This newsletter is for our valued clients and is intended to inform them of recent developments in our law and of other matters of interest. This newsletter and other articles are available on our website. Kindly advise should you not wish to receive this newsletter in future and feel free to distribute it to your friends or other interested parties if you so wish. Contributions are made by our directors and professional assistants.  Please also refer to our disclaimer at the bottom of this newsletter.

THIS MONTH:

(1) TRUST FUNDS – PROTECT AND PRESERVE YOUR WEALTH

(2) CAN I BUY A STAND IN A SECTIONAL TITLE SCHEME, TO DEVELOP MYSELF?

(3) ARE YOU BEING HARASSED?  AND IN SHORT, HOW TO PREVENT IT

(4) ABOUT US

1) TRUST FUNDS – PROTECT AND PRESERVE YOUR WEALTH

The month of September heralds the National Wills Week showcasing a campaign by the Legal Practice Council.  The initiative is to create awareness in communities on the importance of having a will in place through drafting basic wills free of charge by participating law firms to people who fall within the specified bracket.

Whilst many people may be familiar with wills, the opposite is true when it comes to trusts creation which is another structured way to enhance estate planning and effectively transfer assets through generations.  There exists a misconception that trusts are associated with the rich or powerful tycoons.  This tool can also be worth your while even if you merely wish to invest funds to guarantee that your grandchild completes his/her education. 

1. The benefits of a Trust

The two main advantages of having assets in a trust are:

Asset protection (protection of assets from creditors).  Assets which you hold in trust are safeguarded from creditors in the event of your sequestration.  Trust assets are also not affected by the sequestration of trustees.

Continuity (A trust can span multiple generations). When any trustee dies, the trust and any assets owned by it, remain unaffected.

2. Types of Trusts:

The trusts commonly created are inter vivos and testamentary trusts.

Inter vivos trusts (created whilst the donor is still alive): there are two types namely Vested trusts and Discretionary trusts.

• Vested trusts:  the benefits to the beneficiaries are set out in the trust deed

• Discretionary trusts:  the trustees have full discretion at all times about how much each beneficiary is to benefit.

Testamentary trusts are created in the deceased person’s Will.  Testamentary trusts are usually created to hold assets on behalf of minor children, since minor children cannot in terms of South African law, receive an inheritance (in the absence of a trust, cash from the deceased estate left to minor children must be paid into the Guardian Fund and the money is paid to them when they reach majority).

3. Parties to A Trust:

There are 3 parties to a trust namely:

Donor / Founder – This is the person who establishes the trust by way of a donation of property/cash to be kept in trust, and who decides the terms upon which it must be managed (the Trust Deed).

Trustees – the trustees are the custodians of the assets in the trust, but do not necessarily have an interest in the assets.  The trustees, which can be individuals or an institution, are responsible for overseeing that the trust assets are maintained, managed and distributed in terms of the Trust Deed.

Beneficiaries – the beneficiaries are the individuals / entities entitled to benefit from the trust’s assets or income.

4. Conclusion

It is advisable to seek appropriate advice on your estate planning and appropriate drafting of the Trust Deed when considering creation of a Trust.

Ednah Museva - Candidate Attorney

2) CAN I BUY A STAND IN A SECTIONAL TITLE SCHEME, TO DEVELOP MYSELF? 

Dear Client, the short answer is “NO”, you cannot buy LAND in a Sectional Title Scheme.

 Long answer:

There is a common misconception that one can purchase land in a Sectional Title Scheme to develop yourself.  The Sectional Titles Act (Act 95 of 1986) only grants ownership of sections (a section being a building or a portion of a building), with a pro-rata undivided share in the common property.  The model by which Developers create this opportunity for future owners is called a real right of extension.  A Sectional Title Scheme can, in essence only be opened with a minimum of 2 units. Previously, Developers used to create Sectional Title Schemes with, for example, the gatehouse and a small building to hold dustbins, etc., then they would divide the property in areas of extension. They would register real rights of extension over the common property of the Scheme, granting the right to develop more units and exclusive use areas over the common property within a specified period of time. 

The Surveyor General as well as the Registrar of Deeds have now become stricter in the interpretation of the Sectional Titles Act (Act 95 of 1986) in that it was never the intention that the Act provides for this scheme or arrangement. The motivation behind this mode of development inter alia holds the following advantages for the Developer:

a) He did not need to go through the process for Township establishment in order to sell land (a stand);

b) He can immediately receive funds for cession of the real right(stand) to the purchaser without having to first build and open a sectional title register or to extend the sectional title scheme;

c) He enters into a building contract with the purchaser and develop with the purchaser’s funds.

It is still possible to register a real right of extension over a portion of the common property but, the Sectional Title Scheme cannot merely be opened with two units that may in any event later be demolished or retained.  The intention behind a real right of extension by the Legislator, was that a Developer could develop a Sectional Title Scheme in phases.  In practice, a Developer would start with a Sectional Title Scheme by constructing sections as a first phase and completing them for occupation.  A Sectional Title register will then be opened with those sections and with a certificate of real right, in favour of the Developer, to construct further sections and exclusive use areas within a specified period of time.  The Developer is granted a specified period to complete the extensions, so that he cannot merely do as he pleases, and at a point in time, the Sectional Title Scheme need to be deemed as finalized.  Should the Developer fail to construct the balance of his proposed development within the time period stipulated in the certificate of real right, the real right will lapse, and the common property will then belong to the owners of the sections, pro-rated to their participation quotas, without further encumbrance. 

Dangers of purchasing a real right of extension for future development:

As you will note from the above, a real right of extension is granted for a specified period of time, where-after it lapses, and falls back to the Body Corporate of the Scheme.  If a holder (owner) of the real right is not aware of this process, he/she/it may be faced with a precarious situation  in that the real right he/she/it purchased may fall back to the Body Corporate  and the processes to re-instate the real right to extend is tedious and expensive.  A further danger is that a holder (owner) of the real right builds a section on the real right to extend, but, may not be aware of the fact that he/she/it needs to extend the Sectional Title Scheme to add his/her/its section and exclusive use area (example garages, gardens, etc.) to the Scheme.  After construction of a building on the real right to extend, a holder (owner) needs to amend the Sectional Plan of the Sectional Title Scheme to include his/her/its section as well as exclusive use area/s surrounding same at his costs.  The amended Sectional Title Plan then also needs to be registered in the Deeds Office holding jurisdiction over the property.  Only once registered in the Deeds Office, his/her/its section forms part of the Sectional Title Scheme and his/her/its rights becomes secure, without the risk of lapsing of the real right to extend.  A further hurdle is that the commercial banks do not easily finance the purchase and development of a real right, and the Purchaser will mostly have to finance the process himself/herself/itself.

Please contact our

Ona Nell, Hannelie Hattingh or Quraisha Dawood

in our Conveyancing Department

Should you have any further questions pertaining to Sectional Title Schemes, the extension of Sectional Title Schemes, real rights to extend, etc.

Ona Nell - DirectorMr. Elmo-York Stuart of our offices can be contacted regarding administrative aspects of any Sectional Title Scheme as well levy queries

Ona Nell - Director

3) ARE YOU BEING HARASSED?  AND IN SHORT, HOW TO PREVENT IT

As part of community living it is no surprise that a person may very often experience another person being a constant nuisance or simply inconsiderate, but what happens when a person is in fact being subjected to harassment and what are your rights. The Protection from Harassment Act is a law that provides victims of harassment with a way to protect their rights.

What constitutes harassment

Harassment means directly or indirectly engaging in conduct that the Respondent knows or ought to know-

(a) causes harm or inspires the reasonable belief that harm may be caused to the Complainant or a related person by unreasonably-

(i) following, watching, pursuing or accosting of the Complainant or a related person, or loitering outside of or near the building or place where the Complainant or a related person resides, works, carries on business, studies or happens to be;

(ii) engaging in verbal, electronic or any other communication aimed at the Complainant or a related person, by any means, whether or not conversation ensues; or

(iii) sending, delivering or causing the delivery of letters, telegrams, packages, facsimiles, electronic mail or other objects to the complainant or a related person or leaving them where they will be found by, given to, or brought to the attention of, the Complainant or a related person; or

(b) amounts to sexual harassment of the Complainant or a related person.

What to do if you are being harassed

If a person is engaging in conduct which amounts to harassment, a person (Applicant/Complainant) may approach the Magistrates Court for a protection order, to prohibit the person (Respondent/Accused) from further engaging in such conduct.

The process to obtain a protection order:

1. The Complainant will complete and file an application form for a protection order with the clerk of the Court, accompanied by an affidavit setting out all the facts, incidents and conduct of the Respondent against whom a protection order is sought;

2.The Court will then consider the application, and if the Court is satisfied that prima facie evidence or proof exists that the Applicant is being harassed an interim protection  order will be issued together with a return date for the determination of whether or not a final protection order should be issued. The Court may elect not issue an interim protection order and may only order a return date calling on the Respondent to show why the Court should not issue a final protection order;

3. The application stating the return date accompanied by any affidavits or evidence submitted in support of the application, as well as the interim protection order if one has been issued, must be served on the Respondent personally;

4. On the return date the Court will conduct a full enquiry and the Respondent will have the opportunity to show cause as to why a final protection order must not be issued;

5. A final protection order will only be issued if sufficient evidence exists to prove a person has engaged in harassment. The final protection order will set specific conditions to ensure the safety of the Applicant and remain in force for a period of five years or such period specified by the Court, unless such order is cancelled, suspended or set aside.

Who may apply for a protection order?

In short, any person, on his/her own behalf or on behalf of another person (provided certain requirements are met), who believes he/she  or such other person is being harassed my apply for a protection order in terms of the Protection from Harassment Act.

To conclude it is advisable to obtain professional legal advice and assistance when a person wants to apply for a protection order or defend such application, not only as certain conduct may not constitute harassment (and other mechanisms and remedies need to be exercised or may be available) but also to ensure your application is brought in the correct forum and that the correct procedure is followed.

To be continued: The process to appeal and set aside/cancel a protection order…..

Ziegh Steenkamp - Candidate Attorney

4)  ABOUT US

To view our previous newsletters, please visit our website on http://www.eyslaw.co.za.

Kind regards,

EY STUART INC.

Disclaimer: The information disclosed herein is not intended to constitute legal advice and is not guaranteed to be correct, complete, or up-to-date. You should not act or rely on any information emanating from this Newsletter without seeking the advice of an Attorney, as the facts relating to your circumstances may influence any advice or information conveyed herein. Should you require legal representation, then please do not hesitate to communicate with us for further information and our standard mandate terms.