HOW DO I REGISTER A TRUST?

A trust is an agreement between the person who owns the assets and the appointed trustees. A trust can be a good way to preserve your wealth for your family and children. A well-managed trust will make sure that anyone who is a beneficiary of the trust benefits from it. The trustees have the important job to administer the trust and its assets objectively with the best interests of the beneficiaries in mind.

Trusts and their administration fall under the Trust Property Control Act no 57/1988.

What types of trusts are there?

It’s important to note that there are two types of trusts. An inter vivos trust and a testamentary trust. A testamentary trust is one that’s formed from the will of a deceased person. In the case of a testamentary trust the deceased's last will serves as the trust document. An inter vivos trust is created between living persons, and will form the basis of this article. Inter vivos trusts can limit estate duty and preserve your assets and wealth for your descendants. Certain financial institutions assist in setting up a trust and can act as trustees.

Registering an inter vivos trust

To register an inter vivos trust with the Master of the High Court, the following documents must be lodged.

  1. Original trust deed or notarial certified copy thereof.
  2. Proof of payment of R100 fee, for registration of a new Trust.
  3. Completed Acceptance of Trusteeship (J417) and Acceptance of Auditor Application (J405) forms.
  4. Bond of security by the trustees – form J344 (if required by the Master)

* There are no costs involved in amending an existing Trust.

These documents are also required for the Master to issue the trustees with letters of authority for administering the trust. A trustee may not proceed to administer the trust without the written authority of the Master.

If the trust’s assets or majority of its assets are located in a particular area, then the inter vivos trust has to be registered with the Master who has jurisdiction in that area.

De-registering of a trust

The Master can de-register the trust only once it has been terminated. The common law makes provision for the termination of a trust as the Trust Property Control Act makes no such provision. The following circumstances can be grounds for a trust to be terminated:

  1. by statute
  2. fulfilment of the object of the trust
  3. failure of the beneficiary
  4. renunciation or repudiation by the beneficiary
  5. destruction of the trust property
  6. the operation of a resolutive condition

You will still need the original letter of authority, bank statements reflecting a nil balance on the final statement and proof that the beneficiaries have received their benefits.

Administering the trust

Trustees are required to comply with the Trust Property Control Act, which determines how trusts should be administered and the role of the trustees. If trustees fail to comply with the Act they may face criminal prosecution. The trustees have to always act with the best interests of the beneficiaries in mind.

Some legal requirements of trustees include not being able to make secret profits, taking care and being objective when administering trust assets and always acting in good faith.

Reference:

Justice.gov.za. The Department of Justice and Constitutional Development, Administration of Trusts. [online] Available at: http://www.justice.gov.za/master/trust/ [Accessed 19/05/2016].

Sanlam.co.za. Sanlam Trusts. [online] Available at: https://www.sanlam.co.za/personal/financialplanning/willstrustsestates/Pages/trusts/ [Accessed 20/05/2016].

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)

ME, MY NEIGHBOUR AND THAT TREE

A3_bThe house was just perfect – the right neighbourhood, well-established garden, beautiful trees waving graciously in the summer breeze with just the right amount of shade next to your swimming pool and veranda. And as the trees are those of your neighbour, no problem with pruning or the leaves, said the estate agent. You fell in love and your family loves the new home.

Autumn arrives. The leaves have changed colour and you have actually taken the competition-winning photographs right from your doorstep! When the leaves started falling, the swimming pool pump required repairs twice due to blockage and your Saturday golf has been replaced with hauling loads of leaves to the garden refuse. During the first thunder storm of the new season the wind ripped a branch off and whipped the branch through your electric fence, taking all off the wall.

The acorns made dents into your brand new pride and joy, whilst the ripe fruit falling down on your lawn has started to rot whilst you were at the beach house. You can’t wait for them to leave this weekend to jump over the fence with your chainsaw … Problems with trees from adjacent gardens are as old as townships itself and since man moved into closer proximity to each other.

To merely jump over the fence and prune, or worse, cut down the tree to your satisfaction will not only constitute trespassing but also malicious damage to property. Many disgruntled neighbour has approached the courts demanding relief. The courts have carefully considered the basis on which you can approach the court, now generally considered as “nuisance”.

You will have to prove to the court that the inconvenience caused to you by your neighbour’s tree is more than you just being fanciful, elegant or having dainty modes and habits of living. The inconvenience caused must materially interfere with your ordinary physical comfort and your human existence.

The standard that the court will consider regarding this infringing of your health, well-being or comfort in occupation of your property, will be that of a normal person of sound and liberal tastes and habits. The test of reasonableness shall be applied taking into account general norms acceptable to a particular society. Actual damage to your property is not a requirement.

The court will, however, also consider the nuisance, even if the tree(s) is actually causing damage, balancing this with your responsibility to tolerate the natural consequence of the ordinary use of the land. In other words, the court will consider the dispute and the decision will involve balancing the competing interests of you and your neighbour.

The judgement of Judge De Vos in Vogel vs Crewe and another 2003 (4) SA 50 (T) raised a further very important aspect – the environment.

In a world where trees and nature are considered all the more important for our well-being and that of the earth, all the more careful consideration should be taken before a demand for the cutting down of a tree is granted.

Judge De Vos noted that trees form an essential part of our human environment, not only giving us aesthetic pleasure but also being functional in providing shade, food and oxygen. And, like many other living things, trees require, in return for the pleasure provided, a certain amount of effort and tolerance.

With our increasing awareness of the importance of protecting our environment, we need to become more tolerant of the inevitable problems caused by the shrinking size of properties and the greater proximity of neighbours, and consequently, the neighbours’ trees.

Before you sell your property and move to another neighbourhood altogether, consider a friendly discussion with your neighbour and his pruning company of choice, from YOUR side of the fence.

Explain to your neighbour which branches of which trees are problematic or show him the cause for your concern. And be willing to reach an agreement somewhere in the middle, taking the type of tree, its form of growth and the balance of the tree into consideration. It will not suffice to demand the removal of a large branch unbalancing the tree which will then fall over during the next storm taking down your wall!

If all your efforts, including friendly letters and e-mailed correspondence fall on deaf ears, you are allowed to prune all branches as from the point that it protrude over the wall into your property. You are not allowed to lean over the wall to cut those branches at the neighbour’s side of the wall. You will also be responsible for removing the branches from your property after you have pruned the tree in this manner.

So take your cup of tea, and have a good, impartial look at that “offending” tree. See the insects, the birds fluttering around and the odd lizard. Tranquil, is it not? Must that tree go, or can you tolerate its existence, maybe with a little pruning? Cutting it down, you might just open a view into your neighbour’s garden (or house), which is even less pleasing!

Consider the environment. Tolerate that tree. In the summer you will relish the shade.

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)

SALE OF IMMOVABLE PROPERTY AND THE NATIONAL CREDIT ACT

It often happens during a sale of immovable property that the parties agree to a deferred payment of the purchase price. The purchaser will then pay the purchase price in instalments and the seller will charge interest on the outstanding amount from time to time. Sometimes the parties even agree to the registration of a bond over the property to secure the payment of the purchase price.

What the parties don’t keep in mind, however, is that this agreement between the parties constitutes a credit transaction as defined in the National Credit Act (hereinafter called the Act) and that in certain circumstances the seller will have to register as a credit provider in terms of the Act.

To establish if the Act will be applicable and if the seller should register as a credit provider one should carefully consider the following:

  1. The Act will apply to all written credit agreements between parties dealing at arm’s length. This is probably to curb underhand dealings between family members at the peril of other third parties.
  1. Arm’s length transactions are not defined in the Act but they exclude, for example, transactions between family members who are dependent or co-dependent on each other and any arrangement where each party is not independent of the other and does not strive to obtain the utmost possible advantage out of the transaction.

The Act does not apply where:

  1. The consumer is a juristic person whose annual turnover or asset value is more than R1m.
  1. The purchaser is the State or an organ of the State;
  1. A large agreement (i.e. more than R250 000, such as a mortgage) is entered into with a juristic person whose asset value or turnover is less than R1m.

A credit agreement includes a credit facility, credit transaction and credit guarantee or a combination of these. The relevance is the following:

  1. A credit facility requires fees or interest to be paid.
  1. A credit transaction does not necessarily require interest or fees to be paid. An instalment agreement would suffice to qualify as a credit transaction.
  1. An instalment agreement is defined and relates only to the sale of movable property.
  1. A credit transaction also includes any other agreement where payment of an amount owed is deferred and interest or fees are charged.

A mortgage agreement qualifies as a credit transaction [Section 8(4)(d)] and the importance is that mortgage is defined in the Act as a pledge of immovable property that serves as security for a mortgage agreement. Mortgage agreement is also defined as a credit agreement secured by a pledge of immovable property.

Section 40 of the Act requires one to register as a credit provider should you have at least 100 credit agreements as credit provider OR if the total principal debt under all credit agreements exceeds R500 000. Principal debt means the amount deferred and does not include interest or other fees.

It follows that if you sell your home to an individual in a private sale (i.e. where he does not get a bond from the bank) and you register a bond as security, you have to register as a credit provider UNLESS the principal debt is less than R500 000 or the buyer is a juristic person and the price is more than R250 000.

The implications for the seller could be far-reaching if he is not registered, as the agreement will be unlawful and void, and a court must order that:

  1. The credit agreement is void as from the date the agreement was entered into;
  1. The credit provider must refund to the purchaser any money paid by the purchaser under the credit agreement, together with interest;
  1. All the purported rights of the credit provider under the credit agreement to recover any money paid or goods delivered to, or on behalf of the purchaser in terms of the agreement, are either cancelled or forfeited to the State.

The application form to register as a credit provider and also the calculation of the registration fee that is payable to the National Credit Regulator (NCR) can be found on the NCR’s website. If the seller has not registered by the time he enters into the loan agreement he may still register within 30 days after entering into the loan agreement.

Sellers, be careful when you enter into these types of agreements, as non-compliance with the Act could be a costly exercise.

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.(E&OE)

DISPUTES WITH BODY CORPORATE: HOMEOWNERS’ REMEDIES

A1_bOur office recently dealt with a matter where the trustees of the body corporate of a certain sectional title scheme clamped the wheel of the car of one of its homeowners because he did not park on his allocated parking bay.

Even though the homeowner did not park on his allocated parking bay, he could not understand why his vehicle got clamped for parking outside of his own front porch, when he was in and out of the house during the day. It seemed highly unfair and unreasonable to the homeowner.

It is a truism that every homeowner cannot do as he pleases as this would lead to total disorder in the sectional title scheme, and it is the duty of the trustees of the body corporate to enforce rules on owners and tenants alike. When one buys a property in a sectional title scheme one will more often than not find a provision in the agreement which states that homeowners, inter alia, will abide by the rules of the body corporate.

This begs the question whether or not the homeowner’s hands are tied if the rules were amended by a special decision taken at a general meeting by the trustees of the body corporate.

Remedies available to homeowners and tenants

If there is reason to believe that the trustees of the body corporate of a sectional title scheme have acted ultra vires (outside their powers), homeowners have a choice of two remedies – either arbitration or an interdict.

  1. Arbitration step-by-step

The discontented homeowner could apply for arbitration, the duration of which should not exceed a maximum of 52 days.

In terms of Section 71 of Annexure 8 of the Sectional Title Act 95 of 1986, the purpose of arbitration is not, as some believe, to achieve compliance. The prescribed process requires the discontented homeowner to submit his dispute in writing to the trustees of the body corporate of the sectional title scheme within 14 days of the problem arising, whereafter the trustees will review and attempt to settle the matter. Should the problem still not be resolved, either the homeowner or the trustees of the body corporate can request that the matter be referred for arbitration.

The arbitrator has wide discretion in making a costs award. He may order payment by one party, by more than one jointly, or in specific proportions, depending on the outcome of the arbitration. The arbitrator’s decision may be made an order of the High Court upon application by either party, or a party affected by the arbitration.

  1. Alternative remedy

There is a further remedy available to the homeowner, namely an interdict or any form of urgent or other relief by a court with jurisdiction.

But this line of action has elicited the following warning:

Furthermore, the interdependence of the owners and occupants of units and the unavoidable requisite of harmonious co-existence render an interdict inadequate and indeed improper in the sectional title context. A successful application for an interdict can permanently ruin the harmony of a scheme (LAWSA aw para 238).

In essence, if the rules of your body corporate allow the trustees to clamp your wheel should you disobey the rules, and you have reason to believe that your Body Corporate is acting outside of its powers and/or the rules are unreasonable, you may follow the steps as set out above.

NOTE TO ATTORNEYS: See Section 71 of Annexure 8 of the Sectional Titles Act 95 of 1986.

REFERENCED WORK:

See the article “Managing the Unmanageable” by Tertius Maree, published in De Rebus, August 1999.

Also see the article “Arbitration in Sectional Title Disputes” by Tertius Maree, published in De Rebus, August 1998.

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. (E&OE)