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Both sellers and buyers (of anything – houses, cars, you name it) need to understand how the CPA (Consumer Protection Act) has impacted on the very common “voetstoots” (“as is”) clause. Firstly, what’s the difference between “patent” and “latent” defects? Before we get into the meat of this question, let’s understand two important terms – “Patent defects” are those that can be easily identified on inspecting the goods – like a broken door, damaged tiles, cracked mirror or windscreen, and so on. “Latent defects” on the other hand are hidden or non-obvious. They “would not have been visible or discoverable upon inspection by the ordinary purchaser”. Think for example of seasonal roof leaks, broken underground drains, leaking geysers and the like. Exactly what is a voetstoots clause? A general rule in our law is that when you sell something, you give the buyer an “implied warranty” against defects. That can be disastrous for the seller as it allows the buyer, on finding a defect, to claim a price reduction (or sometimes cancellation of the whole sale). Hence the very common voetstoots or “as is” clause. In effect as seller you are telling the buyer “you agree to take the goods as they are, the risk of defects is on your shoulders, and I give no guarantees”. Note however that a seller cannot always hide behind such a clause – if he/she is aware of a latent defect and deliberately conceals it with the intention to defraud the buyer, all voetstoots protection falls away. And then along came the CPA The Consumer Protection Act has been a game changer when it comes to consumer rights. In a nutshell, as a buyer you are entitled to receive goods that are of good quality, “reasonably suitable” for the purposes for which they are generally intended, defect-free, durable and safe. If anything you buy fails, or turns out to be defective or unsafe – You can return the goods to the supplier – without penalty, and at the supplier’s risk and expense – within 6 months of delivery, and You can require the supplier to give you a full refund, or to replace the goods, or to repair them. The choice is yours; the supplier cannot dictate your options to you. But does the CPA apply to all sales?Here’s the rub for buyers – the CPA applies only when the seller is selling “in the ordinary course of business”, so generally “private sales” will fall outside its ambit. In other words, if you buy a movable like a car from a trader or dealer, the CPA applies and overrides the voetstoots clause. But if you buy from a private seller, the voetstoots clause applies and you have no CPA protection. What about property sales?Developers, builders, investors and the like are clearly bound by the CPA. But for private sellers the position is less clear. Although it seems very likely that one-off private sales of residential property don’t fall under the CPA, there is some suggestion that we won’t be 100% sure on that until either our courts rule definitively on it, or the CPA is amended to provide clarity. On the “better safe than sorry” principle, don’t take any chances – cover yourself as below. Practical advice for sellersCover yourself by disclosing any defects you know of to the buyer, and record any such disclosure/s in a written and signed annexure to the deed of sale. A buyer cannot complain if you have informed him/her of the condition of the goods and they have been bought on that basis. Then if you are selling in the “ordinary course” of your business, be very aware that the CPA applies to you. Understand its very strict requirements (what is said above is of necessity only a brief overview) and the risks of not complying. If on the other hand you are a “private seller”, make sure you are covered by a properly-drawn voetstoots clause. On the off-chance its validity is challenged, you can avoid later disputes with a “belt-and-braces” approach – have the goods checked out by an independent expert (like a home inspection service when selling a house) and have your lawyer incorporate that into the sale agreement. Practical advice for buyers Don’t risk having to fight in court over whether or not the CPA applies to your purchase, and over whether or not any voestoots clause is valid. Be warned that depriving a private seller of the protection of a voetstoots clause is never going to be easy, particularly since you will need to prove that the seller intended to defraud you by concealing a defect. Rather be sure of the condition of the goods before you buy. If the seller hasn’t provided you with an expert report as above, commission one yourself. Note: The Consumer Protection Act (Act 68 of 2008), Regulations, Complaint Forms etc are downloadable from the National Consumer Commission’s website

WHAT IS A SUSPENSIVE CONDITION? A suspensive condition or “condition precedent” suspends (puts on hold) the operation of the contract for a period of time, subject to the occurrence of a future event, and only if and when the condition has been fulfilled, will an enforceable contract exist. An example is the ‘Mortgage Bond’ clause whereby the contract is subject to the purchaser raising a loan from a bank for a specific amount before or on a certain date against security of a first mortgage bond to be passed over the property. Some suspensive conditions are inserted for the sole benefit of one party, and can be waived by that party, meaning that he gives up the benefit of that condition, although it remains a suspensive condition until it is waived. For example, the condition may stipulate that the contract is subject to the purchaser selling his own house within a certain time period. If the purchaser decides, after signing the contract, that he can buy the new property without having to sell his existing house, he can waive the condition, providing that he notifies the seller within the specified time period. If the conditions are not fulfilled or waived within the specified time period, the contract falls away completely, and the seller is free to sell the property to someone else, but pending the fulfilment of the condition/s, neither party can withdraw from the contract and the seller may not sell the property to anyone else. However, the seller could include an “escape’ clause, which could allow him to do so under certain circumstances. WHAT IS A RESOLUTIVE CONDITION? In the case where a resolutive condition is stipulated in a contract, the contract is immediately binding after the parties thereto have signed it, and will remain binding subject to the future event stipulated in the condition being fulfilled. An example is where it is stipulated that the contract will terminate if a national road is built next to the property sold, within a certain period. The event referred to in the condition must be accurately described and a time period must be specified for fulfilment (or non-fulfilment) of the condition. Resolutive conditions are rare in the property industry as very few, if any, contracts come into existence and resolves when a specific act or omission occurs, therefore we will take cognisance of such type of condition but for purposes of this discussion will not ponder on it any further. SUSPENSIVE CONDITIONS AND THE EXTENTION THEREOF Deeds of sale are in many instances subject to suspensive conditions such as a mortgage bond to be obtained or an existing property of a purchaser that needs to be sold. The character of a suspensive condition in an agreement of sale is that such condition suspends the effectiveness of the agreement until such time as the suspensive condition is complied with timeously, properly and in accordance with the wording in the contract.  It is of the utmost importance that when parties note that the time limits provided for in the agreement for the fulfilment of the suspensive condition is running out, they should extend such time by way of the required addendum PRIOR to the lapsing of the suspensive condition. The further effect of not extending a time period in advance and prior to its lapsing is that the agreement will simply not come into effect due to the non-fulfilment of the suspensive condition within the period prescribed. What many people do not understand, is that in such event you do not even have to place a party in breach of contract as no contract had come into effect due to such non-compliance. In the case of Fair Oaks Investment vs Olivier it was confirmed that an agreement of which the period provided for the fulfilment of the suspensive condition had lapsed, cannot be revived or amended by means of an addendum as the fact remains that the non-fulfilment of the suspensive condition within the provided time rendered the contract void from the beginning and should it be the parties’ intention to reinstate the agreement a reinstatement agreement with the character of a BRAND NEW agreement should be entered into between the parties, bearing in mind that any attempt to revive the old agreement will not have any legal effect. An addendum with regards to an existing agreement will always serve a purpose in amending the existing agreement, however it is a pre-requisite that such addendum has to relate to an agreement which is still valid at the time and date of the addendum and will serve no purpose regarding a deed of sale which had already lapsed due to the non-fulfilment of the suspensive conditions contained therein. In the case of Neethling vs Klopper and Others, as far back as 1967, the Court of Appeal had found that an agreement that had been cancelled (as opposed to the agreement lapsing in the aforementioned case) could be revived when both parties waived their rights created by the cancellation of the agreement. In the light of the aforementioned it is important that buyers and sellers keep track of the time limits provided for the fulfilment of suspensive conditions in agreements that they enter into and that any amendments to extend such time limits should be done in writing by way of a proper addendum prior to such time limits expiring. Should the purchaser or seller choose to ignore these time limits, it will have the effect that the contract will lapse and be of no effect due to the non-fulfilment of the required suspensive conditions within the provided time.  Although these suspensive conditions are normally conditions imposed for the benefit of the purchaser (the need to obtain a mortgage loan and the need to sell an existing property) and which conditions the purchaser can waive at his peril, the waiving of the suspensive condition equally has to be done prior to the lapsing of the time limit in which it had to be

Question When is transfer duty payable on a transaction and when will VAT be payable? Answer It is important to remember that VAT will only be levied by the Receiver on immovable property if the property can be divined as a “Taxable concern”. Therefore a private residential property will seldom be seen as a “Taxable Concern” unless it generates taxable income in the form of rental income or it conducts a business for example a guesthouse. It is important to remember that only one form of tax will be applicable when immovable property is sold and transferred, either VAT or Transfer Duties.  Both will never be payable simultaneously, Although certain exceptions do exist the following guidelines are provided to determine whether VAT is applicable.  The question to be answered, to determine whether VAT is applicable is whether the seller is a registered VAT vendor or not.  If he is registered for VAT, VAT will be payable by the seller to the Receiver of Revenue and not Transfer Duties The seller will then be liable to the Receiver of Revenue for 15% of the selling price payable to the Receiver with lodgement of his next VAT return.  Normally the purchase price includes VAT in the absence of any other arrangement, and if the seller demands VAT to be paid by the purchaser over and above the purchase price it will clearly have to be specified in the purchase agreement. In the event where the purchaser and the seller are both registered VAT vendors and the property is sold as a running concern VAT will be applicable but at a zero rating, meaning that no VAT will be payable. In the event where the seller is not a registered VAT vendor, but the purchaser is, Transfer Duties will be payable by the purchaser and not VAT and the purchaser will be entitled to reclaim the Transfer Duties from the Receiver in his capacity as a VAT vendor. Transfer Duties Although the liability for payment of VAT vests with the seller the liability for payment of Transfer Duties vests with the purchaser and if neither the seller nor the purchaser is registered for VAT or only the purchaser is registered for VAT, Transfer Duties will always be payable and not VAT. The scale at which Transfer Duties are levied in the event of the purchaser being a natural person is as follows: Property Value Transfer duty calculation R0 to R900 000 0% R900 001 to R1 250 000 3% of property value above R750 000 R1 250 001 to R1 750 000 R10 500 + 6% of property value above R1 250 000 R1 750 001 to R2 250 000 R40 500 + 8% of property value above R1 750 000 R2 250 000 to R10 000 000 R80 500 + 11% of property value above R2 250 000 R10 000 000 + R933 000 + 13% of property value above R10 000 000 In terms of Section 9 of the Transfer Duties Act (Act 40 of 1949) there are certain exemptions for payment of Transfer Duties which need to be taken into account.

Section 35A to the Income Tax Act No. 58 of 1962 was introduced by The Revenue Laws Amendment Act No. 32 of 2004 and with effect from 1 September 2007, a purchaser of immovable property (which has been disposed of for R2 million or more) is obliged to withhold the amounts set out below from the purchase price payable, if the seller of the property is not resident in South Africa. The practical difficulty for SARS has been the collection of the CGT payable by non-residents selling immovable property in South Africa. This withholding amount is to provide for the payment of Capital Gains Tax to SARS. It is therefore necessary to have a quick look at the basics of CGT to understand the withholding amounts better. Capital Gains Tax Capital Gains Tax (CGT) legislation is contained in the Eighth Schedule to the Income Tax Act, 1962. It was introduced by the Taxation Laws Amendment Act, 2001 that was promulgated on 20 June 2001. Since then, it has been substantially amended. Capital Gains Tax is triggered by the disposal of an asset. As a rule, an asset is acquired or disposed of whenever there is a change in ownership of an asset. A person’s taxable capital gain is included in taxable income for the year of assessment under section 26A of the Income Tax Act No.58 of 1962 (Income Tax Act). 2.         Who is liable to pay CGT? The types of persons that are potentially liable for CGT include individuals, companies, close corporations, trusts and the various taxable funds of an insurer. Both residents and non-residents are subject to CGT. A resident as defined in the Income Tax Act is: Any natural person who is ordinarily resident in South Africa; or Any natural person who complies with the physical presence test; and Any person (other than a natural person) which is incorporated, established or formed in South Africa or which has its place of effective management in South Africa, but: Excludes any person who is deemed to be exclusively a resident of another country for purposes of the application of any agreement entered into between the government of South Africa and that other country for the avoidance of double taxation. A resident is liable for CGT on assets located both in and outside South Africa.        A non-resident is any person not normally residing in South Africa and falls outside the definition of a resident. A non-resident is liable for CGT on the following categories of assets: a.         Immovable property or any interest or right of whatever nature of the non- resident person to or in immovable property situated in South Africa. An interest in immovable property includes equity shares in a company, ownership or right to ownership in any other entity and a vested interest in the assets of a trust in which 80% or more of the market value of those equity shares, ownership or right to ownership or vested interest, as the case may be, at the time of disposal thereof is attributable directly or indirectly to immovable property in South Africa held otherwise than as trading stock; and in the case of a company or other entity, that person (whether alone or together with any connected person in relation to that person), directly or indirectly, holds at least 20% of the equity shares in that company or ownership or right to ownership of that other entity. b.         The assets of any permanent establishment of a non-resident in South Africa. A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on, for example, a branch, office, factory, workshop or mine. 3.         Will the sale of a primary home be subject to CGT? The first R1.5 million of gain or loss on disposal of a primary residence is exempted from CGT. This concession, known as the primary residence exclusion, means that most individuals will not be subject to CGT on the sale of their homes. If the primary residence is sold for a capital gain of R2 million, the first R1.5 million is excluded and the remaining R500 000 is subject to CGT. You are also entitled to disregard any capital gain if the proceeds (selling price of the house) do not exceed R2 million. There are two basic requirements which must be met before a home may be considered a primary residence it must be owned by a natural person (not a trust, company or close corporation); and the owner or spouse of the owner must ordinarily reside in the home as his or her main residence and must use the home mainly for domestic purposes. 4.         Rate of Withholding Tax Where a purchaser acquires immovable property from any person that is not a resident of South Africa, the Purchaser must withhold from the amount due as and when paid to the non-resident seller: 7.5% where the seller is a natural person; 10% where the seller is a company; and 15% where the seller is a trust. Section 35A does not apply: Where the total amount payable by the purchaser to the seller does not exceed R2 million, or In respect of any deposit paid to secure the disposal before the agreement is entered into. Any amount which would have been required to be withheld from the deposit must be recovered from the first following payments made by the purchaser. Where the value of the property exceeds R2 million, the withholding amount applies to the full purchase price without regard to the R2 million limit. In the event that the purchaser acquires immovable property from a non-resident natural person for amount or R3 million, he/she would be obliged to withhold and pay over to SARS an amount of R150 000. The rate of the withholding tax does not take account of the seller’s cost of the immovable property. The withholding tax is an advance of the tax ultimately payable by the non-resident seller when they submit

The rate of VAT for commercial property transactions will be the rate applicable on the date of registration of transfer of the property in the Deeds Registry or the date that any payment of the purchase price is made to the seller, whichever occurs first. If a deposit is paid and held in trust by the transferring attorney this payment will not trigger the time of supply as it is not regarded as payment of the purchase price at that point in time and under normal circumstances remains in trust until date of transfer. If the seller allows the purchaser to pay the purchase price over a period of time the output Tax and input Tax of the parties are calculated by multiplying the tax fraction at the original time of supply by the amount of each subsequent payment, as and when those payments are made. A practical example would be as follows :  A Vendor sells a commercial building and issues a tax invoice to the purchaser on 10 January 2018.  If the property will only be registered in the deeds registry after the 1st of April 2018 (the date on which the increased VAT of 15% will apply) and payment will be made by the purchaser’s bank or transferring attorney on the same date, then the time of supply will only be triggered at that later date or registration and VAT must be charged at a rate of 15%. The question which is validly asked is whether a rate specific rule will apply if I sign a contract to buy residential property before the rate of VAT increased but payment of the purchase price and registration will only take place or on the 1st of April 2018? The answer to the aforementioned would be that VAT will only be payable at a rate of 14% and not 15% as this rate specific rule overrides the rule as aforementioned and which applies to non-residential immovable  property. The rate specific rule applies only if : You have entered into a written agreement to buy the dwelling that is a residential property before 1 April 2018; Both the payment of the purchase price and the registration of the property in your name will only occur on or after 1 April 2018; The VAT inclusive purchase price was determined and stated in the agreement of sale. Residential property includes : An existing dwelling together with the land on which it is erected or any other real rights associated with that property; So-called plot and plan deals with a building package for a dwelling to be erected; The construction of a new dwelling by any vendor carrying on a construction business. WITHOLDING RENTAL In the case of Tudor Hotel Brasserie & Bar Pty Ltd vs Hencetrade 15 Pty Ltd the lessee was evicted from the leased premises by the lessor as a result of failure to make payment of the rental. The lessee admitted failing to pay rental but claimed that it had not been given vacant possession of the entire premises as a portion of the rental premises had still been used by the lessor for the storage of goods and based thereon it did not have unencumbered occupancy of the whole property and was entitled to withhold rental based on the legal principle of Reciprocity. The last mentioned principle operates where both parties to an agreement have an obligation to each other.  If one party has not yet performed its obligations, the other party may raise a defence that its obligation to perform has not yet arisen because of the party’s lack of performance. The lessee in this instance argued that the lessor was not entitled to cancel the lease and evict the lessee as it was not required to make payment of the rental until vacant possession had been provided to it. Ordinarily if a lessee were deprived of beneficial occupation, it would be entitled to a remission of rental or damages proportional to its reduced use and enjoyment of the property. Unfortunately for the lessee there was a clause in the rental agreement which stated “all payments in terms of this lease shall be made on or before the 1st day of each month without demand, free of exchange, bank charges and without any deductions or set-off whatsoever.” The aforementioned clause in the rental agreement was the only contractual term that justified the lessor’s actions and had it not been in the rental agreement it would justify the lessee’s retention of at least a portion of the rental representing the part of the rental premises of which the lessee did not have beneficial occupation. A VALID CANCELLATION REQUIRES MORE THAN STATING THAT ANOTHER IS IN BREACH OF THE AGREEMENT In the case of Smith and Another vs Patsalosavis and Another. Mr and Mrs Smith (hereinafter referred to as “S”) were the owners of a main house with a cottage on the property.  Whilst they were staying in the main house they rented out the cottage to Mrs Patsalosavis (hereinafter referred to as “P”).  The rental was based on the understanding that P would effect improvements to the cottage and pay the monthly consumables and monthly tax in return for occupancy of the cottage.  The dispute however arose when the local authority was not satisfied that improvements effected by P to the cottage complied with the NHBRC standards and applicable zoning provisions.  This was further substantiated by two notices by the local authority delivered to S.  S then brought an application to Court asking for the eviction of P and included a statement that they have cancelled the agreement. The Court held that as long as the rental agreement subsisted between P & S, S could not evict P; It became evident that the two notices from the local authority did not contain any detail describing in which respects the building did not comply with the required standards and the allegation by S that the non-compliance related to the

Introduction Whether an estate agent is entitled to estate agents commission will be answered by referring to the agreement (commission agreement) between the principal and the estate agent.  The terms and conditions referring to estate agents commission can be stipulated in the initial mandate which specifies the services that have to be rendered by the estate agent prior to him being entitled to commission and under what circumstances his right to such commission and payment thereof falls away, for example that commission is only payable once the property has been transferred into the name of the purchaser and the seller has received the net proceeds of the sale. In accordance with the common law an estate agent is entitled to demand payment of commission from his principal provided : The estate agent had a mandate to conclude the transaction on behalf of his principal The estate agent has duly complied with all terms and conditions contained in the mandate The estate agent was the effective cause of the transaction A mandate to find a purchaser The mere fact that the owner indicated to the estate agent that he wanted to sell his property and provided certain general information regarding the property to the estate agent does not constitute a mandate to the estate agent to sell the property.  Although a mandate can be provided orally to an estate agent the clear presence of such a mandate by the seller to the estate agent whether orally or in writing is required and will have to be proven by an estate agent requiring the payment of commission (Michael vs Vermeulen and others 1971 (1) SA 442). If an estate agent claims commission based on an implied mandate it has been found by the Court that it should be clear, based on the evidence before it that there was consensus between the seller and the agent as to the terms and conditions of such a mandate (Bosch vs Flowerbox (Pty) Ltd 1971 (4) SA 640). The estate agent should further be vigilant as to the boundaries of the mandate and should not transgress such boundaries in exercising the mandate.  A mandate provided by the seller to the estate agent does for example not entitle the estate agent to conclude a contract, substitute parties or receive any monies on behalf of the seller (Bird vs Summerville and others 1961 (3) SA 194). Due Performance in terms of his mandate In order to prevent any ambiguity or disputes the terms and conditions of the mandate has to be very clear and should indicate the services required by the seller from the estate agent and which functions the estate agent has to fulfil to entitle him to the agreed upon estate agents commission. It is further important to remember that the mandate is an agreement between the seller and the estate agent and not any other prospective parties.  In the case of Phillips vs Aida Real Estate (Pty) Ltd 1975 (3) SA 198 it was established that an estate agent is not entitled to damages in the event where the offeror withdraws from an offer prior to the acceptance of such an offer by the seller, as it was never the intention of the offeror to contract with the estate agent and no contractual relationship existed between the offeror and the estate agent entitling him to such damages. In the event of the absence of a clear mandate and the reliance of the estate agent on an implied mandate the following has to be present and proven by the estate agent : Introduction of the Purchaser to the seller and the property, by the estate agent A proper first introduction of the property and the seller has to be done by the estate agent resulting in the conclusion that if it had not been for such an introduction by the estate agent the purchaser would not have known of the availability of the property or the seller’s willingness to sell.  To merely inform a prospective buyer that you as estate agent have a mandate to sell a property is no proper introduction (D.C Wylde & Co vs Sparg 1977 (2) SA 75). The purchaser was at signature of the agreement willing and able to purchase It has been found that the clear absence of a purchaser being willing and able to purchase during contracting resulted in a claim for estate agents commission being refused (Beckwith vs Foundation Investments Co 1961 (4) SA 510 (A)). A valid agreement of sale was concluded In the event of an estate agent merely identifying a purchaser it has been found not to be sufficient to claim estate agents commission and a valid agreement should at least have been concluded between such purchaser and the seller before the estate agent will be able to claim such commission (Brayshaw vs Schoeman 1960 (1) SA 625 (A)). That the introduction was the effective cause of the contract The only way in which an agent can succeed in proving that the finding and introduction of the purchaser was the effective cause of the sale is by evidence that the purchaser was willing and able to buy on the seller’s conditions and that the sale was bound to have gone through independently of any negotiations conducted by another agent (Eschini vs Jones 1929 CPD 18). Should an estate agent however introduce a purchaser to a seller and the purchaser chooses to negotiate further directly with the seller and obtain the property for a lesser price the estate agent has still been deemed to be the effective cause (Doyle vs Gibbon 1919 TPD 220). Where other factors have intervened causing the transaction to proceed and the initial introduction alone was not the effective cause a claim for estate agents commission has been denied or refused (Basil Elk Estates (Pty) Ltd vs Curzon 1990 (2) SA 1). It is further a requirement that the introduction of the estate agent has to be the cause of the

Although problems in practice are not only limited to the absence of building plans in the event of sectional title properties, but also in the event of full title properties, this problem has proven to be more extensive in the event where sectional titles are present. When a sectional title register is opened in the Deeds Office it is done based on sectional title plans indicating the boundaries of the unit itself.  Other than in the event of full title properties the unit itself is what is transferred and which forms the subject matter of the sale whereas the erven forms the subject of the sale in the event of a full title property. When owners of sectional title units decide to extend their unit by means of certain building additions, they effectively alter the boundaries of that sectional title unit and in many instances neglect to approve building plans via the local authority and amend the sectional title plans to reflect such new boundaries and additions. The practical problem is that the sectional title unit’s extent and boundaries according to the registered sectional title plan now differ from the physical structure which has been extended and is normally identified when the extent and sectional title plans are compared with the physical structure by the valuator of the Financial Institution. To rectify the aforementioned and delaying the registration of the transaction the registered owner needs to contract an architect to draft and submit amended building plans to the local authority, simultaneously with the aforementioned amended sectional title plans have to be drafted by a surveyor and lodged with the Surveyor General for approval. As the extension to the sectional title is done on common property belonging to the Body Corporate of the Sectional Title Scheme, the land on which this extension has been done needs to be acquired from the Body Corporate at an agreed upon price and the Body Corporate further has to consent to this extension in writing. Odendaal vs Ferraris (422/2007) [2008] ZASCA 85 Supreme Court of Appeal This case concerns an outbuilding for which no plans have been passed and a carport which contravened building regulations and re-affirms the commonly accepted understanding of latent defects and the voetstoots clause and the absence of statutory permissions necessary to render them authorized are defects to which the voetstoots clause applies. The Court held that the purchaser will have to be able to prove that the seller was aware or reasonably ought to have known of the absence of the plans or the contravention by default of which he will enjoy the protection provided under the voetstoots clause in the agreement.  In the light of the aforementioned it is therefore the responsibility of the buyer to employ a professional to thoroughly inspect the buildings or have the seller guarantee the buildings’ legal status. The problem with sectional titles however are that Financial Institutions normally require the amended sectional title plans before authorizing registration of the mortgage bond delaying registration of the transaction considerably.  Estate agents should therefore be vigilant when selling a sectional title property especially when the extent of the unit reflected on the Deeds Office search in their opinion differs considerably from the extent according the seller. CHANGE OF LAND USE RIGHTS A further requirement to the aforementioned was recently introduced in that the extension to a sectional title scheme is now classified as a change of LAND USE RIGHTS as described under the Spatial Land Use Management Act (SLUMA) and in terms of Section 28 (9) of the bylaws a certificate in terms of SLUMA has to be issued by the relevant Local Authority consenting to the amendment and extension of the Sectional Title Scheme.  All of the aforementioned unfortunately causes a delay in the transfer of sectional title units where these requirements have not been met and it is therefore imperative to start the process sooner than later to prevent unexpected delays and financial losses. 

A.  Compliance with Section 26 of the Estate Agents Act 112 of 1976 The valid holder of a fidelity fund certificate and insurance (Ronstan Investments (Pty) Ltd and No v Littlewood 2001 (3) SA555) B.  A mandate to find a purchaser (Michael v Vermeulen and No 1971 (1) SA 442) – the mere fact that the owner indicated that he wanted to sell his property and provided certain information to the agent, does not constitute a mandate. (Bosch v Flower Box (Pty) Ltd 1971 (4) SA 640) – an implied mandate can only be relied on if the court can establish that there was consensus between the seller and the agent. (Bird v Sumerville and No 1961 (3) SA 194) – a mandate does not entitle the agent to conclude a contract or substitute parties or to receive monies on his behalf. C.  Due performance of his mandate – (what due performance is, depends on the terms of the mandate) (Phillips v Aida Real Estate (Pty) Ltd (3) SA 198) – Payment of liquidated damages to the agent if offeror withdraws before acceptance –  no intention of offeror to contract with the agent. In the absence of a clear mandate it would mean : Introduction of the purchaser to the seller (D.C. Wylde & Co v Sparg 1977 (2) SA 75) to inform a prospective buyer that you have a  mandate is no introduction That the purchaser was, at signature of the agreement willing and able to purchase (Beckwith v Foundation Investments Co 1961 (4) SA 510 (a)) That a valid contract of sale was concluded (Brayshaw v Schoeman 1960 (1) SA 625 (A)) not only finding a purchaser That the introduction was the effective cause of the contract (Basil Elk Estates (Pty) Ltd v Curzon 1990 (2) SA I (T)) – depending on the time span between introduction and purchase – 9 months (Wynland Properties CC v Potgieter and No 1999 (4) SA 1265) – intervention by a third party and time span is important. (Knight Frank SA Ltd v Nach Investments (Pty) Ltd 1999 (3) SA 891 (W)) – effective cause although the purchaser was not introduced to the property by the agent. In one of the benchmark cases of which judgement was handed down in the High Court of South Africa Free State Division Bloemfontein being Warren Farms CC vs Andre Micro Ferreira and Another the Court had to decide as to whether a proper introduction based on a mandate was done by the relevant estate agent and whether such introduction can be viewed as the effective cause of the transaction being concluded even though such transaction had taken place after the expiry of the estate agent’s sole mandate. Warren Farms CC being a registered estate agent claimed the amount of R160 740-00 estate agents commission alleging that he (Mr Garth) was the effective cause of the sale of the farm Treur Fontein between Mr Ferreira and the Department of Rural Development and Land Reform. Mr Ferreira extended a sole mandate to the estate agent to market his farm to the Department and as a direct result of the introduction the aforesaid immovable property was purchased at a price of R2 350 000-00 exclusive of VAT.  According to the estate agent he performed in terms of his mandate and was the effective cause of such sale and was thus entitled to estate agents commission. Although Mr Ferreira admitted that the initial introduction of the property was done by the estate agent, he denied that the estate agent was the effective cause of the sale as he submitted that the estate agent’s sole mandate had expired after six months and prior to conclusion of the transaction. The estate agent prepared all documents for presentation and included such information on his website and such information was sent to prospective buyers as well as Mr Vincent Paul of the Department of Rural Development.  The estate agent took Mr Paul to the farm who stated that he was impressed with the farm and that he would discuss the acquisition of the farm with the Committee. After the aforementioned introduction the parties contracted with one another privately, excluding the estate agent and irrespective of numerous attempts the estate agent was ignored and registration of the property subsequently took place in the name of the Department. The Court found that the usual and customary terms of a mandate are :  that in the event of the estate agent introducing to his principal, the owner of the property, a purchaser for the property who is willing and able to purchase it and the transaction is successful and finalised, such as in this instance, the agent is the effective cause of the sale. The Court further found that the estate agent’s wisdom and business acumen brought the seller and the purchaser together and it was such an introduction that was the effective cause of the sale.  The Court was further satisfied that the estate agent established on a balance of probabilities that he introduced the Department to the farm and the Department which was the causative factor in the conclusion of the sale and ordered payment of the estate agents commission to the estate agent.