Real Estate Investor Magazine South Africa November 2019 | Page 11

PROPERTY ADVICE
Taking over a mortgage
Q
Can I take over a property
mortgage bond - like taking over
a car payment?
MEYER DE WAAL
Director at MDW Inc.
A T
here are three (perhaps a few more) answers to
such a question:
A home-owner facing financial strain may call on
a 3rd party to take over the bond repayments
with the idea that once the bond is paid up, the
3rd party can take ownership of the property. The
3rd party needs to consider the risks associated
by settling the debt of the home owner without
the registration of ownership on your name. The
Alienation of Land Act of 1968 does however
provide for an instalment sale agreement that
can be entered into to safeguard the rights of the
property owner and the 3rd party who is paying
off the mortgage. A Rent2buy agreement can also
be considered.
The second, one can apply for a substitution
of debtor in terms of section 57 of the Deeds
Registration Act of 1937.
The third solution will be to do a direct sale
and apply for a home loan and “take over the
property and home loan” and actual transfer in
the deeds office.
Penalty fee for tenants
Q
CILNA STEYN
Director at SSLR Inc.
Considering that eviction process is
daunting and lengthy. Will a penalty
fee for late rental payment be an
option to consider? In implementing
this, will you still be within law.
A L
ate or non-payment of rent is always one
of the biggest fears for ‘buy to let’ investors,
unfortunately this is as much part of rentals as
disputes regarding deposits. The mere fact that a
tenant does not comply with the terms of the lease
agreement is already an indication that the landlord
may run into some problems, which will potentially
lead to an eviction. The Unfair Regulations to the Rental Housing Act is
very clear on this particular topic, Regulation 3 provides:
“(c) A lease agreement must not include any provision
which:
(i) imposes a penalty for late payment of rent (whether
or not the penalty takes the form of administrative charge
or any other form other than interest.)”
If a tenant does not pay their rent on time they are in
breach of the lease agreement. However, they are not in
illegal occupation yet. The landlord’s only truly effective
remedy is to place the tenant on terms requiring the
tenant to remedy their breach by paying the outstanding
amount in full within the allocated time. Should the
tenant not remedy the breach by making payment in full,
the landlord may then cancel the lease agreement. This
will render the tenant in illegal occupation and eviction
proceedings can commence. It is very clear that no penalty whatsoever may be
charged on late payments. Please keep in mind that this
is the position even if the parties agree to a penalty in the
lease agreement, parties are never allowed to contract
out of legislation. The landlord is entitled to charge
interest at a rate of 2% per month. A landlord should
never delay action; they must act on a breach as soon as
it occurs. An eviction usually takes around 6 to 8 weeks to
be finalised (should the eviction be unopposed). Delay in
commencement will only escalate the potential damages
to be suffered by the landlord.
SA Real Estate Investor Magazine NOVEMBER/DECEMBER 2019
9