“It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away.” (English novelist Anthony Trollope)
With interest and home loan rates at their lowest since 2022, it’s no surprise that South Africa’s property market confidence level at the end of 2025 was sitting at a record high of 87%. That will have been boosted by the country’s positive economic outlook following Budget 2026, and by Budget 2026’s 50% increase in the primary residence exclusion (which should stimulate sales by reducing the CGT payable by sellers).
If you are a buyer about to put in an offer on a house, remember to budget for the various costs you’ll face over and above the purchase price. In all the excitement of your purchase (particularly if it’s your first house!) it’s easy to underbudget. But you really don’t want to risk any unpleasant financial surprises. If you do breach a term of the sale agreement by not paying something on time, you could even face cancellation of the sale and a damages claim.
Only with a proper budget and cash flow forecast can you be confident both that you really can afford to offer for the house you’ve fallen in love with, and that you’ll be able to pay everything you need to, when you need to.
Have a look at the list we’ve put together below and use it to prepare your own detailed cash flow forecast. Ignore anything that doesn’t apply to you and bear in mind that every buyer’s situation will be unique, so this is no more than a generalised checklist.
Costs payable before transfer
- The deposit: Most sale agreements – often titled as an “Offer to Purchase” (OTP) until it’s accepted by the seller – require you to pay a deposit, usually 5% or 10% of the purchase price.
- Bond/home loan initiation fee: This fee normally incorporates a valuation fee and is added to your loan, but check with whichever bank you use.
- Homeowner’s insurance policy and life cover policy (if required by the bank): Be sure to provide for payment of the first premiums before bond registration.
- Balance of the purchase price: If the deposit you paid and the bond you took out don’t cover the full price, you’ll need to pay the balance before transfer.
- Transfer duty: Unless VAT applies to the sale, transfer duty is payable. This is a government tax payable via SARS before transfer. It applies to all property sales over R1,210,000, on a sliding scale linked to the sale price. This can be a substantial cost!
- Transfer fees: The transferring attorney (conveyancer) charges fees based on a sliding scale linked to the sale price. Added to the account will be charges for FICA verification, deeds searches, postages and petties, other disbursements and the like.
- Bond registration fees: If you take out a bond, the bank appoints an attorney to register it, with the fees calculated on the size of the loan and including the attorney’s fees, FICA charges and a prescribed Deeds Office registration fee.
- Deeds Office fees: These are government charges for both transfer and bond registration.
- Rates clearance: Your local municipality will require advance pro-rata payment of municipal rates before it issues the necessary clearance certificate.
- Levy clearance: Similarly, if you are buying into a complex, the sectional title’s body corporate or Homeowners’ Association (HOA) will require pro-rata levy payments before issuing a clearance certificate.
- Occupational interest (if applicable): If you take occupation before transfer, you need to budget for whatever occupational interest is provided for in the sale agreement.
- Utility deposits: If required by your local municipality when opening up water and electricity accounts.
- Moving costs: Don’t overlook these when budgeting!
Some of these costs are easily overlooked, but they can add up alarmingly. So, plan for them all before you put in your offer to purchase.
Ongoing monthly costs after transfer
Include bond instalments, municipal rates and taxes, levy payments (if you buy in a sectional title or HOA), utility charges, insurance premiums for the property and the contents, and so on.
One-off costs after transfer
If you plan to do alterations or repairs, redecoration, garden revamps, furniture replacement or anything similar, add these costs to your budgeting so you don’t suddenly run out of money and have to postpone them. For long-term planning, set aside a budget for ongoing home maintenance.
As always, we are here to assist, so let us know if you have any questions, need any further information, or would like help in creating a cash-flow projection specific to your purchase.
Director Delinquency Declarations: Managing Your Risk
“Knowledge is power.” (Sir Francis Bacon)
Being a company director carries not only rewards but also risks that you need to manage carefully.
In particular, you are held by the Companies Act to a high standard of conduct. Breaching any of your many duties and responsibilities can have significant negative consequences. Among these is being declared a “delinquent director”. That’s no small thing…
It’s a serious long term career risk
Serious categories of misconduct expose directors to being declared delinquent and thus disqualified from holding any directorship or senior management position for a period ranging from 7 years to a lifetime.
A wide range of less serious categories of misconduct can lead to “probation” orders, with possible consequences including disqualification for up to 5 years, supervision by a mentor, remedial education, community service, and payment of compensation.
The other side of the coin, of course, is that the delinquency risk isn’t just a warning to directors. It also gives victims of director misconduct a powerful remedy.
Let’s illustrate in the context of two recent cases.
Seven years in the wilderness (and a R78m damages bill) for a delinquent MD
Two groups of granite producing companies, one responsible for quarrying and the other for production and export, operated inter-dependently for decades. All went well until the Managing Director of the quarrying group of companies placed them into business rescue. Unsurprisingly, this had a devastating effect on both groups, with mining rights in jeopardy, credit lines and bank facilities lost, production levels affected, discussions with SARS over penalties terminated, and millions wasted both in the business rescue process and in remedying the aftermath.
The companies in the surviving group of companies sued the MD of the quarrying group with allegations that those companies should not have been placed into business rescue at all, and for various other acts of mismanagement and misconduct.
The MD’s defences to these claims found no favour with the Court, which declared him delinquent and ordered him to pay R78m in damages. He had, the Court held, unnecessarily placed companies into business rescue without engaging shareholders and despite available shareholder support and the absence of true financial distress.He had acted with gross negligence, caused substantial financial damage, breached his fiduciary duties (i.e. used his powers improperly and not in the best interests of the companies), and neglected his supervisory duties relating to quarry operations.
Another director, another disqualification
Now let’s move to a struggle between two shareholder factions for control of an investment company with energy sector interests. Exasperated, one faction went to the High Court to challenge the validity of a board resolution and share issue which affected their control of the company. There was substantial value at stake here, possibly (reading between the lines of the judgment) many millions of US dollars.
The dispute eventually found its way to the SCA (Supreme Court of Appeal), where, on application by the opposing shareholder faction, a director (and sometime Executive Chairperson) of the investment company was declared delinquent for seven years.
He had, found the Court, acted with gross negligence, wilful misconduct and breach of trust in performing his functions. Here’s one example among many: even after his removal as Chairperson, he purported to call a shareholder meeting “By order of the Chairman.” That alone, said the Court, was “a blithe disrespect for corporate governance and [a breach of] his fiduciary duty as a director.”
If you’re a director, here’s how to manage your risk
Your best defence against hostile stakeholders will always be to remain fully aware of all your many fiduciary duties, and to scrupulously comply with them. Knowledge is power!
Act early to address any financial issues that could lead to accusations of reckless trading or of causing financial harm to the company. Ensure that proper financial and operational controls and procedures are in place. At all times act strictly in the best interests of your company with transparency and good faith, proactively exercise proper oversight of all operations, and – perhaps most importantly – ask us for advice if in any doubt!
Considering Using Sequestration to Recover Levies? Think Again
“The only man who sticks closer to you in adversity than a friend is a creditor.” (Evan Esar)
Body corporates face a familiar problem. Owners fall into arrears. Levies go unpaid. Legal costs mount. The temptation is to reach for the most forceful remedy available.
Sequestration may seem like that remedy. If an owner will not pay, why not have them declared insolvent?
A recent Gauteng High Court judgment offers a clear warning. A body corporate sought the sequestration of a unit owner for levy arrears exceeding R1.4 million. With such a substantial debt, the body corporate’s frustration was understandable. But the application failed.
The court held that the body corporate had not met the statutory requirements under the Insolvency Act. In particular, it had not shown that sequestration would be to the advantage of creditors. The court also noted that the body corporate had other execution remedies available and emphasised that sequestration proceedings are not intended to function as a debt-collection mechanism.
What is sequestration?
Sequestration is a court-ordered insolvency process under the Insolvency Act. It applies where a debtor can no longer meet their financial obligations. The court places the debtor’s estate under the control of a trustee, who sells the debtor’s assets and distributes the proceeds among creditors.
The test for sequestration
To succeed, the applicant must establish three things:
- The debtor has committed an act of insolvency, or is actually insolvent.
- There is reason to believe sequestration will be to the advantage of creditors.
- The applicant has a liquidated claim against the debtor.
The second requirement is where many applications come unstuck.
Where sequestration applications unravel
Sequestration is not designed to punish debtors or pressure them into payment. It’s a collective remedy, intended to ensure the orderly distribution of a debtor’s assets among all creditors.
The applicant must prove that there’s a good chance that creditors will receive a meaningful dividend. If the debtor has no realisable assets, or if the costs of sequestration would consume whatever value exists, the application will fail. The court will not grant sequestration simply because a debt is owed.
Sequestration is not leverage
In practice, some creditors use sequestration applications as a form of pressure. Their reasoning is simple: the threat of insolvency may prompt the debtor to settle. But our courts have made clear that this is not appropriate.
In this case, the court emphasised that insolvency proceedings are not a private debt-collection mechanism. They carry serious consequences: loss of control over assets, restrictions on legal capacity, and reputational harm. These consequences are justified only where the statutory purpose is served.
Where the true aim is to recover a debt rather than administer an insolvent estate, the court will refuse the application.
What body corporates should consider
Before pursuing sequestration, a body corporate should ask practical questions.
- Does the owner have realisable assets? If the only asset is the unit itself, and it is bonded, there may be little left after the bondholder is paid.
- Would the costs of sequestration exceed the likely recovery?
- Has the body corporate exhausted more conventional remedies? A judgment, followed by execution against property, may be more direct and effective.
If the answers suggest that sequestration will not benefit creditors, the application is unlikely to succeed.
Other options
Body corporates have several remedies for levy recovery: obtaining a judgment and executing against the property, applying for an attachment of emoluments, or seeking a sale in execution.
Each has its own requirements, but they are all designed for debt recovery (unlike sequestration).
Where this leaves body corporates
Sequestration is a remedy of last resort, not a debt-collection tool. The Insolvency Act sets strict requirements, and courts will hold applicants to them. If you are unsure which remedy is appropriate, we can help.
Beyond Your Will: Leaving a Legacy
“Legacy is not leaving something for people. It’s leaving something in people.” (Peter Strople, former Dell Computer Corporation director)
Leave a personal legacy, not just a financial one
We all know how important it is to our loved ones that we leave behind a valid will rooted in a comprehensive estate plan, but our legacy should go a lot further than just distributing assets.
Sharing with your heirs your values, your family history, and the wisdom your years have granted you can be one of the most important gifts you leave, often outlasting tangible bequests by generations. On a practical level, it will also help your heirs value, preserve and enjoy the wealth and the heritage that you leave them.
Start with a family mission statement
This sounds very corporate and complicated, but in fact it’s really simple and entirely personal. A family mission statement is foundational in legacy planning and will help everyone focus on the values and priorities important to them. As Stephen Covey (author of The 7 Habits of Highly Effective People) puts it “A family mission statement is a combined, unified expression from all family members of what your family is all about – what it is you really want to do and be – and the principles you choose to govern your family life.”
Of course, the mission statement must be collaborative, and everyone, even young children, can share in putting it together. You never know who will come up with a bright idea or two!
There’s a useful downloadable worksheet here if you need help getting started – personalise it to your family’s situation, and adapt it as you go along.
Share and discuss your plans
Openly sharing and discussing your estate planning and the provisions of your will with your nearest and dearest isn’t just an opportunity to prepare everyone for the financial implications of your death. It’s also a great way to involve everyone in your planning and to ask for their input.
Discuss the financial structures you have already put in place, or are planning for the future. Talk about your vision for the wealth you will leave behind and why you have made the bequests you have. Sharing all that, and relating it all to your family mission statement, will significantly reduce the risk of unhappiness and disappointment when the time comes for your last wishes to be implemented.
Craft your “legacy letter”
This isn’t your will (although it’s sometimes misleadingly referred to as an “ethical will”).
What’s the difference? Your formal will, which must comply with all legal formalities to be valid, sets out who is to inherit what from you. In contrast, your legacy letter is an informal and personal letter from you to your loved ones, sharing with them whatever you think will be of value to them in their lives. It needn’t be just one letter – many people choose to write individual letters to each member of their family.
There’s a lot to be said for sharing all these things informally with your family while you are still around, but don’t stop at verbal discussions. Writing them down and leaving them in letter form will give your heirs a permanent point of reference.
What should you include in your legacy letter? Really, anything that you think will help your loved ones live richer and more fulfilling lives. Perhaps share some of your family history, stories of your own life and the lessons it has taught you, your values, and your hopes and dreams for each of them. What challenges have you faced and how did you overcome them? What was really important to you at each life stage? What are your most cherished memories? What stories and advice from your parents and grandparents really helped you? What principles have inspired your financial successes?
The Confucian advice to “Study the past if you would define the future” rings as true today as it did two and a half thousand years ago.
A practical five-point plan brings it all together
- Your estate plan underpins everything, so review and update it regularly.
- Take legal and tax advice on forming a family trust. Depending on your circumstances and objectives, it could be the perfect way of guaranteeing that the financial part of your legacy is protected and managed wisely for generations to come.
As to the more personal side of your legacy, the trust’s name itself will preserve your family name no matter how many of your descendants may in due course acquire new surnames. - Most importantly, leave behind a valid and updated will (“Last Will and Testament”) that clearly reflects your wishes and complies with all legal formalities.
- To accompany your will, put together a “Notes for my executor and loved ones” file with all the information and documents that your executors and heirs will need when the time comes.
- Last but certainly not least, be sure to include your legacy letter. This ensures that you aren’t just leaving your family all your worldly wealth, but also a real legacy – your own personal message for the future, direct from you to them.
Legal Speak Made Easy
“Director”
It’s tempting to think that a “director” must be formally appointed to that position, but the Companies Act provides a much wider definition. “‘Director’ means a member of the board of a company … or an alternate director of a company and includes any person occupying the position of a director or alternate director, by whatever name designated.”
When it comes to deciding who is and isn’t a “director”, it’s the substance of the person’s position that counts, not their designation. “A rose by any other name,” as Shakespeare might put it, although not necessarily smelling quite as sweet. Consider, for example, a delinquent director trying to hide their (unlawful) high-level participation in a company by adopting an inoffensive title like “Liaison Officer” or “Floor Supervisor”. It just won’t wash.
Author: Gerings, Attorneys, Notaries, Conveyancers