Property 24/10 - 121

Overdraft facility for body corporate
Propell, South Africa’s leading levy funding and collections company has launched a new Overdraft Facility Product to Bodies Corporate.

This follows the successful launch of Propell’s Arrears Funding Product, which has been very well received by the market.

“This product has been developed as a safeguard for Homeowners' Associations and Bodies Corporate to cover any future costs they have not accounted for or are unaware of,” says Johann le Roux, executive director of Propell.

Le Roux says its a product that one can sign up for and possibly never use, but if the need suddenly arises for funds, one is able to draw on them at a moment’s notice.

“Many schemes find themselves in situations where ‘out of the ordinary’ events can leave the scheme in a cash flow crunch.”

He says this could be anything from a larger than usual legal bill, an excessive municipal bill due to a leaking water pipe or even the uncomfortable transition period between the financial year end and the AGM date, where budgets are formally approved.

Selling and pricing your property
In today’s competitive real estate market, price still remains a driving factor for homeowners to sell their property in the shortest possible time. 

However, the biggest question is determining what that correct price is, as it depends on a large number of aspects that influence the perceived value of a property, says Adrian Goslett, CEO of RE/MAX of Southern Africa

According to Goslett, the importance of correctly pricing a home cannot be overemphasised. This is because in the current buyer’s market, a property that is priced at the correct market value will appeal to a much broader number of potential buyers. 

He says if two properties in the same area, offering the same features are compared by a buyer, price will become the only factor that will separate each property and influence their decision-making process.  

When it comes to the property market, time is of the essence and the longer a property is on the market, the less likely the seller is to get their asking price, he says.

Sectional title: Who can be a trustee?
A common mistake some people make is thinking that trustees in sectional title schemes have to be owners in that scheme. 

This is according to Michael Bauer, general manager of property management company IHFM. The reality is that anyone who is legally nominated and elected can be a trustee – it can be a registered owner, a relative or spouse of an owner or a tenant – as long as the majority of the trustees in the scheme are owners or spouses of owners, there is a valid board of trustees.  

The trustees are elected by the owners at the Annual General Meeting and according to Prescribed Management Rule 13, a trustee only ceases to hold this position if : 

  • he resigns,
  • he becomes of unsound mind,
  • his estate becomes insolvent or he is sequestrated,
  • he is convicted of an offence which involved dishonesty,
  • by a voting at a general meeting of the body corporate he is removed from his office.  (The intention to vote on this removal has to be specified in the notice calling the meeting.)
  • he is disqualified from being appointed or acting as a director of a company (in terms of section 218 or 219 of the Companies Act). 


Free Market's take on land reform
The Free Market Foundation’s proposals for land reform in South Africa make sense, according to the Rawson Property Group chairman, Bill Rawson.

Rawson says the acrimonious debate on land reform issues in South Africa and the frequent calls from left wing organisations for immediate hand overs with little or no compensation have done a great deal to undermine international investment confidence in the country.

He explains that on his recent overseas trips, among the first questions that he is always asked have been those relating to nationalisation and land reform proposals. 

These have very definitely given a negative impression of the direction in which South Africa is now moving, he says.

He notes that in recent talks, he has had the big advantage of being able to refer to a publication by Leon Louw, executive director of the Free Market Foundation.

Levy payments in sectional title homes
An important issue in sectional title schemes that managing agents and trustees need to keep in mind is when the levies are due, says expert.

Michael Bauer, general manager of the property management company IHFM, explains that Section 37 (2) in the Sectional Title Act says that the levy contributions are due and payable on the passing of a resolution by the trustees of the body corporate. 

The usual process is that the levy budget is approved at the AGM with or without amendments, but within 14 days after that resolution must be passed once the trustees have worked out the levies for each unit.

This includes how the levy is payable, for example, monthly, quarterly, annually, what interest rate will be charged if the payments are late and what compound interest will be added and then, of course, when the payments are due.

Tips on buying a home with a partner
While property pricing and market conditions now favour buyers, many are still struggling to meet the lending criteria of financial institutions.

In light of this, many buyers are choosing to partner with a friend or family member to purchase property together, says Adrian Goslett, chief executive officer of RE/MAX of Southern Africa.

In today’s property market, co-ownership has become an especially attractive option as the shared costs make it a much more affordable venture.

Although some banks no longer offer joint cheque or savings accounts, Goslett says that due to the vast number of buyers who are choosing to co-own with another party, many lenders do offer joint home loan accounts or mortgage packages that cater specifically for this situation.

“There are definitely advantages to buying property with a partner, such as the greater prospect of finance being approved as well as the possibility of obtaining a bond for a higher amount.”

Finding home buying opportunities
With price correction following the boom period and low interest rates last seen over 39 years ago, buyers now have many investment opportunities.

Adrian Goslett, chief executive officer of RE/MAX of Southern Africa, says property buyers should still be patient, selective and focus on quality.

He says it may be tempting for buyers to jump at every opportunity that comes their way, however, it is important that they do not rush into any decision, but rather choose the properties that will provide them with the highest return on their investment.

Goslett cautions buyers not to assume that a property is a bargain simply because we are currently in a buyers’ market.

“Even distressed properties are listed at current market value, reminding consumers that property purchases should always be treated as a long-term investment.”

Whenever possible, property buyers should learn as much as they can about the environment they are trading in, consult various experts and make use of professional, reputable and knowledgeable estate agents to assist them in the sales process.

Fences, walls and neighbours
From time to time bordering walls and fences will need to be replaced or sometimes a new owner moves in and may wish to change the fence or wall.  

The right approach from day one would make for better neighbour relations, says Lanice Steward, managing director of Anne Porter Knight Frank. 

A case summarised in the Smith Tabata Buchanan Boyes newsletter recently mentions a case where this sort of situation landed up in court and would never have gotten to the stage of going to trial and, even further, appeal, if the two parties had reduced their agreement to writing. 

The case (Joubert v Groenewald) is one that happens from time to time with neighbours, where fences need repairing. A dispute arose regarding whether there was an agreement that both owners would share the costs equally. In this situation, Joubert attended to the replacement of a fence bordering his and Groenewald’s farms and he alleged that there was an agreement between them to share the costs and that Groenewald had said to go ahead. 

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