select
|

Implications for property held in companies

In terms of the new Companies Act, the position of those buying a property on behalf of a company yet to be formed is now more precarious.  If the company on whose behalf they act is not subsequently incorporated or rejects the agreement drawn up by its representative, that individual will be held liable for the purchase or the contract penalties as set out in the contract document.

If the company is incorporated but fails to ratify the agreement in writing or rejects the agreement but fails to notify all involved within three months of its being incorporated it will under the new law be deemed to have accepted the contract.

The person concluding the agreement will only be discharged from liability if the company ratifies the agreement in terms of Section 21 of the Act.

The lesson to be learned, says Clarke, is that anyone planning to buy a property through a company to be formed should familiarise himself with the new Companies Act and keep strictly to it or he will be in trouble.

Clarke also draws attention to announcements which could have serious effects on the ownership and/or transfer of properties:

The Companies and Intellectual Property Commission (CIPCO, formerly known as CIPRO) has revealed that recently over one million companies were deregistered or are in the process of being deregistered by them for failing to submit their annual returns.
A significant number of SA properties are held in companies and that quite often this company has been set up only for this reason. If, due to negligence or some other cause, the property holding company has been deregistered by CIPCO, it will have immediately lost its status as a legal entity.

This, says Clarke, could mean that any agreements entered into by the company while it was registered are possibly invalid and open to questioning.

Furthermore, the company can no longer enter into any legal agreements such as the buying, selling or transfer of property.

Worse still, all the company’s assets (including the property) pass to the State and the “owners” (no longer recognised in law) may have to get State permission to work with or dispose of them.
Clarke advises all who hold property in a company and who have any doubts about whether their corporate governance or judiciary duties have been in complete compliance with the law to transfer the property to a natural person.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK