Real Estate Investor Magazine South Africa December / Jan 2016 | Page 35

As the date of transfer drew near, Angile sold some
furniture, packed up the rest and made arrangements
to move it. After numerous phone calls the week
before the removal truck was due to arrive, she learnt
that the transfer would most likely be delayed, as the
municipality was behind with the issuing of rates
clearance certificates. Now homeless, with all her
belongings packed away in boxes, Angile had no way
of knowing when she would be able to move into her
new home.
Interestingly, Angile is a financial consultant with
two degrees behind her name. One would have thought
she would understand the process of buying a property,
applying for a home loan and registering ownership
better than most.
Unfortunately, the reality is that most property
buyers do not understand the process, because they do
more research when buying a mobile phone or a car
than when buying a property, which will most likely be
their biggest investment and the biggest debt they will
incur in their lifetime.

and taxes are paid. In reality, however, the municipality
may have overlooked outstanding rates and taxes bills
that are older than two years. As outstanding rates
and taxes does not prescribe, but remain a debt to
the property (not the previous property owner), new
property owners may well be held responsible for old
rates and taxes that precedes their ownership.
When investing in a sectional title scheme,
information about the financial situation of the body
corporate must be obtained before the sale agreement
is signed. In Angile’s case, for example, the estate agent
verbally confirmed that the financials affairs of the body
corporate are sound. However, despite various requests
to obtain a copy of the financials, Angile had still not
received these four months after signature of the sale
agreement and a month after date of transfer. Little
did Angile know that trustees of a body corporate
can decide to raise additional or special levies. Within
one month after she became the owner of her new
apartment, she was faced with a special levy to repair
and replace the outside windows of the entire complex.

Do your research
The one page information marketing brochure provided
by an estate agent is not comprehensive research.
Buyers should insist on a comparative market analysis
(CMA) and should also do their own research on the
Internet to ensure the property is not overpriced.
Before signing an Offer to Purchase, buyers should
first consult with their attorneys. The attorneys should
at least to go through the sale agreement before it
is signed. We have seen countless sale agreements
with open or blank spaces, no provision for vacant
occupation on transfer or a specific date of occupation.
This could result in buyers ending up with tenants with
a long-term lease occupying their new home.
Buyers should also ask their attorney to scrutinize
the title deeds for onerous conditions and investigate
the diagram of the property prepared by the Surveyor
General’s office as these documents may contain
servitudes or rights in favour of third parties over
the property. The attorneys should also verify on the
sectional title register whether there is a right to
develop further and the status quo of the exclusive
use areas. Often mistakes are made regarding how
the exclusive use areas are owned, as some exclusive
use areas are formally demarcated and a title deed
issued for such right while other exclusive use areas are
allocated according to the rules of the body corporate,
which may have changed.

Protect yourself
Had Angile known better and had she been under less
pressure, she would have made her offer subject to the
condition that a reputable company perform a house
inspection. Although she was in a hurry to submit
her offer, she could have made the offer subject to the
condition that she had the opportunity to obtain a
house inspection report within 7 days after signature
of the agreement, and that she is satisfied with the
outcome of the report.
In one recent case, a buyer was able to renegotiate
and reduce the purchase price by R50,000 after the
house inspection report revealed some serious defects
in the property. The R4,000 spent to obtain the house
inspection report was one of the better investments the
buyer had made.

Investigate potential liabilities
Buyers often assume that when the local municipality
issues a rates clearance certificate it means that all rates
www.reimag.co.za

Get the right finance
Remember that a bank will evaluate your credit profile
and debt exposure when evaluating the risk of granting
a home loan. The bigger the risk, the higher the interest
rate. Before applying for a home loan, obtain a copy
of your credit profile, and first repair mistakes and
negative information such as late or non- payments. A
1% higher interest rate can increase your repayments
by more than 15% and a 2% higher interest rate will
cost you up to 32%.

RESOURCES
Oosthuizen & Co Meyer de Waalt
DEC/JAN 2016 SA Real Estate Investor

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