Funding those Bargains

August 1, 2015

REPORT

Call it Murphy’s Law, but good property deals often seem to come around at the least opportune moments when access to ready cash is restricted. Most investors remember well those times when they lost out on the ‘deal of a lifetime’ and unfortunately, it’s something that often leaves a bitter aftertaste.

Having the right sum of cash at the right time is key to any investor’s success. However, unlike the Richard Bransons of the world, there will be times when traditional methods of raising funds will be blocked and a different avenue will have to be pursued. This is particularly relevant when buying a property on auction.

The terms and conditions when buying a property on auction differ significantly from traditional property sales. It’s customary for auctioneers to demand at least 10 percent of the purchase price, as well as the auctioneer’s commission, at the fall of the hammer. Thereafter the usual terms are payment of the balance and all associated costs within 30 days.

In other words, you need to be able to lay your hands on cash – and quickly. Traditional sources of finance may well cost you the deal because of administrative hold ups and delays. This is where a bridging finance product such as that offered by Prevance Capital comes in to play.

“Those who are interested in buying homes on auction can set up a facility with Prevance Capital ahead of time,” says Christo Jonker, marketing manager of the group. “Like any regulated financial institution, we require some form of security for the funding, and this can take the form of a first mortgage on an existing property.

“Once this has been accomplished, the operator has the fire power to bid for a property at an auction, secure in the knowledge that they have the financial backing in place if theirs is the winning bid. This would give an investor a possible advantage over his competition in the bidding process.”

Jonker says that once the deal has been finalised, Prevance will then fund the deposit, the balance of the purchase price and other costs involved and will give the operator around six months to dispose of the property and repay the finance to Prevance.

Obviously interest will have to be paid on the credit facility, but this pales into insignificance when compared to the potential profits to be made on some auction properties.

Serial investors seldom work with one property at a time. These entrepreneurs are fully aware of how necessary it is to invest in multiple properties simultaneously in order to maximise profit. Even for those who have access to equity, gearing this with bridging finance will ensure much higher percentage returns on their investment.

The extended funding period of up to six months facilitates renovating and selling a property without undue pressure. Reselling an investment property for a market-related price via the traditional estate agent route takes time. This is exactly what bridging finance allows entrepreneurs to do – take the time to market their investment correctly in order to achieve the best selling price possible.

Selling Your House This Summer? Get Your Ducks in a Row With This Checklist

“In the summertime, when the weather is high, you can stretch right up and touch the sky.” (Mungo Jerry)

Summer’s here with its blue skies, happy holidaymakers from around the country and the world, and, as always, an upsurge in demand for houses. If you’re going to capitalise on this seasonal upswing, start planning your sales strategy now with our simple, practical Seller’s Checklist below.

Follow these 10 steps for a successful sale:

1. Ask yourself “What’s my goal and how will I get there?”

The first step is to outline your strategy, starting with your end goal. Of course, all sellers want to get the best price and to get paid out as quickly as possible, but brainstorm the specifics. What price do you actually want to achieve? Define your perfect buyers (a critical and much-overlooked step) and think about how you’ll find them. Which estate agent should you employ? And so on…

It pays to bring us in from the start. Not only can we help you find the right agent for the job, but we’ll also tell you what prices are being achieved in your area and share our thoughts on how to avoid the over-pricing trap – a common mistake which can taint a property for months, or even years.

We’ll also outline the whole sales and transfer process for you from a legal perspective, highlighting both the potential pitfalls to watch out for, and the many ways in which you can help make the whole process as smooth, quick and hassle-free as possible.

2. Give notice to your bondholder

If you have a home loan, remember that some banks will charge an early settlement penalty unless you give them 90 days’ written notice.

3. Prepare a cashflow projection

Get your finances ready to cover all your selling costs, including:

Compliance certificates and any repair work needed to get them issued. Bond cancellation fees (if you have a home loan).
Final municipal accounts (rates, refuse, sewerage, and water) and, if your property is in a sectional title scheme or Homeowners Association complex, outstanding levies. CGT: Plan for possible Capital Gains Tax on your profit (subject of course to exemption thresholds).
Estate agent’s commission is normally paid out by the conveyancer on transfer – but don’t lose sight of it when you’re dreaming about how to spend the proceeds!

4. Spruce up your property

Pretend you’re a house hunter seeing your property for the first time:

What’s its “kerb appeal”? How about its “front door appeal”? First impressions can make or break a sale, so ask yourself “what will potential buyers see when they first drive up to my property, park, and walk through the garden into my house?” Imagine being greeted by a neat, tidy, colourful garden with a sparkling pool, bright and airy rooms with homely wafts of fresh air and brewing coffee – get this bit right and you could seal the deal in the first few minutes of a viewing.

Declutter and tidy up, both inside and out, particularly on viewing and show days – the hassle is well worth it.
To give your property that all-important feeling of being well maintained, find and fix small issues like leaky taps, peeling paint, dark musty corners, scruffy gardens, murky swimming pools and the like. Deep clean if there’s any risk of doggy smells or stained carpeting spoiling that positive first impression.

And last but not least, we come to a deal breaker of note. Many a sale has been lost purely because of old, unwelcoming bathrooms or kitchens. Spruce them up now: repaint, retile or renovate completely, if necessary.

5. Start getting your paperwork together

To speed up the transfer process when you do sell, and in case potential buyers ask to see them before offering, make a start now on putting these basics together:

Your original title deed (or a copy from your bank if the original is held as security for a bond). If the original has been lost, we’ll be able to get an early start on obtaining a replacement for you.

Your ID (and your spouse’s, if you own the property jointly or are married in community of property).
Approved building plans and any compliance certificates you already have.
A recent municipal rates account showing you’re up to date.

6. Make sure your property is compliant

Find out what compliance certificates you will need early so you have time to fix any issues:

Electrical compliance certificate. Plumbing/water installation compliance certificate (required in Cape Town – check whether your local authority has any similar provision). Gas compliance certificate if you have a gas installation. Electric fence certificate (if applicable). Beetle clearance certificate where needed.

7. Complete the disclosure form

You’ll need to sign a mandatory disclosure form in which you must list all defects or issues you know about, such as damp, leaks, structural issues, boundary disputes, unapproved alterations and the like.

8. Don’t sign blind

Most importantly, when you do get an acceptable offer, don’t sign anything until we’ve checked it all out for you. The terms and conditions in the sale agreement (often titled “offer to purchase”) become binding as soon as you sign. There’s no going back and many a seller has regretted “signing blind”. Even “standard” clauses may come back to bite you because every sale’s different, and every seller has their own areas of risk.

9. Nominate the conveyancer

It’s your right as seller to choose the conveyancer, so don’t let anyone convince you otherwise.

10. Communication is key!

Remain in constant touch with your agent, with us, and with the buyer. Quick responses to requests for documents or signatures can save days or even weeks in the transfer timeline.

In closing…

Selling a property doesn’t have to be stressful. Work through this checklist step by step and keep us constantly in the loop to avoid delays, disputes, and unwelcome surprises.

Parental Leave: Out With the Old, in With the New

“Raising kids is part joy and part guerilla warfare.” – Ed Asner (actor with a great sense of humour!)

A game-changing judgment from our Constitutional Court sets out new rules for parental leave.

The Joy of Becoming Parents, and a Father’s Leave Dilemma

The birth of a couple’s first child presented them with both a bundle of joy and a practical dilemma.

Dad wanted to be the baby’s primary caregiver while his wife carried on running her two businesses, so he asked his employer for four months’ parental leave.

“Sorry,” said his boss, “the law only allows you ten days.”

In the end, he had to take six months’ unpaid leave – which came with some unhappy financial and career consequences.

Off to the High Court he went. That Court’s declaration of invalidity of the relevant provisions in the Basic Conditions of Employment Act (BCEA) and Unemployment Insurance Fund (UIF) Act has now been confirmed by the Constitutional Court – with some important modifications.

Let’s start with a quick look at how the current wording of the two Acts creates an inherent inequality between parents.

Out With the Old: Different Rules for Mums and Dads

In the far-off “bad old days”, many expectant mothers had no job security or entitlement to maternity leave.

That gradually changed for the better over many years, but even after a general entitlement to maternity leave was introduced, it was – as the name suggests – available to women only.

Then in 2020 came the brand-new and widely welcomed concept of “parental leave”, which brought fathers (and other non-birth parents) into the fold.

It was ground-breaking at the time but still not perfect. While biological birth mothers were entitled to maternity leave of at least four consecutive months, fathers (and other non-birth parents) got parental leave of only ten consecutive days.

Adoptive leave and commissioning (surrogacy) leave were ten weeks for one parent but only ten days for the other. The UIF Act inevitably mirrored these inequalities.

In With the New: Parity for Parents

The High Court found these discrepancies to be unconstitutional, and the Constitutional Court has now agreed.

It’s given Parliament 36 months to sort out the invalid provisions (new legislation is reportedly already in the pipeline), and in the interim the following changes apply:

1. One Parent Employed

Where only one parent is employed, or in the case of a single parent, that parent gets the full four consecutive months’ leave.

If the parent is an expectant mother, she can start her leave up to four weeks pre-birth (or earlier if medically certified). Otherwise, it starts on the day of birth.

2. Both Parents Employed

Where both parents are employed, they get a total of four months and ten days of parental leave – the sum of what used to be the mother’s four months and the father’s ten days.

This total can be shared between them as they agree, taking it:

Consecutively (one after the other), or
Concurrently (together), or
A mix of consecutive and concurrent.

However they split it, each must take their portion of leave in one single sequence of days.

If they can’t agree on the split, it must be as close as possible to 50/50.

Shared leave must be completed within the four-month period.

3. Compulsory Periods

There are no changes to the compulsory no-work period for the birth mother – a six-week recovery period after birth during which she may not work unless medically cleared.

In the event of either a miscarriage during the third trimester, or a stillbirth, the birth mother must get the same six-week recovery period.

4. Adoptive and Commissioning (Surrogacy) Leave

The same equal splits now apply to all parents – natural, adoptive and commissioning.

A provision limiting adoptive leave to children under two years old was declared invalid and unconstitutional, but remains in place for now, with the Court leaving Parliament to decide on an appropriate age limit.

5. Other “Parties to a Parental Relationship”

Leave in the shared pool applies only to “parties to a parental relationship”, defined as people who have assumed parental rights and responsibilities under the Children’s Act.

6. Notice to Employer

Employed parents must still give their employers at least four weeks’ notice (some sections refer to “one month” – just to confuse the issue!) of their intention to take leave.

If that’s not practical, notice must be given “as soon as reasonably practicable.”

Are You Entitled to Paid Leave, and What About UIF?

Although you now have extended job security protection, you are still not entitled to paid parental leave unless:

Your employment contract provides for it,
Your company policy allows for it, or
A collective agreement covers it.

(These are more common in larger corporates.)

The better news is that the UIF allows you to claim for maternity and parental leave benefits, but currently still with restrictions mirroring the BCEA’s.

The Court declared the relevant sections of the UIF Act invalid, but again left it to Parliament to sort out, so nothing changes there for now.

An Important Note for Employers

Review all your employment contracts, company policies and procedures to ensure compliance with these new rules.

Communicate them clearly to your employees to prevent misunderstandings and unrealistic expectations – especially since not all media reports and online articles on this topic are accurate!

Wedding Bells? You Can Both Choose Your Own Surnames Now

“A family name holds the music of generations – it’s the first inheritance we receive.”
(Attributed to Irish poet-philosopher John O’Donohue)

The Constitutional Court has just confirmed (with some significant adjustments) last year’s High Court ruling that both partners in a marriage have equal rights to choose their surname.

Previously, a woman – and only a woman – could choose when marrying to take her spouse’s surname, or to retain her own surname, or to assume a double-barrelled surname (her own surname with her husband’s surname).

However, if a man wanted to do the same – to adopt his wife’s surname or a double-barrelled surname – he had to apply formally to the Department of Home Affairs (DHA) and provide “good and sufficient reason” for wanting to change. The problem was that the reason had to be related to “a change in the marital status of a woman” – an impossible ask for men.

A Tale of Two Couples

The Constitutional Court, and the High Court before it, grappled with this issue via applications from two couples whose attempts to depart from the “only women can choose” rule had been thwarted by the existing wording of the Births and Deaths Registration Act.

The couples’ reasons for wanting to depart from the norm will ring a bell with many. One couple wanted their new family to bear the wife’s maiden name as it symbolized her connection to her parents, who had died when she was young. The other wanted both spouses to use a combined (double-barrelled) name so that the wife’s maiden name, which was important to her, would not be lost.

Our apex court has now confirmed that this unequal treatment was unconstitutional because it discriminated on the basis of gender, infringing on their rights to equality and dignity.

So, What Are Your Choices Now?

In a nutshell, the Court’s order employs gender-neutral language to ensure that everyone, regardless of gender or type of marriage, now has the same automatic rights when it comes to assuming a new surname.

Although the declaration of invalidity is suspended for 24 months to enable Parliament to either amend existing legislation or pass new legislation, the Court’s ruling includes the provision that in the interim everyone can, as of right and without needing DHA authority:

After marriage, take their spouse’s surname or, having taken it, resume a previous surname.
After marriage, divorce, or the death of a spouse, resume a previous surname or create a double-barrelled surname.

Any other surname changes (including changes to your children’s surnames) still require formal application to the DHA.

To avoid any confusion, it’s a good idea to tell the marriage officer before you marry what names you’ve chosen so that the correct choices appear in the marriage register and on your marriage certificate.

As 1 December Looms, Here’s What AARTO Means for Motorists and Employers

“Forewarned is forearmed.” — Wise old proverb

Government keeps assuring us that the long-delayed AARTO (Administrative Adjudication of Road Traffic Offences) system will finally begin its full national rollout on 1 December 2025.

Is This Another False Start or the Real Thing This Time?

There have been so many false starts to AARTO over the last fifteen years that many of us will no doubt take the attitude: “I’ll believe it when I see it.”

Particularly with all the speculation that the implementation could be delayed, varied, or even blocked again by legal and other challenges.

But let’s not be caught unawares here – this time, the first phase really could be shooting out of the starting blocks on time. It seems a good idea to start prepping for the changes, especially now that the holiday season, with its surge in year-end travel, speed trapping and roadblocks, is almost upon us.

In a nutshell, the way traffic fines work is about to change for millions of drivers — including private motorists, fleet operators, delivery drivers, taxi operators, and vehicle owners.

Firstly, Driver Demerits Are Still Nine Months Away

Sensational, click-bait headlines and fake news reports notwithstanding, the “driver demerit points” system — with its licence suspensions and cancellations for repeat offenders — is only scheduled to kick in on 1 September 2026.

So What Will Actually Change on 1 December?

If your vehicle is registered in, or if you drive in, any of the 69 major municipalities and metros scheduled for commencement on 1 December 2025, you’ll be subject to these new rules from day one.

The other 144 areas are set to commence on 1 April 2026.

Fines Will Become Administrative, Not Criminal

Traffic infringements such as speeding, traffic light violations, licence issues, parking offences, and so on will no longer be handled in criminal courts.
Instead, the Road Traffic Infringement Agency (RTIA) will run everything as an administrative process.

Electronic Notices

Infringement notices, courtesy letters, and enforcement orders can now be sent by email or SMS (even by fax if you still list a number) as well as by post or personal service.

Not receiving notices will not be a defence – legal service will be deemed to have been made whether you receive/open them or not.

The onus is on you to make sure you get them by updating all your contact details with your licensing authority now – and by configuring your spam and junk filters to let them through.

Discounts and Deadlines

A 50% discount will be your reward for paying within 32 days of receiving an Infringement Notice.
Miss that window and you lose the discount.

You may then get a Courtesy Letter allowing you another 32 days to pay the full fine plus a fee.
If you still don’t pay, an Enforcement Order is issued.

Enforcement Orders Will Block Licence and Permit Renewals

Unpaid fines that reach the enforcement order stage are recorded on the National Contraventions Register.

If your name appears on the register, you will be automatically blocked from:

Registering a vehicle, and
Renewing your vehicle licence disc or driver’s licence/professional driving permit.

If You Aren’t the Driver

You must nominate the actual driver within 32 days to prevent the fine being attached to you.

Keep a copy of all drivers’ licences so you have a record of the infringer’s full names and ID number.

Businesses in particular should be able to identify the drivers of their vehicles at all times so that fines can be allocated correctly.

Also, review all your staff training processes, vehicle policies, and disciplinary procedures accordingly.

Beware of Scammers

Scammers are reportedly already issuing fake notices, so be sure to pay only on authorised payment portals.

Know Your Rights – But Act Quickly

You can still make representations or appeal against fines you disagree with, but strict deadlines apply.

Johannesburg and Tshwane Motorists

Note that although Johannesburg and Tshwane motorists have already lived with AARTO’s pilot fine system for years, from 1 December 2025 they will move onto the amended national AARTO framework.

You can expect:

Stricter electronic service of notices
Updated fine tariffs
Stronger enforcement order blocks on licence renewals
New proxy nomination duties

Bottom Line

If you need our help with anything, please get in touch immediately!

Legal Speak Made Easy

“Title Deed”

A property’s title deed (more formally, deed of transfer) is the legal document that proves ownership of immovable property (land, house, sectional title unit etc). It’s issued by the local Deeds Office, and contains detailed information about the property – owner/s, size and description, purchase details, mortgage bonds, servitudes etc.

You’ll need your property’s original title deed when you come to sell or get a home loan, so keep track of it. If your property is bonded, the bank will have it. Otherwise it’s up to you to keep it safe!

It’s possible to replace a lost title deed, but that will cause unnecessary delay in the transfer process.