Estate agents: How to secure your commission

A3BAre you an agency trading through a company or close corporation (CC)?  If so, this is for you – a recent High Court (Full Bench) case in which a close corporation lost its commission because its Fidelity Fund Certificate (FFC) was only in the sole member’s name and no separate FFC had been issued to the CC.

Coming short – a CC without its own FFC

  1. A close corporation estate agency successfully carried out its mandate to find a tenant for a landlord.
  2. Only the sole member of the CC held an FFC, which stated that it was issued to her in her ‘capacity’ as Principal (Sole Proprietor at Firm)’ of the CC, with the CC’s trading name also specified.
  3. The agency sued for its commission when the landlord refused to pay it.
  4. Holding that the FFC had clearly been issued to the member herself and not to her CC, and that this disentitled the CC to its commission, the Court dismissed its claim.

Protecting your commission

Don’t put your commission claims at risk.  Obtain separate FFCs for your trading entity/ies as well as for all directors/members/principals and agents.  The entity’s FFC is issued free of charge but you must display it “in a prominent position” on its premises.

Another risk – the “trading as” scenario

In another recent High Court case, a CC with a valid FFC had fulfilled its mandate to find a buyer for a property, but it did so not in the CC’s name but in its trading name.  The seller refused to pay the agency’s commission, arguing that it had never given a mandate to the CC, which was neither mentioned nor named in either the agency’s documentation or on its website.

The Court, finding on the facts that the CC and its trading name were effectively one and the same, awarded the agency its R78k commission.  But don’t risk having to go the litigation route – avoid uncertainty by disclosing both your legal entity’s name and its trading name/s on all documents, letterheads, website etc. Take full advice in any doubt.

© DotNews, 2005-2016. This newsletter 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 omission. (E&OE)

Dual citizens – don’t risk losing your South African citizenship!

A2BYou are a South African citizen.  You decide to acquire dual citizenship.  Your reasons for doing so are irrelevant – perhaps you are living/working overseas, perhaps you want a second passport just to make travelling easier, perhaps you have financial reasons.  What is relevant is that you risk losing your South African citizenship.

You are certainly allowed to hold dual citizenship, no problem there.  But our Citizenship Act provides that if “by some voluntary and formal act” you acquire citizenship or nationality of another country, you are automatically deprived of your South African citizenship.

You are exempt only if …..

Automatic loss of citizenship does not apply to –

  1. Minors (under 18 years of age) and
  2. Acquisition of another country’s citizenship by marriage.

Here’s how you keep your SA citizenship

The good news is that you can apply through Home Affairs for authority to retain your SA citizenship – but your application must be approved before you acquire your second citizenship.  Don’t leave it to the last minute – processing time is given as “3 to 6 months” and even that could be cutting it fine.  If you are overseas you should find the necessary forms and instructions on your local SA Embassy/Mission/Consulate website.

You’ve lost it automatically – what now?

This is very much second prize, but you can still apply to get your citizenship back –

  • If you were a citizen by birth or descent you can apply for reinstatement only if you have returned to, or are living in, South Africa permanently (you still have permanent residence, you just aren’t a citizen).
  • If you were a citizen by naturalisation, you must re-apply for permanent residence or apply for exemption thereof, before you can be considered for resumption of citizenship.
  • If all else fails, seek legal advice.  There is some speculation that these provisions may not pass Constitutional muster.  This is definitely third prize; there are no guarantees, and you are likely to be in for some serious legal costs.

P.S. Don’t let your SA passport lapse! 

Although you can travel freely around the world on your second passport, you must enter and depart from South Africa on your valid SA passport.  Keep renewing it!

© DotNews, 2005-2016. This newsletter 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 omission. (E&OE)

Could your property debts be cancelled?

 A1B“How, on these figures, an employee of the bank could conclude that the farming may prove to be successful, is beyond me. It seems that money was just being poured into a bottomless pit.” (Extract from judgment below)

If you are a bank (or other lender), or if you have borrowed money against your property and are facing financial difficulty, you need to know about a recent High Court decision declaring that a bank’s loans to a farming couple had been granted “recklessly”, setting aside the loans, and cancelling the mortgage bonds.

The pensioners who went farming; and the bank that funded them

  • A couple used their pension moneys to buy a smallholding and develop it into a small scale farming venture.  They then started borrowing from a bank to meet shortfalls in their cash flow.  The bank secured its loans with two mortgage bonds over the property for a total of R1,151m, and took a suretyship from the couple’s daughter.
  • From day one it seems the farming venture was in trouble and eventually the bank approached the courts for an order to allow it to sell the property in execution.  The couple (and presumably their daughter also) risked losing everything.
  • However it emerged that –
    • The couple had no fixed income other than an annuity of R647 per month,
    • They were relying on loans from family to make ends meet,
    • They were already retired when the loans were granted, and would have been 85 and 80 years old respectively by the end of the 20 year loan period,
    • The bank had incorrectly taken the daughter’s income into account in assessing the loan applications,
    • The farming venture’s prospects of success were never good.
  • The Court, commenting that the National Credit Act (NCA) obliges a credit grantor to assess the consumer’s means, prospects and obligations “reasonably” before granting credit, held that the bank had failed to do so but instead had acted “irrationally”.
  • In the circumstances the couple had, with the help of an expert witness, proved (it being up to a debtor to prove any allegations of reckless lending) that the loans fell to be set aside or suspended in terms of the NCA.  The extent of the bank’s recklessness, the fact that the couple were elderly, and the fact that the smallholding was their only home led the Court to set aside the loans altogether rather than just suspending them.

Reckless lending → Consumers off the hook, bank down R1,74m

The couple must pay the bond cancellation costs, but other than that they – and their daughter who stood surety for the loans – are off the hook altogether.  The bank on the other hand is down R1,74m plus interest and legal costs.

Banks (and other credit providers):  Revisit your credit granting procedures urgently!

© DotNews, 2005-2016. This newsletter 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 omission. (E&OE)