“This sale agreement is no more! It has ceased to be! This is an EX-sale!” (With apologies to Monty Python) A “bond clause” – standard in most property sale agreements – typically provides that the whole sale depends on the buyer obtaining a mortgage bond by a specified date. If the deadline comes and goes without a bond being granted, the sale lapses and the buyer is entitled to get their deposit back. Most agreements also provide that the bond clause is there for the sole benefit of the buyer, who is thus entitled to waive it, i.e. to tell the seller “I no longer need a bond and I’ll pay the purchase price in cash so the sale can proceed.” There’s both risk and reward in that The rewards…
You should always take as much security for your claims as you possibly can before advancing credit or lending money to a debtor. That’s because if your debtor fails and is “liquidated” (if a corporate) or “sequestrated” (if an individual), without security you will have only a concurrent claim in the estate. And with a concurrent claim, you will be lucky to get back more than a few cents in the Rand, because you will rank right at the bottom of the ladder after both secured creditors and preferent creditors (employees, SARS etc). So, first prize is always to hold security for your claim Having a “secured claim” greatly increases your chances of being paid out a decent amount (hopefully your claim in full), because the proceeds of the asset/s…
Selling or buying a house is a time of excitement and the culmination of a lot of time and effort on your part, so as soon as the ink dries on your signed sale agreement you will want the transfer process to get underway, and you will want it to keep going without a hitch. The best way to achieve that of course is to be aware of what can go wrong and to proactively take steps to avoid any problems. Be particularly aware of a common “sinker of sales” in the form of the bond clause. If the buyer fails to get a mortgage bond by due date you have no sale. We’ll have a look at what the bond clause is, why it’s important to both buyer and…
In January 2019 new amendments to Regulations for the replacement of lost title deeds (and similar documents like mortgage bonds and notarial bonds – see below) were published. They were very onerous and slated to come into effect at short notice, but after criticism they were suspended – until now. Revised amendments have been published, to come into effect on 1 January 2020. Firstly, what is a “Title Deed”? A title deed (deed of transfer) is legal proof of ownership of a property. It also contains a lot of other important information relating to the property, such as a full description, its size, names of previous owners, bonds registered over it, conditions and legal restrictions relating to it and so on. Why should you care if yours is lost? Without…
“Men keep agreements when it is to the advantage of neither to break them” (Solon, Athenian lawgiver c. 638 BC - 559 BC) Here’s the story of yet another High Court battle over a disputed property sale agreement. A fight over how to interpret the “bond clause” again highlighted how vital it is to clearly express the intentions of both the seller and the buyer in every word of the agreement. A seller gets cold feet (the facts) The seller sold a property to the buyer for R1,62m, payable on registration of transfer. The bond clause made the sale conditional on the buyer, within 7 days of signature of the sale agreement, “being able to obtain” a loan for the full R1,62m on the security of a mortgage bond. Payment…
One of the most important decisions you must make before you marry is what “marital regime” (“matrimonial property system”) you want to apply to your marriage. The different marital regimes Marry in community of property: This is the default in South Africa if you don’t sign an antenuptial contract (“ANC”) before you marry. All your assets and liabilities (with a few specific exceptions) are pooled in one joint estate. It’s probably not the best choice for most couples - you don’t for example want to be lumbered with a poor credit record (and a bank rejecting your bond application for example) or even with a sequestration application because of a spouse’s debts. But as the old saying goes, “it depends…” Marry out of community of property with accrual: The most…
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…
With our economy in trouble and the ongoing pandemic and lockdown damaging more and more businesses by the day, sales by distressed companies and traders are likely to rocket. If you are a prospective buyer here, be aware of one particular danger lurking in the wings for you. Follow this rule to protect yourself - before you buy any business, its goodwill or assets forming part of the business, take legal advice as to whether or not the sale must first be advertised in terms of section 34 the Insolvency Act. You stand to lose both the business and the purchase price if section 34 requires the sale to be advertised and it isn’t. Your risk is that if an unadvertised sale is challenged by a liquidator/trustee (or by a…
Is your bank entitled to clean out your current account’s credit balance – with neither notice to you nor your permission – to settle a separate debt you owe it? Banks have always argued that they are allowed to do exactly that in terms of our common law principle of “set-off” – and that having that ability helps us all in the end by giving them more security when lending us money. As we discuss in more detail below, the National Credit Regulator has however approached the High Court for a determination on whether or not the National Credit Act has changed all that. A recent High Court decision in National Credit Regulator v Standard Bank of South Africa Limited (44415/16) [2019] ZAGPJHC 182 has settled the knotty question of…
Having to write off bad debt is one thing – having to pay in even more money for the privilege is just adding insult to injury. Yet that is exactly the danger you face if one of your debtors is sequestrated or liquidated (we start off by explaining the different terminology) and you prove your claim without considering the “danger of contribution”. What is that? How does it arise? What if you are a petitioning creditor or hold security for your claim? How can you protect yourself from having to contribute? Read on for the answers… The background You are owed money by a debtor, whose insolvent estate is sequestrated (in the case of an individual or trust) or liquidated (in the case of a company or other corporate). The Master…
