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6 June 2013

Co-ownership & buying property jointly
One or more people purchasing property together or jointly with others, is becoming more and more prevalent. This is mainly because it is increasingly difficult for young individuals to raise the purchase price and the costs required to buy a property. Accordingly, many decide to pool their assets in order to take their first step up the property ladder. 

What is co-ownership?
Co-ownership is when one or more people jointly own the same property. In essence, it is when they legally share ownership without dividing the property into physical portions for their exclusive use. It is thus commonly referred to as co-ownership in undivided shares. Think of two people jointly owning a motor vehicle: they do not stipulate that one person is the exclusive owner of the engine and the front seats, and the other person, the exclusive owner of the rear seats together with the boot. 

It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70% and the other 30% of the single property. The different shares can be recorded and registered in the title deeds by the Deeds Office.  

If ownership is given to one or more purchasers, without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares. 
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Can tenant renege on renewal of lease?
A Property24 reader asks:
I have a tenant who signed a lease for a year and the contract stated that if she wished to stay in the property for a further year this could be negotiated. This all took place, however, after almost two months she has come back to say the email she sent confirming that she wants to extend her lease is not a legal document. I did give her a substantial discount on the original lease as she said they would be doing some improvements on the property. I have also contributed towards these improvements and have all her emails in writing confirming that she would leave these items in the house. Please help!

Yusuf Boda, legal manager at Legal & Tax, advises:

In terms of contract law, in order for there to be a valid and binding agreement there must be an offer and an acceptance.  Also vital to any contract is the intention of the parties, and a written contract must reflect the true intention of the parties.
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Tech reviews of mobile property apps
Mobile apps have taken the world by storm. Whether you are planning your wedding, moving home or searching for property, there is an app designed to make your life simpler.  Tech Report on eNCA recently reviewed apps for home buyers and tested out some of the best features available that make searching for your new home more convenient. In an increasingly competitive buying market, a home buyer simply cannot afford to wait for a weekly paper to search for property. Not only is this a time-consuming process, but with property alerts notifying buyers as soon as a new property matching the desired criteria comes onto the market, being quick off the mark is essential.

Property portal apps allow buyers to browse from anywhere, selecting property based on area, price, number of bedrooms, as well as additional home features. The added advantage that is offered by using an app rather than a newspaper or even searching online at home, is that you can take all the necessary information with you on the road. With these apps you are able to get going on your house viewing immediately, and by making use of the GPS functionality within the app, you can be in your desired area and the app will display properties for sale or rent within close proximity.
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Up your chances of getting a home loan
Affordability problems when it comes to qualifying for a mortgage bond are often the reason that finance is declined, but sometimes there are just small mitigating factors that stand in the way at that time.  This is according to Michael Bauer, general manager of bond origination company, IHFS, who says it sometimes happens that the applicant is waiting for an increase in salary and it did not come through when expected. 

He says while the applicant is waiting for the few months to pass until his income increases, he can then get his financial affairs in order. “Applicants also have the option of being placed as tenants, with the option to buy the property.” 

The basic thing to remember when sorting out your financial track record and credit rating, is to be sure that there are no outstanding bills that might have been listed as a non-payment by checking with ITC, and everyone gets one free credit check per year. 

Retail accounts, Bauer says, are another big issue. They are usually unnecessary and can cause major budget imbalances, purely by the account holder buying many small items on credit which then add up to quite a large sum of money. 
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Conversion of share block schemes
With effect from 1 January 2013, transfer duty is no longer payable in respect of a transaction contemplated in Item 8 of Schedule 1 to the Share Blocks Control Act, No 59 of 1980, whereby a right to or interest in the use of immovable property conferred by virtue of the ownership of a share in a share block company is converted to ownership of the immovable property concerned.  Hugh Jackson, director, for real estate at Cliffe Dekker Hofmeyr explains that the amendment of section 9(19) of the Transfer Duty Act, No 40 of 1949 is contained in section 1 of the Taxation Laws Amendment Act, No 22 of 2102.

Jackson says the exemption from payment of transfer duty in such circumstances was previously restricted to a natural person and only applied if the initial acquisition of the share was subject to duty in terms of the Transfer Duty Act. 

“The exemption now applies in respect of any such transaction concluded on or after 1 January this year irrespective of whether the holder of the share is a natural or juristic person, and whether or not the transaction relating to the initial acquisition of the share was subject to payment of transfer duty at that time.”
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Tax claims where family live rent-free
A Property24 reader asks:
What would the tax implications be regarding a bonded property which I have allowed my mother-in-law to live in, rent-free, effectively incurring a loss every month? Would I be able to claim all the tax deductible expenses mentioned in your article on how investment property is taxed?

Johan Swart, tax manager at Legal & Tax, advises:

The short answer – SARS would not allow any losses made in respect of the property.

Firstly SARS would probably apply section 23(b) of the Income Tax Act. Seeing as no rent is being received, no trade is being conducted, therefore no expenses will be allowed as deduction. Any transaction with a family member will be scrutinised by SARS, as it is not an “arms-length” or normal business transaction.
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No easy road for property franchisees
The Rawson Property Group is establishing new sales, rental, commercial and auction franchises at a rate of approximately one per week.  Louis Taljaard, franchise sales manager for the Rawson Property Group and Chic Berkhout, the group’s franchise expansion manager for the northern half of South Africa, say this possibly indicates that at no stage in South Africa’s history has a career in property been as attractive to the general public as it is now.

Taljaard says it is good news and it is relevant that surveys have shown the majority of estate agents have high levels of job satisfaction. This is not only due to the fact that the career can be financially rewarding but also because helping clients to achieve improved lifestyles is a satisfying process - which has the advantage of giving the client a steadily appreciating asset for which he will become increasingly grateful as time moves on, he says.

“The big challenge today is to conform to the regulatory legislation." This requires that a franchisee must have his NQF5 qualification – he can't simply walk in and take over as many entrepreneurs would like to do. Taljaard says this will be especially valid from next year.
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Consumer body investigates timeshare
The National Consumer Commission is investigating leisure companies offering timeshare after receiving hundreds of complaints over the past two years, The Times newspaper reported on Tuesday.  Prudence Moilwa, the commission's head of enforcement and investigations, said there had been so many complaints about holiday contracts in the timeshare industry that it had been decided to launch a large-scale investigation.

In 2011, it had received 781 complaints and last year the commission handled 596 complaints, which included travel and budget-holiday clubs.

Moilwa declined to name which timeshare companies were under investigation.

Complaints included customers not being able to cancel their contracts which they could no longer afford, and unavailability of accommodation, often due to overbooking.
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Can seller backtrack after accepting?
A Property24 reader asks:

My offer on a property was accepted but then I was informed that someone else had made an offer that the owner is seriously considering. What are my rights? 

Francois Venter, Director at Jawitz Properties advises:

You are getting gazumped, and unfortunately, it’s perfectly within the law. Perhaps your offer was tied to a suspensive condition like selling your home in order to buy. It is also possible the second offer is higher than yours, or the buyer has no home to be sold. If the seller has included a ‘right to continue marketing’ annexure in the offer you signed and he accepted, it is perfectly legal to accept the second offer. 

However, the owner also has a responsibility to give you notice before accepting the second offer.  In most instances, this will be 72 hours (actual hours, not business day hours) giving you the chance to remove the suspensive conditions from your offer. If you are unable to do so, the seller can accept the second offer, and your offer will become null and void.
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8 need-to-knows on tenant rights
Choosing to rent a home instead of buying comes with some risks if you don’t understand your rights and obligations as a tenant.  This is according to Michael Bauer, general manager of property management company IHFM, who says the Rental Housing Act is the basis of all written lease agreements but the agreement between the tenant and the landlord is also important. 

There is a basic list to stick to as a tenant, to avoid miscommunication and possible disputes with the landlord. This is to: 

1. Get the lease agreement in writing

Although verbal agreements are binding, getting everything in writing is preferable as there can be no chance of miscommunication and it is then easier to prove if either party has not stuck to the agreement. “You are within your rights to ask for a written agreement and the landlord must provide one if you ask for this,” says Bauer. 
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