Avoiding traps in property deals
Beware of tax, renovations and handshakes.
Despite regular warnings on this subject from most of the major estate agencies, property buyers and sellers, says Lanice Steward, MD of Anne Porter Knight Frank, still regularly ignore some of the basic rules of property transactions. This can on occasion lead to severe difficulties and expensive legal proceedings.
It has to be emphasised time and again that a signed contract is totally binding. For reasons that I have never really understood, some signatories, including affluent people in leading positions in industry, seem to believe that if they change their minds down the line a friendly discussion and perhaps a small compensatory payment will result in the sale agreement being cancelled. Regrettably, although this has been known to happen, most bargainers, particularly in the current market, are hard-nosed and will simply insist on the agreement being observed.
Similarly, some buyers and sellers will persuade themselves that a casual verbal agreement is totally binding.
They will go home in a state of euphoria, thinking that the deal is now a fait accompli, only to find out a day or two later that this is not the case - the seller has changed his mind or received a better offer or the buyer has found something he prefers.
Agents regularly need to remind clients that no deal is binding until it is in writing and signed by both parties.
This seems completely obvious to anyone who has worked in the industry for some time, but it is amazing how naïve and trusting some clients are in this matter, especially when they are not accompanied by an experienced estate agent.
Another common let-down is the ‘inadequate inspection syndrome'.
When a buyer is in someone else's home it is natural to respect their privacy - and there are certain sellers who will exploit this situation. It has to be remembered that the seller has no right to prevent the buyer seeing all parts of the house, even if that is where he works or where certain confidential goods are stored, or for any other reason.
If the buyer does not inspect the property from the cellar to the dome he could find himself with a cracked wall, rising damp, rotted timbers or the like - and regrettably this has been known to happen all too often.
In this situation, it is very often advisable to employ a professional valuer to inspect the property before signing the agreement.
Another pitfall facing buyers is that they may find that alterations have been carried out without Council approval.
Sometimes, a homeowner will add a room or even build a garden cottage without realising that he has to get his plans approved. The buyer can then face severe problems when he himself wishes to make changes and finds that the plans with the Council do not adequately represent the existing building.
Problems can arise if the buyer is in arrears on tax payments. All proposed property transactions are scrutinised by the South African Revenue Service, which will insist on being paid first before allowing the sale to go ahead.
Published by Lanice Steward on Real Estate Web on 11 August 2009