Real Estate Investor Magazine South Africa March 2014 | Page 44

SMART MOVES

BY RUI MARTO

Ticking all the boxes
The essential checklist for buying commercial property

T

here is a lw ay s g reat e xc itement
around the buying of a new property.
Buyers would be well advised not to
let the excitement preclude them from doing
their homework prior to signing an offer to
purchase. In this article, I provide a checklist
for buying property which should provide you
with all the necessary information that you
require and minimise your risk.

search on the property to verify various aspects
including the identity of the owner, the size
of the property, any existing mortgages or
encumbrances which may exist against the
property and whether there are any interdicts
registered over the property.

Municipal Accounts

Request a copy of the title deed from the seller,
alternatively from your attorney. Check whether
there are any restrictions against the title which
may prejudice your use and enjoyment of the
property. For example, check for any servitudes
in favour of third parties such as a neighbour. If
so, check where these are situated and whether
these are permanent or renewable.

Check that there are no disputes between
the seller and the municipality in respect of
outstanding rates and/or consumption charges
which may delay or preclude the transfer from
taking place. If there is a dispute, such dispute
or litigation may delay the transfer for a number
of months. It is also important to verify that
there are no tenant accounts which may appear
in the tenant’s name but linked to the property,
which may also lead to a dispute or affect the
transfer of the property.

Zoning

Size of Property

Ensure that the property is zoned for the purpose
for which you require. For example, residential,
commercial, etc. If you are seeking to buy a
property and intend to rezone it after purchase,
check with the municipality whether they are
likely to grant the zoning that is required.

When buying a property, especially vacant
land, if you want to ensure that the size of the
property is as represented by the seller, or as
per the beacons delineating the perimeter of
the property, you can request a land surveyor
to measure and verify the size and location of
the property.

The Title Deed

It is important to also check with the
municipality that there are no plans to construct
anything that may adversely affect your use and
enjoyment of the property and its value. For
example roads, railway lines, etc.

Building Plans
Request a copy of the building plans for the
property and ensure that the building of the
property together with any alterations were
built in accordance with the plans and that
same were authorised by the local authority. In
terms of existing case law in South Africa, the
duty is on the purchaser to ensure the above,
as a “voetstoots” clause will have the effect of
indemnifying a seller in such an instance.

Interdict
Request your attorney to do a deeds off ice
42

March 2014 SA Real Estate Investor

Terms of Agreement
Request your attorney to advise you on the
terms of the offer to purchase. You should
especially look out for clauses which may cause
a forfeiture of any deposit paid, interest and
penalty clauses and any clause in which you
are either indemnifying the seller, alternatively
assuming a risk.

Defects in the Property and Voestoots
Clause
Be aware that in terms of a “voetstoots” clause,
a buyer buys the property as is, with all existing
defects. This places an onus on the buyer to
properly inspect the property to ensure that he is
satisfied with the condition which the property
is in. Should the buyer require an assurance in
respect of the working order of certain items,
SUBSCRIBE

same should be included as a special condition
or warranty in the offer to purchase. The seller
should also list all defects in the property to
provide full disclosure in respect of same. There
are various companies that do professional
inspections and provide reports on any defects
on behalf of buyers.
Should the Consumer Protection Act apply
to the transaction the “voetstoots” clause will
not apply. In such an instance, the seller will
be liable for any defects which have not been
disclosed and accepted by the buyer.

Sectional Title
In the case of a sectional title property, a buyer
should check that there are no outstanding
levies for the last three to five years. It is also
recommended that the buyer obtain a copy of
the Scheme Rules and the latest financials of
the Body Corporate to ensure that the Body
Corporate is solvent and to minimise the risk of
the raising of special levies. The aforesaid will
also allow you to gauge whether the Complex is
being well managed.
T he S c heme Ru les w i l l a lso prov ide
important information in respect of the use of
the property within the Complex, for example,
whether they allow pets and other potential
restrictions within the Complex.

Buying from an Estate Late
If the seller is deceased and the property is
being transferred from the Estate Late, it is
important to note that the offer to purchase
needs to be signed by the Executor of the
Estate