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Jul 22
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Expropriation Bill South Africa

Expropriation Bill 2015 – Compensation, The Vexed Question

By | Expropriation Bill

Last week we looked at the Expropriation Bill 2015 and what it means for property owners. In the second part of this article we deal with an aspect beset by controversy – compensation: how much and when.

Expropriation Bill South Africa

 

How is compensation determined?

What is ‘just and equitable’? How and when will compensation be paid?

It’s worth noting that one of the better features of the 2015 bill, compared to the 2008 version, is that compensation is decided by the courts, not by the state.

Issues affecting the amount of compensation to be paid are:

  • Current use of the property
  • History
  • Market value
  • The extent of direct state investment and subsidy in the acquisition and beneficial capital improvement to the property
  • Purpose of the acquisition

 

An expert, unbiased opinion might be useful at this stage – property and its value, apart from being a financial transaction, can arouse strong emotions.

You should be aware of some factors the authority will ignore when determining compensation:

  • The fact that the property has been taken without the consent of the expropriated owner/right-holder
  • Any special suitability or usefulness of the property, if it is unlikely that the property could have been purchased on the open market for that specific stated purpose
  • Any improvements made to the property resulting in illegal use are not included in the valuation
  • Improvements made after the notice of expropriation was served (unless an agreement has been reached prior to expropriation)
  • Anything that was done with the aim of claiming compensation

 

What to do when you receive notice of expropriation

If you are the owner or holder of an unregistered right, you should respond to the notice of expropriation within a 20-day period (which can be extended), whether or not you agree to the expropriation or the amount of compensation payable.

If you claim an amount of compensation and this is rejected by the authority, the authority has to propose a ‘just and equitable’ amount, detailing how this amount has been calculated and what is included. In this situation, you will need to provide supporting documentation within 20 days of delivery of the statement indicating the amount claimed.

If an agreement is not reached at this stage and you don’t institute legal proceedings, it is assumed that you have accepted the offer. If you are entitled to compensation, 80% must be paid to you on the date the authority takes possession of the property.

 

Mortgaged property and rates

If there is a mortgage or a deed of sale on your property, the appropriate amounts are paid by the authority to the bond-holder or buyer. If you cannot reach agreement with the bond-holder/buyer, then the matter will be decided in a court application.

Property rates and other charges are paid by the authority from the compensation. (The municipal manager is responsible for ensuring that the information regarding outstanding charges is forwarded to the authority.)

Under certain circumstances, it may be necessary for compensation to be deposited with the Master of the High Court – for example if the property was a bequest to people unknown to the parties involved, or if the address of the payee cannot be provided.

 

Extenuating circumstances

Your property may be expropriated on a temporary basis – in the event of a disaster, for example. ‘Temporary’ means a period not longer than 12 months (this may be extended by court order) and some of the provisions of the bill are waived. Compensation is payable.

If, for any reason, the property is no longer needed – perhaps the reason for the expropriation is no longer in the public interest – it can be withdrawn, in which case there is provision for recompensing the owner.

 

The way forward

Does the bill infringe the Constitution on issues such as property rights and the removal of the ‘willing-buyer, willing-seller’ approach? The bill seems to relate not only to land, but to shares, intellectual property and, indeed, moveable property. Are we heading for a Zimbabwe-style land grab or are we protected, at least to an extent, by our Constitution?

As mentioned in the first part of this article, there has been a great deal of discussion around the Expropriation Bill, mostly relating to the constitutionality of the powers given to the minister and state organs to expropriate property either for ‘public purposes’ or ‘in the public interest’.

The debate is likely to continue until the pertinent points have been addressed and clarified, probably in the Constitutional Court, and there are calls from the DA, AgriForum, and the Institute of Race Relations for further discussion.

 

Help is at hand

Meantime, if you are faced with a possible expropriation, we strongly advise you to read the bill/act and prepare to take legal advice. This is a potential minefield, but with the right approach you could save yourself time, money AND heartache. Contact Simon today on 087 550 2740 or email sdippenaar@sdlaw.co.za

 

Jul 12
0

Expropriation Bill & Land Reform – What You Need To Know

By | Expropriation Bill

The word ‘expropriation’ sends a shiver down the spine of many property owners and so the Expropriation Bill, passed by the National Assembly in May 2016, has attracted a great deal of attention.

Just what is ‘expropriation’? Very simply, it is the taking of privately owned property by government (the expropriating authority) for the public good in return for ‘just and equitable’ compensation.

The Expropriation Bill in South Africa - Land Reform

Expropriation Bill

Expropriation has been acknowledged by the Constitution of South Africa as a means for the State to proceed with land reform, land redistribution and service delivery, for example. The 2015 Expropriation Bill is the latest – and depending on your viewpoint – the most effective and fairest legislation to date to deal with South Africa’s land issues.

That doesn’t mean it’s perfect! Questions are still being asked about the constitutionality of the bill and there is much concern about the powers given to the State in matters of expropriation, the amount of compensation that should be paid, property owners’ rights and so on.

Should you be worried? In this article we will give a brief overview of the clauses of the bill and aspects being debated. While it’s important to be aware of the ramifications, all is not doom and gloom, at least not at this stage.

Practicalities

How will the bill work in practice? Are there enough qualified people in the employment of the State to implement the provisions of the expropriation bill? There is a lack of clarity here as well; the bill has yet to be tested in court. How robust is the document, currently awaiting the signature of the President before it becomes an Act of Parliament?

Objectives of the Bill

The stated objective of the expropriation bill is to provide a uniform and fair procedure or framework for all expropriations, within the provisions of the Constitution.

In this context, the history of the acquisition of the property, the current use of the property and the purpose of the expropriation will be taken into account. As a land/property owner, you have the right to approach the courts if you believe the proposed compensation is inadequate. (The legal route can be a costly and time-consuming exercise; mediation is an alternative but this might not work for everyone.)

Let’s look briefly at the provisions of the bill …

How does it work?

The expropriating authority can only expropriate property for a public purpose or in the public interest.

If there is an intention to expropriate your property (remember, this is not restricted to immovable property), you will have the opportunity to negotiate with the authority (except in the case of an urgent, temporary use). The bill is clear that every effort must be made to reach agreement with the property owner/holder of an unregistered right.

What powers does the Department of Public Works have?

The minister has a ‘general power’ but property can only be expropriated if this is directly connected to the minister’s mandate. These powers can be delegated to officials in the Department of Public Works.

There are some limitations in delegating the powers. Officials may not:

  • Expropriate
  • Expropriate urgently on a temporary basis
  • Withdraw an appropriation
  • Make regulations

The pre-expropriation phase

The expropriation bill outlines the guidelines that ensure the property is suitable for purpose:

  • The effects of registered and unregistered rights on the property (if there are any) on the possible expropriation have to be investigated thoroughly
  • The authority has the right to mandate surveyors and valuers to inspect the property, but if damage occurs as a result of these inspections, compensation may be due to the owner
  • Other government departments – Rural Development and Land Reform, Mineral Resources, Water Affairs and Sanitation, for instance – and the relevant municipality must be consulted

What next?

The notice of expropriation is then served to all affected parties, detailing the following:

  • A description of the property
  • Purpose of the expropriation
  • Reason for the expropriation
  • A directive to the owner/s to provide details of any unregistered rights on the property
  • Details of the amount claimed as compensation
  • Diagrams or sketches

What happens if you have a right over a property? Rights are dealt with individually and separate notices must be delivered to each right-holder. Everyone has the same opportunity to object (in writing) and the authority has to consider all objections and submissions in good time before proceeding with expropriation. Incidentally, the same terms and conditions apply to rights-holders as to owners.

If you are involved in the expropriation of your property, the authority takes possession in the period between the delivery of the notice and the actual expropriation. Compensation will be paid for costs incurred but it is your responsibility to maintain the property.

In the second and final part of this article we’ll outline the remaining clauses and briefly discuss some of the concerns being expressed about the bill.

Contact Us

Meanwhile, if you have concerns about the expropriation bill or your property and want to talk to an expert, contact Simon on 087 550 2740 or email sdippenaar@sdlaw.co.za

Simon Dippenaar & Associates Inc. is a law firm in Cape Town and Gauteng with eviction lawyers and attorneys specialising in eviction law.

Further reading:

Nov 18
0

Keep your rental income flowing freely

By | Evictions, Lease Agreement, Rent | No Comments

Rental Income - Eviction Lawyer South Africa

Have you recently become a landlord? Or maybe you’ve had problems with tenants in the past and want a bit of guidance to avoid trouble in the future? We’ve laid out the key things you need to know when embarking on a rental agreement with a new tenant.

Is a formal lease necessary?

A written lease is not essential for your agreement to be binding, but it can save a lot of hassle later on and prevent disputes over ‘who said what?’ Putting everything in writing will clarify the terms and conditions of the rental agreement and ensure you have captured all the minutiae that can lead to conflict if not addressed at the outset. Are pets allowed? Can your tenant let the spare room for cash? What date in the month should the rent be paid? A written lease spells everything out so there is no doubt on either side. And if your tenant requests a written lease, you must comply.

We can draw up a lease for you or you can download a standard lease agreement here.

What information should be included on a written lease?

  • Your name and your tenant’s name
  • Your postal address
  • Your tenant’s postal address
  • The address of the property being leased
  • The agreed rent, the amount of increase and when it may increase (e.g. by 10% at annual renewal) and the frequency of payment (monthly, quarterly, etc.)
  • The amount of any deposit
  • What each party is responsible for, e.g. utilities, maintenance, etc. (usually, tenants pays for charges related to things they use, such as water and electricity, and landlords pays for charges related to the property, such as rates)
  • The notice period for quitting the property (applicable to both parties) and the conditions under which you can end the agreement early (for example, if specific maintenance is not done, or if the tenant is in arrears with the rent)
  • If there are ‘house rules’, such as no loud parties, they should be signed by both parties and attached to the lease
  • A list of defects drawn up during a joint inspection when the tenant moves in. This should be signed by both parties and attached to the lease

How does a background check work?

You should always ask prospective tenants for references. While it is normal to obtain a reference from the current tenant, it can also be helpful to speak to previous landlords, in case the current landlord gives a good reference simply to get rid of an undesirable tenant. You should also request a letter from the tenant’s employer to verify his employment status and income. You can also do an ITC credit check (call TransUnion ITC on 0861 482 482 or visit www.transunionitc.co.za) or we can carry that out for you.

What about a deposit?

A deposit is your insurance against your tenant defaulting on the rent or damaging your property beyond normal wear and tear. A deposit must be put in an interest-bearing account for the duration of the tenancy and given back to your tenant, plus the interest it has earned, when the tenant moves out. But the deposit can legally be retained and used to pay for repairs or to cover the money owed to you in the event of non-payment of rent.

What if the tenant is behind with the rent?

Technically, your tenant is in breach of contract. Your lease should have a breach clause in it; this is the time to enforce it. If you don’t have a cancellation agreement or breach clause in the lease, or if you want to give your tenant a reasonable chance to put things right, it is good practice to write a letter giving your tenant seven days to pay, failing which you will cancel the lease. We can draft the letter and send it on your behalf. Many tenants will take a ‘lawyer’s letter’ more seriously than one from the landlord alone!

What is the eviction process?

A landlord may not evict a tenant. You may seek a court order to evict a tenant if your tenant is in breach of contract, for example if the rent has not been paid. However, we would urge you to encourage the tenant to rectify the breach. In fact the Consumer Protection Act allows for this. Legal action is the last resort and, however justified, is never pleasant, especially where someone’s home is involved, so it is always advisable to give the tenant the opportunity to put things right.

What if there is damage to the property?

There will always be normal wear and tear. More serious damage can be repaired out of the deposit, if you asked for one. These steps will ensure a fair process for both parties:

  • When your tenant moves in, inspect the property together and list, in writing, any existing defects – you should both sign this and attach it to the lease agreement
  • When your tenant moves out, inspect the property again together, preferably just before moving day. Compare the two lists
  • Either of you can do the repairs. If you decide to do them yourself, keep all receipts for repairs paid for out of the deposit. Your tenant is entitled to see them
  • If the repairs cost less than the deposit plus the interest earned, you must repay the balance to your tenant

Who can help?

The Rental Housing Tribunal can advise you of your rights and responsibilities as a landlord and can help in the event of a dispute with a tenant.

Or contact us. At Simon Dippenaar & Associates Inc. we are a firm of specialist eviction attorneys with extensive experience in eviction law and property law. We act for both landlords and tenants and therefore know the challenges faced by both parties; and we have an intimate knowledge of the legislation from both sides.

Call Cape Town Eviction Attorney now on +27 (0) 86 099 5146 or email sdippenaar@sdlaw.co.za if you need help drawing up a lease or handling a difficult situation with an existing tenant.

Further reading: