HOW TO EVICT A DEFAULTING TENANT

You are an owner of a residential property and have entered into a lease agreement with a tenant. Unfortunately your tenant is unreliable and falls into arrears with the monthly rental. What is your position now and what legal steps can be taken to claim back your property?

The Prevention of Illegal Eviction and Unlawful Occupation of Land Act, Act 19 of 1998 (more commonly known as PIE) allows for the eviction of unlawful occupiers of land in the Republic of South Africa. PIE applies to an “unlawful occupier” who is any person who occupies land without the express or tacit consent of the owner of such land. The High and Magistrate’s Court has jurisdiction to grant an eviction order under the provisions of PIE. However, for purposes of this article the Magistrate’s Court process for an eviction will be discussed.

The main eviction application is issued by the Clerk of the Court and a case number is then allocated. This case number is then copied onto an Ex Parte application as well as a Notice in terms of Section 4(2) of PIE. The Ex Parte application is not an interim order, but is rather an interlocutory application where the Court is requested to authorise the Notice in terms of Section 4(2) and also give a service directive for this notice. The Court will then consider the facts of the specific case and give a directive as to what the Court deem as sufficient service of the papers on the land occupier.

Once the Ex Parte order has been obtained the main application as well as the Section 4(2) Notice will be served on the Respondent in terms of the service directive provided by the Court. This service directive will include a directive to serve on the local Municipality as well. It is a requirement of PIE that this notice is served 14 calendar days prior to the hearing of the eviction application. Therefore after successful service and lapsing of the required time period the final eviction application will be heard and granted accordingly.  Should the occupant however fail to vacate the premises as directed by the Court Order, the Sheriff of the Court will be authorised by the Court to attend to the eviction of the occupant on or shortly after a specific date.

Compiled by Annerine du Plessis

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

IMPLICATIONS OF ESTATE DUTY

Estate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

A. Insurance policies

i)  Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.

ii)   The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.

iii)   If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.

iv)  Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.

B.  Benefits payable by pension and other funds by or as a result of the death of the deceased

C.  Donations at date of death
Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.

D.  Claims in terms of the Matrimonial Property Act (accrual claim)
An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.

E. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions
Some of the most important allowable deductions are:

  1. The cost of funeral, tombstone and deathbed expenses.
  2. Debts due at date of death to persons who have their ordinary residence in South Africa.
  3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.
  4. Foreign assets and rights:
    a. The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.
    b.  However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.
  5. Debts and liabilities due to non-residents:
    a.  Debts and liabilities due to non-residents are deductible but only to the extent that such debts exceed the value of the deceased’s assets situated outside South Africa which have not been included in the dutiable estate.
  6. Bequests to certain public benefit organisations:
    a.  Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes.
  7. Property accruing to a surviving spouse [Section 4(q)]:
    a.  This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.
    b.  Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).
    c.  Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.
    d.  Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death. The portability of the deduction will only apply when the entire value of the estate of the first dying spouse is left to the surviving spouse.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

VALIDITY OF ANTENUPTIAL CONTRACTS

One must be careful when drafting and signing an Antenuptial Contract. Aside from ensuring that the contents is all correct, one must also ensure that all the necessary provisions are contained therein to make the contract valid. The consequences of neglecting to do so may result in a marriage in community of property even though the parties had no intention of this at the time of their marriage.

Attorneys are often trusted with the task of drafting an Antenuptial Contract. This is a contract, which one signs to regulate the property regime of a marriage. If a couple does not sign, an Antenuptial Contract then the marital property regime will be that of in community of property. The presence of an Antenuptial Contract means that the marital property regime is that of out of community of property and the parties must specifically stipulate whether they would like the accrual system to apply to their marriage or not.

The importance of ensuring that all the necessary provisions are contained in the Antenuptial Contract to result in a valid contract was discussed in the 2014 Supreme Court of Appeal Case of B v B[1]. In this case, no values were stated in respect of any of the assets listed in the Antenuptial Contract and they were also not properly identified. In B v B the court stated that if the terms of a contract are so vague and incoherent as to be incapable of a sensible construction then the contract must be regarded as void for vagueness.[2]

According to Section 6(1) of the Matrimonial Property Act[3] ,a party to an intended marriage which does not, for the purpose of proof of the value of his or her estate at the time of the commencement of the marriage, declare the value in the contract, then he or she may do so within six months of the marriage in a statement attested to by a notary. If this is not done, according to Section 6(4) of the Marital Property Act, the net value of the estate of a spouse is then deemed to be nil at the time of the marriage. In effect, such a contract is valid but it will effectively render the marriage in community of property since nothing was excluded from the accrual.

However, if a contract is contradictory and incoherent in other respects then it cannot be seen as a valid contract since there is no certainty as to the meaning of the contract and what the parties seek to achieve. This means that the contract would not embody terms that would enable to court to give effect to the intention of the parties at the time the contract was concluded.

The result of such a contract is that the Antenuptial Contract would be void for vagueness and that the marital property regime would be the default position according to the Marital Property Act, which is in community of property.

Therefore, parties are encouraged to read their contracts thoroughly and ensure that they understand the terms thereof and that the contract embodies their intentions without any further explanations or evidence.

[1] (952/12) [2014] ZASCA 14 (24 March 2014).

[2] B v B (952/12) [2014] ZASCA 14 (24 March 2014) par 7.

[3] 88 of 1984.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

HOW WE SPENT OUR 67 MINUTES…

A1_bThe Schnetler’s team dedicated their 67 minutes for Mandela Day on 17 July 2015 by spending some time with the elderly of Huis Uitsig in Parow to cheer up their day!We also packed a small package for each of them, consisting of toiletries, warm socks, beanies and sweets and chocolates. The residents at Huis Uitsig were so pleased and excited to receive their packages from the Schnetler’s team on that rainy and cold Friday morning.  We spent our time handing out the packages to each resident in the Frail Care Unit. We were treated to a ‘thank you’ speech and sing-a-long by the residents as well as a visit with the oldest resident at Huis Uitsig who is101 years old!  Schnetler’s is so pleased that we managed to brighten the day of so many by means of a small donation.

Compiled by Laura Ames