WHAT HAPPENS IF I DIE WITHOUT A WILL?

A4_BAttorneys often emphasise the fact that you should have a will drawn up and revise it regularly in order to facilitate the bequeathing of your possessions after your death. Many people still omit to do this. The problem is that, should a person die without leaving a valid will, in other words intestate, his/her estate will be administered and distributed according to the stipulations of the Intestate Succession Act No 81 of 1987.

Below is a basic example of the effect an intestate death will have on the distribution of an estate. Should the composition of the beneficiaries of the deceased be more complex, the administering of the estate in terms of the Intestate Succession Act will also become more complicated.

Let us assume that person A dies and the value of his estate is R1.8 million. He is survived by his wife (B) and 2 children, of which one is of age and the other is a minor.

Scenario 1:

A and B is married out of community of property.

B inherits R125 000 or a child’s portion, whichever is the largest.

A child’s portion is calculated by dividing the total value of the estate by the spouse and number of children, in other words R1.8 million/3 = R600 000.

The spouse and children therefore inherits R600 000 each.

The inheritance of the minor will be paid to the Master’s Guardian’s Fund, as there is no will which determines that the minor heir’s inheritance should be placed in e.g. a Testamentary Trust, where the funds will be administrated on behalf of the minor until he/she becomes of age or reaches any other specified age.

Scenario 2:

A and B is married in community of property.

B inherits 50% of the estate due to the marriage in community of property.

B also inherits R125 000 or a child’s portion, whichever is the largest, with regard to the other half of the estate.

A child’s portion is calculated by dividing half of the total value of the estate by the spouse and number of children, in other words R900 000/3 = R300 000.

The spouse inherits R1.2 million and the children R300 000 each.

The inheritance of the minor will be paid to the Master’s Guardian’s Fund, as there is no will which determines that the minor heir’s inheritance should be placed in e.g. a Testamentary Trust, where the funds will be administrated on behalf of the minor until he/she becomes of age or reaches any other specified age. It is therefore clear that Intestate inheritance may result in an unpractical and often even impracticable division of assets.

The fact that the inheritance of the minor will be paid to the Master’s Guardian’s Fund may place the spouse in such a dilemma that she has to devise plans to finance the amount payable to the Master’s Guardian’s Fund to the benefit of the minor heir. Alternatively she could register a mortgage against an immovable property in favour of the Master’s Guardian’s Fund.

In case of death without a valid will there will of course be no person or institution appointed to support the surviving spouse in the administering of the estate. This should not usually present a huge obstacle, but the spouse should consider carefully which person or institution she appoints to assist her in this task. She should also negotiate the Executor’s fee with the relevant person or institution before the administering of the estate commences.

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. Errors and omissions excepted (E&OE).

PAY YOUR LEVIES, OR ELSE…

A3_BDear Mr Lawyer

I am the owner of a sectional title, and I have paid my levies every month as required, until the water started seeping through the ceiling of my enclosed balcony into my section when it rains. The leak was clearly emanating from a defect in the common property. I asked the body corporate on numerous occasions to repair the defect, yet after four months of writing letters and sending emails the body corporate still has not done anything to honour this simple request. As a frustrated owner I resorted to desperate measures and employed a contractor to repair the property defect. I settled the bill myself.

May I withhold my levies for a period to set off the money that is owed to me by the body corporate?

Dear Mr Owner

Although this action may sound reasonable, the right to stop paying or to set off a debt against levies is not legally justified and owners are not, under any circumstances, entitled to simply withhold levies.

There is no provision in the Sectional Titles Act 95 of 1986 or the rules that gives an owner the right to withhold levy payments. Even if an owner incurs expense in performing an emergency repair to the common property, and believes that the body corporate owes him money, the owner may only set off the debt against the levies once it becomes liquid.

An amount can only be liquid once it has been agreed upon. An owner cannot set off the amount he believes he is entitled to deduct. The trustees, judge or arbitrator must have confirmed the amount.

If Mr Owner does withhold his levies without the amount being liquid, he is subject to the following sanctions in terms of the prescribed rules:

l Firstly, the trustees are entitled to charge interest on arrear amounts at a rate determined by them, and so the defaulting owner may receive a larger account, due to the interest on his arrears, than if he had paid his levies.

l What is more, The Sectional Titles Act imposes a positive obligation on trustees to recover levies from defaulting owners. Not only does the Act empower them to charge interest, the scheme attorneys will most likely issue summons against the defaulter for all costs that the Body Corporate may incur in recovering any arrears.

l Secondly, the prescribed management rules provide that, except in the case of special and unanimous resolutions, an owner is not entitled to vote if any contributions payable by him in respect of his section have not been duly paid. Therefore, an owner who withholds his levies is unable to vote for ordinary resolutions in respect of the section that he is withholding levies on.

Mr Lawyer, how does an owner deal with a situation where he believes the body corporate is liable for payment?

A dispute must be declared with the Body Corporate by written notice of the dispute or query to the trustees. The trustees or Body Corporate then have 14 days from receipt to resolve the dispute. During this period, the parties should meet to try and resolve the dispute. If there is no resolution after the 14-day period, either party may demand that the dispute be referred to arbitration. The arbitrator must make his/her recommendations in settlement of the dispute within 7 days from the date of commencement of the dispute. The decision of the arbitrator shall be final and binding and may be made an order of the High Court.

It is clear that prescribed processes are in place according to which disputes and related issues can be settled. Not only will this ensure that you act within the legal guidelines, but it will also eliminate unnecessary frustration.

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. Errors and omissions excepted (E&OE).

PROTECTING SOUTH AFRICA’S CONSUMERS

A2_BThe Consumer Protection Act, No. 68 of 2008 (CPA) was signed by the President on 24 April 2009, coming into effect on 1 April 2011.

This vital piece of legislation has and will continue to change the manner in which businesses conduct themselves in South Africa.  The Act aims to, among other things, promote a fair, accessible and sustainable marketplace for consumer products and services. The Act also, importantly, aims to establish national norms and standards to ensure the protection of consumers. Further, its objective is to prohibit unfair marketing and business practices.

The CPA applies to the following:

  1. every transaction which occurs within the Republic of South Africa;
  2. promotion or supply of any goods and services occurring within the Republic; and
  3. goods or services which are supplied or performed within the Republic in terms of transactions mentioned in the Act.

The Act is not applicable to credit agreements, defined as such in terms of the National Credit Act.

A ‘consumer’ is defined as a person/s to whom goods or services are marketed, who have entered into transactions with suppliers, users of particular goods or recipients of services.

The Bill of Rights protects the rights of all of South Africa’s citizens, including those of consumers. The CPA further outlines the fundamental rights of consumers, of which all consumers should be aware. Every consumer of goods and services is entitled to the protection of their rights, regardless of the monetary value of a transaction or the significance of the product or service that a consumer buys, even if it is only a loaf of bread. These rights include:

  1. Right to Equality in the Consumer Market and Protection Against Discriminatory Marketing Practices;
  2. Right to Privacy;
  3. Right to Choose;
  4. Right to Disclosure of Information;
  5. Right to Fair and Responsible Marketing;
  6. Right to Fair and Honest Dealing;
  7. Right to Fair, Just and Reasonable Terms and Conditions;
  8. Right to Fair Value, Good Quality and Safety; and
  9. Right to Accountability by Suppliers.

 The National Consumer Commission (NCC) was established in terms of the Consumer Protection Act. The NCC is the chief regulator of consumer-business interactions in South Africa. It was created by the government with the backing of the Department of Trade and Industry (DTI) to safeguard the economic welfare of consumers. Consumers are imperative to the growth of the economy and therefore contribute to the national fiscus and to the development of the country.

The NCC’s mere existence in terms of the Consumer Protection Act, which it administers, is to promote a fair, accessible and sustainable marketplace for consumer products and services, establish norms and standards relating to consumer protection, to provide for improved standards of consumer information, prohibit unfair marketing and business practices, promote responsible consumer behaviour, and to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements. This simply means that the NCC registers and assesses complaints, investigates alleged misconduct by businesses, refers individual complaints to Alternate Dispute Resolution (ADR) agencies for resolution, and represents consumers in the Consumer Tribunal amongst other things.

It is important to remember that every Consumer has rights; any infringement of these rights is an act of non-compliance with the provisions of the Consumer Protection Act.

A consumer may approach the NCC for guidance or assistance with a dispute that cannot be amicably resolved.

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. Errors and omissions excepted (E&OE).

FOR BETTER OR FOR WORSE

A1_BIn our March Newsletter edition my colleague reported on our firm’s participation in the Canal Walk Wedding Show. While I was manning the stand it came as no surprise that a lot of engaged couples were inquisitive as to why a law firm would be present at a wedding show. My personal favourite catch phrase to couples would then be: “Have you given any thought to the legal side of getting married?” and the answer to this would simply be no, accompanied by a nervous and/or confused giggle.

In the last couple of months I have been quite busy with clients who have not given thought about the legal side of getting married prior to saying “I do”, and I find it rather alarming how people, even in modern times, do not consider the legal reality of tying the proverbial knot.

According to South African law a married couple is deemed to be married in community of property unless they expressly enter into and register an Antenuptial contract prior to getting married.

Here is a simple example of a scenario I was faced with a while back: Mr A and Mrs B are both originally from Timbuktu and have worked and resided in South Africa for the last twenty years. The South African law is entirely foreign and unknown to both of them. About seven years ago the couple rushed off to the Department of Home Affairs to get married. In their minds, that was it! A year ago Mr A bought a house. The Conveyancing attorney then brought it to Mr A’s attention that he and Mrs B are in fact married in community of property. The attorney had to explain exactly what the legal consequences are of being married in community. Mr A and Mrs B are both medical practitioners and in the event of something happening to one of their practices, the financial consequences could be devastating to the other spouse’s practice. It was purely by chance that the couple found out that they are married in community of property and after the impact of a joint estate was explained to the couple, they were worried.  Is this what is meant by the part where you say “for better or for worse”?

There is good news and bad news. The good news is that it is possible in South Africa to apply to Court for the change of your matrimonial property system. The bad news is that this type of application is costly. It is therefore strongly advised that couples consider all the legal aspects of marriage before walking down the aisle. Consult with a legal professional regarding the different options available on how to get married and what the legal implications are of the different matrimonial property systems.

Section 21 of the Matrimonial Property Act, Act 88 of 1984, makes provision for the change of your matrimonial property system. According to the Act a husband and wife may jointly apply to court for leave to change the matrimonial property system which applies to their marriage. The court will only grant an order to this effect if the court is satisfied that there are sound reasons for the proposed change, sufficient notice of the proposed change has been given to all the creditors of the spouses and no other person will be prejudiced by the proposed change. Should the parties be successful with such court application, the court will authorize them to enter into a notarial contract by which their future matrimonial property system will be regulated on such conditions as the court may deem fit.

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. Errors and omissions excepted (E&OE).