The Consumer Protection Act (CPA), due to take effect on 25 October this year, will mainly force agents to ensure property sellers and buyers understand the wording and legal effect of all contracts they enter into.

If this is not complied with, the Act gives wide latitude to the consumer to seek legal recourse and compensation.

Simon Raab, Southern Suburbs manager for Greeff Properties, says property marketers will find themselves “in a new ballpark” when this Act is implemented.

Raab warned that agents will have to take it upon themselves to ensure that sellers and, more particularly, buyers, have fully understood the meaning of the wording and legal effect of such wording contained within all mandate agreements and contracts into which they have entered. “The aim of the new Act is to promote a fairer, more accessible and more sustainable marketplace in which the less well-informed and less educated clients are better protected.”

Furthermore, said Raab, if in any way the quality of the product or the service rendered falls short of generally accepted high standards, the customer will from November onwards, be entitled to claims, replacements or even to a total cancellation of the agreement. “Consumers will also have an opportunity to approach the National Consumer Commission instead of the Magistrate’s or High Courts, which in itself will encourage more action being taken when damages can be proven.

“The wording of the Act makes it clear that all in the ‘supply chain’ can be held responsible. This, as I read it, implicates the agent as well as the manufacturer or, in the property world, the seller and/or valuer.”

Steven Kay, MD of Home Inspection Services, says Section 55 of this Act places a responsibility on estate agents to ensure that potential buyers are fully informed regarding the condition of the property.

“The ‘As Is’ or ‘voetstoots’ clause in an Offer to Purchase will no longer protect estate agents from the perils of non-disclosure. This means that the challenge for estate agents is to provide full disclosure up-front to potential buyers.”

Dr Andrew Golding, CE of Pam Golding Properties (PGP), says he believes the primary benefit of the Act will be enhanced protection for consumers against exploitation and unfair marketing and business practices. “Property buyers will also benefit from improved standards of consumer information and the setting of standards and national norms relating to consumer protection.

“I do believe that the Act is a good thing that will offer improved protection to the most vulnerable of consumers, who most often find themselves in unequal bargaining positions. Consumer issues will also be dealt with in a less fragmented way and the Act has sought to consolidate various pieces of legislation in relation to consumer protection. The regulations to be promulgated under the Act will provide greater clarity with respect to the implementation of certain of the Act’s provisions.”

He says PGP has already commissioned a review of their standard documentation and business and marketing practices to ensure that changes are made where necessary and new processes implemented as required. “We believe that this review will be an ongoing process in light of the interpretation by our courts of the new Act’s provisions.”

The CPA is set to have a massive impact on virtually every business in the country, including the real estate industry, says Peter Gilmour, chairman of RE/MAX of Southern Africa.

He says that, for example, the CPA states that a supplier cannot make any false, misleading or perceptive representations that any land or immovable property has characteristics, facilities and amenities that it does not have, or that it may lawfully be used for purposes that are unlawful or impracticable. “As per this particular clause, any false representation or inaccurate concepts, whether delivered knowingly or not, could, under the CPA, make it possible for the buyer, on appeal of the courts, to get the contract cancelled.”

Furthermore, it deals with restrictions pertaining to unfair, unjust or unreasonable terms, and stipulates that the price and terms must be fair. “This is a relatively controversial provision, as it could be used as a price control mechanism. In reality, with markets and demand in a constant state of flux, it is very difficult to determine what a fair price is. A fair price is what the market at any particular given time is willing to pay for a property,” he explains.

Gilmour notes that in terms of Section 55 of the CPA, every consumer has a right to receive goods that are suitable for the purpose for which they are bought and free of defects. He explains that the exception to the aforesaid is if a consumer has been expressly informed that the goods were offered in a specific condition and has accepted goods in that condition. “However, this particular section does not apply to auctions.”

The CPA is limited to transactions that are concluded as part of the regular business of sellers, suppliers, distributors and manufacturers. “As long as it is not their usual business, the Act does not apply to once-off transactions undertaken by private individuals who sell their property. However, pertaining to the real estate industry, if the supplier of the home is a developer or builder, and defects become evident after the sale, they will be held responsible.

Gilmour says the seller will need to sign a declaration that they have listed everything that they are aware of, and likewise, the buyer will also need to sign a declaration noting that they have read and fully understood the list.

“If enforced successfully, the CPA will no doubt instil great confidence in local and international investors alike, as well as weed out unscrupulous operators, which will be to our benefit in the long run.”

Raab says ultimately, this legislation will work to the benefit of all concerned because it will result in more transparent, open dealings coupled to strong deterrents against any form of misrepresentation.

Raab added that the Act does not in any way do away with the basic stipulation that all property deals have to be in writing, “but it will make it necessary to ensure that the wording of these deals is clearer and simpler than in the past”. Greeff Properties, he said, would be consulting with their lawyers on this matter. Source: Property24

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Buying Your First Home: Everything You Need to Know Before Taking the Leap

Buying your first home can be a daunting experience; with all the hype in the news about high interest rates, repossessed homes, and the near impossibility of obtaining a home loan most people are running, sprinting, towards renting a home instead of running the risks of buying one.

But even with all the negative press about the current state of the property market there is no better feeling than owning your own home. And with interest rates about to drop there is no time like the present to take the plunge. Here is everything you need to know before buying your first home …

Be Pre-approved:Nothing beats the piece-of-mind of shopping with a pre-approved bond. Arranging a pre-approved bond will minimise stress when shopping for your new home; knowing what you can afford will allow you to narrow down the search and save you the time of looking at things you can’t afford and that aren’t suitable. www.mortgagepluscc.co.za

Plan Ahead for Success:

 Before setting out to buy a home, it pays to think about your needs. Often one may fall in love with “the perfect house” only to find that the home is not in the right area or that the garden is too big to manage. If the home is for a family, the needs of the whole family must be considered – husband, wife, children, and sometimes even grandparents. Think about how many bedrooms and what size kitchen is needed; and whether having a garage is important. Do you have a dog and need the property to be fully fenced?

Very few people have the money to buy exactly what they want, so make a list of your requirements and break it down into “must have” and “like to have”. It will help you when you start looking at homes. Then think about the area where you want to live – is it quick and easy to get to work? Are there schools and shops nearby?

Monthly expenses need to be carefully budgeted before you even start looking. Owning a home not only means paying a monthly bond installment but has many new bills too. Make a list of everything you’ll have to pay – bond instalment, rates or levies, house insurance, mortgage (bond) protection insurance, electricity and water, repairs and maintenance; and make sure your budget can afford everything you have listed.

Know your Agents:

Get to know the agents in the areas you are searching in and inform them about what you are looking for and your price range. They will be able to notify you when new properties come on the market and can provide a tailor-made service to suit your needs.
Putting in an Offer to Purchase

Once you have seen a property you like, the estate agent will help you draw up an “Offer to Purchase”. This document contains all the terms and conditions of the sale, the purchase price, the payment terms, the date you will take occupation of the property, and the occupational rent.

Occupational rent is a monthly amount paid to the seller by the purchaser to occupy the property prior to the date of registration of transfer of the property into the name of the purchaser. Alternatively occupational rent could be paid by the seller to the purchaser if he/she needs to continue occupying the property for a period after registration of transfer.

If you plan to take out a home loan, the “Offer to Purchase” must include a condition that the sale is subject to bond approval being obtained within a realistic amount of time — i.e. 7 – 10 working days. Once you have confirmation that your loan has been approved, you must notify the estate agent immediately to ensure that your offer becomes unconditional and to enable the process to continue.

This condition is very important, because if you are not able to secure finance, the “Offer to Purchase” will terminate and become null in void, and neither you nor the buyer will be liable to pay any costs or penalties.

The Offer to Purchase should also include details of any unusual fixtures or fittings which are included in the purchase price, or which the seller might want to take with him when he leaves. Generally all items which are “fixed” remain in the house, but furniture, loose carpets and appliances go with the seller. This is where conflicts often arise, so it’s best to ensure any important items are noted in the contract.

Take the time to find out everything you need to know about a property before signing anything. Visit the house for a second look – you may have missed something the first time. Always express your concerns to the estate agent and ask them to assist you in clarifying any problem areas that you may have or consult an Attorney. Once the seller has accepted and signed the offer, it becomes a contract binding on both parties. However, if the purchase price is R250 000 or less, the buyer has the right to cancel the offer within 5 days of signing the Offer to Purchase. This must be confirmed by the buyer giving written notice to the seller and the sellers’ agent within those 5 days.

Applying for a loan:

As a first time home buyer there are a number of special criteria which you’ll need to fulfill in order to qualify for a home loan.
One of the most important factors to consider is what size bond you can qualify for; often this is about 25-30 percent of your salary, however if you and your partner apply for the loan jointly you may be approved for a larger loan amount.

Upon the application for your home loan the bank will consider the Loan-to-Value ratio (LTV) , which is the ratio between the home loan amount you are applying for and the value of your property. This is an important factor as the LTV percentage forms part of the interest rate calculation on your loan amount.

The maximum loan term offered by all banks is twenty years, and some banks require a life policy to be ceded to them. It is important to clarify this with your bank immediately.

 The general requirements of applying for your first home loan are the basic details of your monthly salary, your credit history and the offer to purchase.

The following criteria will need to be passed to qualify for a home loan;

- You must be 21 years or older
- Proof of six months of permanent employment or at least two years of self-employment,
- Minimum salary requirements can vary between R8 000 and R10 000 per month joint or single income.
- You’ll need to have a credit clear history – i.e. no judgments or defaults.
- Some banks may require SA citizenship.

Also Make sure you have all the following documents available.

- Copy of ID
- 3 months bank statements.
- Offer to purchase, which is the written agreement between the seller and the buyer on the purchase price of the property. Sectional Titles must submit most recent body corporation financials.
- Most recent pay slip, commission earners will need to submit 6months pay slips.

- If you’re a self employed business owner:
- 6 months business accounts statements
- 6 months personal bank statements
- a letter from auditor or accountant stating monthly income.

Taking Ownership of Your New Home:

Once all the conditions of the contract have been met and the deposit paid, the next process is the transfer of the property into your name and the registration of the Mortgage Bond at the Deeds Office. The Conveyancing Attorneys handle this part of the loan process and will contact you when the documents are ready to be signed.

The seller will also have to provide you with an Electrical Clearance Certificate, as well as a document stating that the property is pest-free. These conditions may vary depending on which province your property is situated in.

The registration and transfer process normally takes between 8-10 weeks if there are no unexpected delays.

The day the transfer is registered in the Deeds Office is the day you become the legal owner of the property. Your lender will start the insurance policy and begin charging interest on the loan and will inform you when the first instalment becomes payable. From this date onwards you are also responsible for paying rates and levies — or earlier, depending on conditions of sale agreement.

Once everything is finalised:Once all the Is are doted and the Ts crossed you can finally enjoy your home. Transform your new house into a home by personalising your space. Focus on making your home a comfortable space where you can unwind and have fun; after all you will be sacrificing a large portion of your income to stay there.

And don’t forget to think long-term; boost your future re-sale value by ensuring that you keep your home updated and looking good. Budgeting for routine maintenance and unforeseen emergencies will ensure your home stays looking as, if not more, beautiful than when you bought it.

Words by: Crystal Espin

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za