time to investigate.

An article on security while you are on holiday is included - of course you know all this. It intends to serve as a reminder of steps you can take to enjoy a carefree summer holiday.

The last article is another one in the series on sectional title ownership.

Until next month!

Kind regards,
Daleen and Carina van der Linde.

Get your financial and legal ducks in a row before you sell

One of the documents that must be lodged at the deed's office to transfer a property from a seller to a buyer is the clearance certificate. This is obtained from  the Council. This is proof that no money is owed to  the Council for rates and services.  Although the seller is only responsible for payment of these up to date of transfer,  the Council requires an upfront payment for a few months - any overpaid amounts are refunded to the seller after transfer. (It usually takes months and a lot of effort to get them to refund you, but they do - eventually!)  Be proactive and avoid excessive clearance figures which may leave you out of pocket.

Take a thorough look at your municipal account or accounts, if you get more than one. Are you being billed for everything? If you are a full title owner, you should be billed for property rates, refuse removal, sewerage, electricity (unless you have a prepaid meter), and water. If you are a sectional title owner, the Council should charge you for property rates and refuse removal. (Electricity, water and sewerage form part of the levy  account.)  Often one is under the impression that one's municipal account is up to date, but one of the above items has never been charged on the account. When the clearance figures are then issued, they are much higher than expected.

Also, make sure that you are billed for actual consumption for water and electricity, based on readings. If they did not or could not do readings and billed you for estimates, they often have to send someone to do actual readings - which can take weeks, and may lead to a hefty clearance figure!

Any of the above issues, as well as any other disputes with the Council about the account, must preferably be resolved before the first buyer set foot on you property.

Ensure that you have approved building plans available. One can get a copy of the approved building plans from the Council (6th floor, Civic Centre, across the road from the Civic Theatre). You may have bought the property as is, only to  discover now that an outbuilding or extension was never approved by the Council. Chances are good that the bank who is granting the buyer's bond, will ask for copies of approved building plans. If you do not have this available, it may cause an unexpected delay of transfer. If you know, or become aware of an "illegal" section, have an as-built plan approved.  It may even be necessary to remove restrictive conditions in the title deed, or to apply for relaxation of building lines before you can submit the as-built plans for approval.  Give us a call if you discover that you need to address this - we can refer you to professionals who will be able to assist.

Notify your bondholder of your intention to sell and ask  if there will be any penalty payable if your bond is cancelled within the next few months. Ask them what you can do  to avoid paying  a penalty. You may have to postpone marketing for a few months.

Is your income tax up to date? This is a question you should also ask the agent you appoint to market the property. If any of the parties in the sale - the seller, the purchaser or the estate agent - owe SARS any money, it may be a problem to get the transfer duty receipt from SARS. They may insist on payment of any outstanding taxes before it is issued.

If you own a unit in a sectional title complex, ask the managing agent or trustees for a copy of the most recent financials.  It is shocking that financials are often not available. Now is the time to kick up a row and to get them to finalise the financials and to have it audited. Not only  is the potential buyer likely to ask for it before he makes the buying decision - the bank may also not grant the bond if the financials are not available.

Sectional title owners should also make sure that their levy accounts are up to date, and should there be a dispute about any charges, resolve the matter  as soon as possible. Any special levies being raised  at this stage, or for a period after transfer to cover expenses incurred before transfer, will still be for your account. Get clarity about this if in doubt.

Although not essential, it is not a bad idea to organise the electrical compliance certificate before marketing starts. Not only will the agent be able to vouch for the electrical installation, but the COC is also  a document which must be available before the transferring attorney can lodge. Often the bond registration attorney will require this before guarantees are issued.

If you entered into a contract with the security company  - or any other service provider such as  a solar heating company  - in exchange for installation of the goods, it is essential to take a look at the agreement with them. Will you be able to tell the buyer that the alarm system or solar geyser is a fixture, or will they have to take over the monthly payment if they want to keep the goods? If you disclose this beforehand, it is highly unlikely to cause a problem.

Not essential, but perhaps a good idea, is to arrange  a professional home inspection. You will then be in a position to make the necessary repairs, or to disclose problems to the buyer. Remember that the  voetstoots clause does not mean that you may hide problems from the buyer of which you should be aware.

Once you know that none of these matters will cause a delay with regards to the bond grant or transfer, it is time to put out the fresh flowers and fill  your home with the smell of fresh coffee - you are ready for your buyer!


Getting a bond approved made easy

Work on getting your credit record in order!

Get rid of as much debt as possible, and make sure that all payments are made in full on or before the due date. Tenants should keep in mind that their rental payments may also influence their credit rating - pay in full and pay on time!  Contact TransUnion ITC or Experian to obtain a free annual credit report - check their webpages. Those who have defaulted should contact their creditors and seek to make payment arrangements over an agreed period of time.

Play your cards right to get the best possible credit score.

No one other than the mathematicians who work for the credit  bureaus knows exactly how a credit score is determined. That is because this is their intellectual property.  We do, however, know some of the factors that drive the determination of this score, like judgements and payment profiles. According to Chris Harrison of SA Homeloans lesser known factors influencing  credit scores are:

Even spread of credit:
A bureau prefers a normal spread of credit, so, for example, 1 car loan, 1 mortgage loan, 1 credit card and 1 store card is far more preferable to 1 car loan, 3 credit cards and 3 personal loans. The former represents a sensible approach to credit and will get rewarded by the bureau.

Extent of credit used:
If, for example, you have a credit card with a limit of R20 000,  but an outstanding balance of R2 000, this is preferable to someone who has a limit of R20 000 and an outstanding balance of R18 000. If you do not utilise the maximum credit  you stand a better chance to recover if something goes wrong.

Types of credit:
A mortgage loan scores better than a store card. Firstly a mortgage loan is asset backed and secondly it is a long-term financing decision that is seen as a normal event. The presence of a store card with a large balance could indicate a cash-flow problem.

Budget, budget, budget!

Put some money aside every month towards a deposit - 100% bonds are still scarce. The banks will like the idea that you were in a position to save some money towards a deposit. Remember that the banks’ lending criteria have become far stricter. Banks look at income and expenditure and, generally speaking, will only grant finance of between 30% to 40% on the remaining income after deductions. So cut on the expenditure now! Reduce unnecessary spending and think twice before opening new accounts. Or get a second regular income that reflects on at least 3 months' bank statements.

Make sure that your tax matters are in order.

If you owe the Receiver money, or did not submit income tax returns, it will cause a problem when the transfer duty receipt has to be issued. It does not help if you get a bond, but the sale cannot be registered because of your negligence with your taxes.

Get all the paper work ready before submitting an offer.

If you work  for a salary, you will need to provide bank statements for 3 to 6 months, as well as salary slips for the same period. Make sure that your salary is paid into your bank account every month, and that all other regular income reflects in the account too. If you are self-employed, ensure that up-to-date financials are available. 


Subdivision - an option?

The following practical matters need to be assessed when you consider subdivision:

  • Is your stand large enough? The general norm for densification in Johannesburg is 10 homes per hectare, or a minimum stand size of 1000m²,  with allowed diversions from this norm specified for each area. In Linden, the minimum stand size is 700m² - this includes the panhandle access, which is often necessary. The position of your house on the property may prevent you to achieve the minimum size requirement.
  • Will you be able to provide panhandle access of at least 4m wide to the subdivided portion? Previously 3.5m was allowed, but now 4m is the minimum requirement.  If it means that an outbuilding will have to be demolished, the cost of demolition and replacing the demolished accommodation must also be taken into consideration.
  • Will you be able to provide a connection to the municipal sewer system?  If the slope allows you to connect to the main sewer line in the street in front of your property, you will be able to allow the sewer line to cross the front part of your own property. But if the back section is the lower part of your property, it may be necessary to ask a neighbour if he will allow the sewer line to cross his property. In most instances, there are no standard servitudes for this purpose registered on properties in Linden, with the result that your neighbour is not legally obliged to allow such a connection to the municipal sewer line. Some sewer lines run in the middle of blocks - between your property and the neighbour,  and this then solves the problem of an uncooperative neighbour. If a sewer connection is not possible, you are wasting time and money by trying to subdivide.

The process of subdivision  takes about 8  to 12 months.  Firstly this involves a town planner, who assesses the possibility of subdivision, prepares the application and submits it to Council on your behalf. It is a legal requirement that a notice be put up in front of the property and that the neighbours be notified of the application in writing.  Any person can object to the proposed subdivision. Most objections are raised by neighbours who fear that the erection of a double-storey home on the neighbouring property will impact on their privacy. If objections are raised, the matter will be heard by the Town Planning Committee. It is unlikely that a subdivision will be refused if it is applied for in terms of  the Council's guidelines for densification, but an objection may lead to certain restrictive conditions, such as a larger than usual building line.

After the Council has approved the subdivision, a surveyor needs to mark the  boundaries of the property and create the official subdivision diagram which has to be submitted to the Surveyor General's office for approval.  Once the approved diagram is available, and all the other  subdivision requirements such as the installation of the new sewer connection and  payment of services contributions to the Council, have been met, a Regulation 38 clearance can be issued and transfer to the buyer affected.

Financial layout for the complete procedure  will be approximately R60 000 to R80 000 - the big variable being the cost of the sewer installation. At the moment, stands in the Linden area sell for R600 - R800 per m². The proceeds of the sale can amount to a nice figure to settle the bond, do some renovations or take that dream trip. Best of all - you have a smaller stand to maintain, pay less on rates and taxes and the value of your existing home is unlikely to be much lower than before subdivision.

If you consider subdivision and would like more information, contact Eduard on



Secure your property while you enjoy the sun and sea!

"Burglary is a crime of opportunity where entry is gained due to the carelessness of homeowners. "

I don't think the above quote is absolutely true, but it is true that there are many things the average homeowner can do to make his home less of a target. 

Now is the time to get ready to enjoy a carefree break.  Attend to the following in the weeks before you leave:

  • Have your alarm system checked and repaired if necessary. If an alarm goes off every now and then, nobody may pay attention when it is actually a problem. Test the radio connection to your service provider. Also, check the back-up battery of your alarm system - it is no use if a power failure of a few hours renders it useless.
  • Take a walk around and through your property with a close friend or neighbour who is not too familiar with your house. Start outside and ask yourself  "How would I best break in?" The purpose of not doing it alone is  that your friend may spot things you may overlook. Address any weak spots identified. This may include cutting back on plants and hedges that provide hiding space for burglars,  and illuminating all major entrances. Make sure that all security lights are working. Any kind of sliding glass door is a favourite target. Guard against the door being lifted up and out by installing a safety lock into the door's upper track.
  • Get into the habit of closing the garage door all the time. If you tend to leave the door open all the time now, criminals will be quick to pick up your absence if the door suddenly remains closed.
  • Install timer switches on lights and even the TV. Imitate your routine to create a natural looking sequence: set timers to switch on the lights in the living area as well as the TV around sunset, and to switch it off around bedtime, when the lights in the bedrooms should be switched on for a while.
  • Get a house sitter, or ask a neighbour or trusted friend to pop by regularly while you are away. Some activity - like a car parked in the driveway, and people coming and going - will confuse a criminal who is on the lookout for signs that you are away. Invite neighbours without a pool who are staying at home, to cool off in your pool on hot summer days!
  • Make sure that someone knows and understands your alarm system. Leave contact details with them, as well as spare keys. Spare keys should not be hidden on the premises! This person - be it your house-sitter of friend - must know who to contact  and what to do if there is an incident.
  • Arrange someone to take care of your dogs while you are away. Some pet lovers will find it difficult to do, but if you can leave the dogs at home, it is a great added security measure. Not because they are  vicious; they need not even be seen, but they have to be heard. A dog with a menacing bark will scare away a lot of would-be burglars, not only because they don't know what kind of dog you have and what risk it would be to them if they try tried to break in, but more likely because a noisy dog will create a disturbance and get attention - the last thing a burglar wants!
  • Check your insurance and make sure that you are adequately insured. Prepare a proper record of all your valuables - a video recording is ideal.
  • Stop newspaper deliveries for the period you are going to be away.

Just before you leave:

  • Tell your neighbours that you are going away.
  • Inform your security company of your absence, and provide them with contact details of the person who is going to keep an eye on your property.
  • Store valuables in a safe, if possible. Firearms should in any case be securely locked away.
  • Make sure that  ladders or tools which may assist an intruder are all stored away.
  • Unplug electrical appliances as far as possible and switch off geysers.
  • Switch on the answering machine, or turn down the volume of the phone. You do not want  a phone that is ringing incessantly to reveal your absence. And do not leave a message on the answering machine which states that you are away on leave!
  • Check that all doors and windows are securely closed. Close those windows on the second floor too, and lock the door between the garage and the house.
  • Switch on the alarm - you should do this even if your house is going to be unattended for 5 minutes!

Criminals will look for signs that the house is unoccupied.  To avoid tell-tale signs, ask  the house sitter or friend to:

  • Collect your mail and junk mail regularly.
  • Water plants and mow the lawn.  An unkept garden will tip off criminals.
  • Open and close curtains and blinds from time to time - and not the same ones every day. Nothing gives your absence away like a house of which all curtains and blinds remain closed for weeks on end.
  • Switch on some lights from time to time if you do not have timer switches on lights and the TV.
  • Put out the rubbish bin for collection. Keep a few black bags with non-smelly refuse ready so that the bin is not empty.

With this all done, nothing should stop you from forgetting about all your cares when you point the nose of your car in the direction of your favourite holiday spot!



Whose staircase is this?

Sectional title is a form of ownership where a number of people jointly own the piece of land on which buildings are built, while each one of those people individually owns a flat or townhouse in that buildings.

A section is that part of the sectional title scheme which an individual owner owns - the space between the four walls, including windows, doors, ceilings and floors. This could refer to the inside of the unit, but also to an enclosed garage, balcony, staff room or storeroom.

Common property is the whole area of a sectional title scheme that does not form part of any section - including the "outer skin" of the building - the exterior of the walls, the roof, stairs and corridors, parking area and pool.

An exclusive use area is an area of the common property, such as a garden, which is set aside for the sole use of the owner of a certain section of the scheme. Exclusive use areas can be registered at the deed's office in terms of the sectional plan, or be allocated in terms of the management rules of the scheme.

The owner of a section is responsible for repairs and maintenance inside the unit, unless the damage is caused by something which is covered in terms of the building insurance, like ceilings or carpets damaged by a burst geyser.  The outer part of a window should be treated as common property, and the inner part as part of the section.  Repairs to and maintenance of the common property is the responsibility  of the body corporate. This is paid for from the levy fund, to which all owners contribute. An owner is also responsible to keep his exclusive use area in a good condition.

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