IEASA National - News

Review your documents - again!   Article Date :24 May 2005 Changes in legislation may effect estate agents' standard contracts and other forms Any printing firm which has an estate agency as a client should be doing well, given the constant stream of changes in legislation which necessitate the amendment and reprinting of estate agents' standard contracts and other forms. In January, it was the new scale of stamp duties. Last month, we reminded estate agents to remove any remaining references to the IEA recommended commission tariff, which was abolished more than a year ago. Now, in the light of two recent Rental Housing Tribunal cases, we recommend that estate agents review those clauses in their lease agreements which deal with payment of municipal rates and service charges. Municipal charges and billing have become more complicated over the past year or so. As matters now stand, in the City of Cape Town, a property owner receives an itemised account for (a) rates, (b) a refuse "disposal charge", (c) a "solid waste disposal levy", (d) a sewerage "basic charge", and (e) a sewerage "disposal charge". As far as leases go, common practice has been for the landlord to pay the rates and for the availability of services, and for the tenant to pay for the actual consumption. Leases which we have looked at refer in rather general terms to "sanitary fees", "levies", "service charges", and "municipal charges", but with the introduction of the more detailed municipal billing system, the meaning and interpretation of such terms can be questioned - hence the two cases brought before the Tribunal. Does the term "levies", for instance, apply only to sectional or shareblock levies (paid to bodies corporate) or does it now also apply to the municipal waste disposal charges which the CCT calls "levies"? In the two Tribunal cases, the landlords held that it applied to the waste disposal levy too and tried to pass on the responsibility to the tenants. The tenants objected, and the Tribunal agrees with them. The Tribunal's decision and recommendation is that the landlord should be responsible for paying for the rates (a), the "solid waste disposal levy" (c), and the "basic charge" for sewerage (d). The tenant should be responsible for paying the refuse "disposal charge" (b), and the sewerage "disposal charge" (e). This is the principle which the Tribunal will apply in future cases of this nature. So, we urge letting agents to review their leases in the light of the Tribunal's recommendation, and to make the wording more specific. Those operating outside the City of Cape Town, should check with their local or district municipalities to establish exactly what names are given to the charges and levies in those areas, so as to eliminate as much room for doubt and dispute as they can. Agents should also bear in mind that, since January, any amounts which the landlord pays and then recovers from the tenant have been subject to stamp duty, and that if the exact amount can't be calculated when the lease is signed, then the duty has to be calculated at the end of the financial year, based on what was actually paid. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE