Real Estate Can Re-open on Monday 1 June 2020 | General

South Africa is preparing to get back to work on Monday, 1 June - with the Covid-19 Command Council stressing the importance of workplace health and safety procedures. 

The new Level 3 regulations allow both commercial and residential property practitioners to get back to work; short term rentals for Leisure purposes remain restricted; evictions still on hold, unless ruled just by a competent court; and moving to new places of residence can continue.

South Africa's Covid-19 Command Council briefing on Thursday, 28 May detailed the final Level 3 Alert Level Regulations giving most of the country's workforce, including the Real Estate industry, the green light to start operating fully.

The former Alert Level 3 restriction on residential property sales and operations no longer apply. This means an estimated 46 000 property practitioners, who have not earned an income since the lockdown came into effect, will now be able to go back to work.  

Crucial to the re-opening of the industry on Monday, will be the implementation of the proper health and safety protocols, including the need for a Covid-19 officer and safety plan that can be implemented and inspected as needed, as detailed by the CCC.

With regard to real estate, Estate Agents were previously restricted to doing as much of their services remotely - by taking listings, mandates, signing Offer to Purchase agreements electronically and facilitate bond applications. The industry was also encouraged to conduct virtual viewings with pre-recorded video footage of a property, as residential property viewings and show houses were restricted.

As the industry opens up from June, government is still advising extreme caution, especially in the country's hotspots, as social distancing and the compulsory need for screening and wearing of masks continues to be crucial. 

Michelle Dickens, Managing Director of TPN Credit Bureau says, "It has been a long, stressful wait but we made it! Estate agents can all now return to work - both commercial and residential. It is business as usual with the necessary safety precautions in place.

"There are no exclusions except that where you are able to work from home, you need to do so. As well as strict compliance with health protocols and social distancing measures.

Dickens highlighted the specific exclusion for the rental market, as listed in Table 2 on page 15 of the Alert Level 3 Regulations means that  "short-term home sharing/ letting/leasing or rental for leisure purposes" was not allowed. 

Commenting on the opening up of the industry, Vuyiswa Mutshekwane National Property Practitioners Council (NPPC) Chairperson says The NPPC, through its various member organisations have developed a comprehensive set of health and safety guidelines for the Real Estate Sector that will assist in preventing the spread of infection across our value chain. 

As the largest national industry trade association, the NPPC is encouraging "Principals and practitioners to adopt these guidelines and create their own internal Standard Operating Procedures [SOPs] for all employees returning to work. Protocols have also been developed for property viewings together with client consent forms and tracking and tracing procedures in line with international best practice."  

What about hotspot downgrading?

Tony Clarke, MD of the Rawson Property Group, says permission to operate under Level 3 is the result of extended lobbying by the industry but the discussions are far from over. The Rawson Property Group has also contributed to the formulation of proposed workplace plans and viewing safety protocols now adopted as the official stance by the Real Estate Business Owners of South Africa (REBOSA).

“Real estate is such a huge contributor to the South African economy, and the source of countless jobs, both directly and indirectly,” says Clarke

“Our goal is to have the industry formally reclassified as a Level 4 service to ensure vital continuity should hotspot flare-ups cause a return to stricter lockdowns. 

“We don’t want to end up in a situation where new leases or sales are paused halfway through the process because we went back to Level 4 lockdown and buyers, sellers and tenants were left to their own devices with no professional assistance,” he says. “This was a major issue with the original lockdown and we want to do everything we can to make sure we don’t end up there again.”

Can tenants move?

While the curfew is being lifted from the beginning of June, certain restrictions and permits are required for domestic and inter-provincial travel and moves. Dickens says, "The movement of persons between provinces, metropolitan areas and districts and hotspots is prohibited except if you are moving into a new place of residence, in which case you must be in possession of the affidavit referred to as Form 6 in the Regulations. The affidavit needs to be signed by a Justice of the Peace or Commissioner of Oaths."

Mutshekwane says, "We are also in discussions with the EAAB, the Department of Human Settlements and other industry stakeholders with regard to proposing measures to stimulate the industry going forward. A return to work for real estate also means a return to work for many downstream activities and sub-sectors linked to real estate like removal companies, artisans including electricians and plumbers and valuers."

Can landlords now evict tenants?

Regarding evictions, the rule regarding evictions remain the same as per level 4 - meaning they are not allowed to be enforced, except under exceptional circumstances.

"A competent court my grant an order of eviction provided that the order of eviction may be suspended until the last day of the Alert Level 3 period unless a court decides that it is not just and equitable to stay and suspend the order," says Dickens.

Property law expert Jaco Rademeyer says COVID-19 may potentially affect both landlords and tenants financially, leaving either party unable to meet their financial obligations. It is therefore imperative that all parties become involved in finding solutions, should this occur, advises 

"If you get an eviction notice in this period it is not enforceable before lockdown is lifted completely - only if a court application is brought and decide by the court, can an eviction be effected."   

Rademeyer says it is important to look at what lease agreements provide from a legal perspective, it is important to look at the common law principle of “force majeure” or “Act of God”. This “force majeure” can cause an agreement to become impossible to comply with and can cease a party’s contractual obligation as a result of the principle of a “supervening impossibility”. An Act of the State falls within the ambit of “force majeure”. For a party to raise the lockdown as a defense against non-performance of paying rent (as example), it must be shown that the lockdown is the reason for the non-performance.

"If the lease does not contain such a clause, then the common law will apply. In terms of the common law, parties can rely on “supervening impossibility of performance” to suspend their obligations under the contract. An example would be if the landlord can’t offer the tenant free use and enjoyment of the premises. We would advise landlords to have a look at their agreements and what they provide for. Furthermore, investigating insurance policies (commercial leases) and whether they provide any relief mechanisms to cover for example rent payments, is an avenue to explore.

"Strategic financial planning, negotiation and consultative discussions are the only way to overcome the effects the lockdown may have on the rental relationship."

Article Courtesy of Property24

 

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