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There are positives in every market
2008/06/17
It's time for consumers to stop focusing on the immediate problems in the real estate sector and start focusing on the bigger picture.
So says Berry Everitt, managing director of the Chas Everitt International property group, who notes: "Homeowners and sellers are currently preoccupied with a possible decline in prices but they need to realise that this is part of the perpetual economic cycle, in which the prices of all commodities – including property – go up, go down and then go up again."
He points out that homeowners who bought their properties five years ago and held them today have an asset that is worth at least 100% more than they paid for it, "so if they have to sell today they may not get what they would have got last year, but it is highly unlikely they will actually lose money".
On the other hand, they may be able to upgrade for less than it would have cost them last year. And if they continue to hold their property, they will derive more benefits when prices start to rise again.
Meanwhile, such owners may also have had the opportunity to utilise some of the increased equity in their properties to improve their lifestyle. "They may have chosen to further their education, perhaps, and got a better job as a result. Or they may have used the money to buy another property and increase their asset base. These are the sort of benefits to be derived from the upward part of the price cycle
"But rising prices are dependent on demand, and that tapers off at a certain level due to lack of affordability. To enable new buyers to enter the market and keep the economic cycle going, prices have to come down or at least level off at some point. This is where we are now, and from a seller's point of view, SA is a great place to be, because it has one of the few real estate markets in the world where there are literally millions of potential buyers champing at the bit to become homeowners."
Indeed, a recent survey conducted by Markinor for the Reader's Digest shows that more than 50% of South Africans rank owning their own home as their most important life goal, "which means that there is actually a huge market for homes that are for sale, provided they are pitched at the right price".
This is, he says, just one of the opportunities inherent in the downward phase of the economic cycle. Another is that higher interest rates at the moment are driving up the demand for rental properties and the returns to be made on those properties. "This is of course bringing savvy investors back into the market and as that demand also grows, it will also help to absorb inventory and start creating the conditions for prices to start to rise once again.
"Consequently, we do not believe this should be a time for scaremongering about the current state of the market, because that will keep changing. Instead it is a time to be looking at the bigger picture and finding ways to maximise the opportunities it always presents."
PROPERTY DEALS WITH A TRUST? CHECK FOR AUTHORITY!
Trustees of trusts must be both:
- Appointed per the terms of the trust deed, and
- Authorised in writing by the Master of the High Court to act as trustees.
The High Court held recently that in some circumstances a trustee may be justified in taking legal action on behalf of the trust even before receiving the Master's authorisation to act as trustee - the court has a discretion to subsequently ratify such action.
But in contrast, any contract purportedly entered into by an unauthorised Trustee will be totally void - and cannot be subsequently ratified.
So when contracting with a Trust - for any purpose - check that: -
1. The Master has issued "Letters of Authority" to each trustee, and
2. The trust deed empowers the trustees to enter into the contract in question in the first place (with property deals, check for authority to deal with immovable property in the applicable manner).
SUING THE STATE - MOVE FAST, YOU HAVE 6 MONTHS ONLY!
Recent high-profile media reports confirm that any victim of unlawful arrest (and/or assault whilst in detention) should sue the State for damages - the courts are making substantial awards.
But if you have a case against the State (for anything - not just claims related to police action), you need to obtain legal assistance without delay.
You have only six months to give the State proper notice of any claim. Whilst late notice can be condoned, a recent High Court case illustrates the danger of leaving it too long. A couple wanting to sue for the death of their baby in a State hospital was refused permission to do so, the Court holding that they had not shown "good cause" for their delay in giving notice.
DIRECTORS: BEWARE DELAY IN LIQUIDATION APPLICATIONS
A company may apply for its own liquidation, but, the High Court held recently, the board of directors cannot make such an application "without a resolution approved by a general meeting of the company".
The formalities involved in holding a general meeting introduce potential delay into what may be a very urgent process - so directors of companies in distress need to act quickly as soon as they become aware of problems.
Directors should also immediately take legal advice as to whether or not trading may continue, as they could well become personally liable for corporate debts if they trade on regardless.
IMPORTED GOODS - KEEP THE PAPERWORK, OR SARS CAN SEIZE!
Anyone selling or dealing in imported goods is obliged to "maintain books of account and documents to reflect from whom the goods were purchased".
Otherwise, as happened in a recent case before the Supreme Court of Appeal involving some R1.2m worth of clothing labelled as made in China, they are at risk of seizure and forfeiture as illegal imports. If you bought the goods locally (from an importer or wholesaler for example), it's up to you to prove that you did - it is not for SARS to prove that you didn't.
EMPLOYERS' NEW OBLIGATIONS TO BAR SEXUAL OFFENDERS
Children and mentally disabled people receive further protection from sexual abuse once new laws come into effect in June (by the 16th at the latest).
A "National Register for Sex Offenders" will be established within 6 months, and it will be unlawful for offenders to be "employed" (which includes assisting an employer without pay) in a wide variety of situations where they may interact with children or mentally disabled people.
The range of employers likely to be affected is extremely wide - apart from the obvious categories, many sports clubs, churches, medical practices, airlines, bus services etc will have to comply. Failure to do so carries not only criminal liability, but also the potential for substantial damages claims if anything goes wrong.
As always, all the formalities and requirements of labour legislation will still apply, so get ready now. Seek advice on how you should handle these new requirements - both in regard to existing employees, and in regard to new recruitment practices (once the Register has been established, a "clear" certificate must always be obtained before hiring).
HOW TO FORCE A SERVITUDE RELOCATION
If your property is subject to a "defined" right of way servitude (in other words, the servitude specifies exactly where the right of way is to run), can you forcibly relocate the right of way over the objections of the other party?
Until recently, the answer was no - you needed consent from the servitude holder (the person with a right of way over your property). Now, however, the Supreme Court of Appeal has held that a landowner may unilaterally force relocation, provided that: -
1. The landowner "is or will be materially inconvenienced in the use of his property" if the right of way remains as is;
2. The new right of way is still over his property;
3. The relocation will not prejudice the owner of the servitude;
4. The landowner pays all costs of relocation and of changing the title deeds.
NOT ENOUGH SEATS, NO TAXES INCLUDED - SO AIRLINE'S PRICE ADVERT GROUNDED
Don't allow advertisers to mislead you, either as to availability of product, or accuracy of price. A budget airline was recently forced to pull an advert for two breaches of the Code of Advertising Practice: -
1. The airline was unable to prove that "a reasonable number of seats were actually available" at the advertised price; and
2. The advertised flight prices did not indicate that they excluded taxes; the Code requires advertisers "to either quote a fully inclusive price in their advertising, or draw the consumer's attention in a prominent manner to the fact that further costs are payable over and above the advertised amount."
WEBSITE OF THE MONTH: SAVE FUEL, SAVE RAND
With the soaring cost of petrol and diesel hammering many business and personal budgets, it makes sense to cut consumption in every way possible.
The good news is that you can save as much as 25% - and that's a lot of money these days!
Be wary of some of the advice you will find on the Internet (and in e-mails currently circulating, which purport to emanate from "petroleum industry" professionals). Rather go to sites such as these: -
Have a Great (and Fuel Efficient) June!
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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