Offer to purchase question

[PotatoGuardian]

I sincerely hope I don't get stuck with a 90% bond because then I won't be able to get it.

Same with us :/

 

[The_Ogre]

Update: FNB (own bank) came back after 1 day with 90% approval at prime minus 0.43 over 20 years. Originator is going to go back and see if they’d be willing to up the amount (maybe even by extending the term).

I took a 25 year term to get 100% at a better rate. I'm just paying more so the actual amortized term means nothing to me

 

[PotatoGuardian]

I took a 25 year term to get 100% at a better rate. I'm just paying more so the actual amortized term means nothing to me

That’s what we are hoping for as well. The monthly payment matters less than the upfront costs. We also plan to pay extra. We don’t want to deplete our savings and/go into additional debt.

 

[quovadis]

Alrighty. So we inspected the place we put the OTP on again today, because we want to start getting our heads around the whole thing. This is the best chance we've had to date to actually get a place. So we check out everything and as we leave the current tenant stop us, wants to have a chat. So, before I continue, let me explain the setup here.

The tenant is a "bed-ridden" woman, who can't move (apparently). I believe she rents from the owner, and then sub-lets to (as I have counted today) 7 other people also on the premises. This is the first time I'm actually seeing it this clearly. She lives in the main bedroom, and in the other two bedrooms are two other people. Outside is a caravan, two tents and two shacks (literal zinc plate shacks). All apparently occupied. The people inside the house share a bathroom, and the people outside share the outside toilet. There's no refuse for that many people, so they literally just dump their **** in the yard. It's as bad as it sounds.

The tenant sits in her bed all day, smoking and watching all the other sub-tenants on a big TV. That's what she does. Literally. All day.

So anyway, as we're walking out, she stops my wife and I. She wants to know if we're buying, and if we're buying, if we want to stay in the house. I said "yes". She says "OK, by when". I say "as soon as registration happens". Then the **** started forming.

She said that the new owner of the house (who is not the owner, the house is in a deceased estate and the executor is the "owner") never told her that she must move, so she didn't receive her notice yet. She also says she wants 2 calendar months notice before she must move, and she will demand it, so according to her she's only leaving the house at the end of January 2021.

So I tell her that I'm sorry, but as I have it her contract expired already, AND the executor gave her notice to move. I also told her my contract stipulated that I get occupation on registration. She then said "thank goodness, still gives me 3 months". So I said "no no, wait, it can go as quickly as 6 weeks because I already have pre-approval, my paperwork is in order and the OTP is already in". Then she started going on about not receiving notice and she has rights. I told her the day the registration goes through, that is the day I rip out all the carpets and floors in the entire house, I break down the walls and tear down both the kitchen and the bathroom. She just kept quiet. So I said she must take it up with the owner, and left.

So, who's bought a house with a stubborn, sub-letting tenant before? I don't mind fighting the seller, but I'm not fighting the tenant for ****. My OTP states that I get occupation on the date of registration, but it doesn't state what rent I'm due if I can't occupy. That was one of the sections that was left blank.

I sincerely hope your OTP has explicit written conditions stating the tenant will have vacated the premises at time of your occupation and the remedies should that not be the case - you cannot rely on anything not written in this agreement, verbal or other. Because you have the right to occupation of a home on transfer doesn't guarantee that the current tenant and co will not be there and not interfere with your plans. You also need to consider the complication of the sub-letted parties as they can most likely jointly or severally create a huge amount of headache for you. As far as what is due to you in rental that would be based on the current rental agreement and nothing more and nothing less unless renegotiated based on the current agreement. Either way you need visibility of this agreement - if it's only verbal you'll have even more complication. Also, you cannot simply start breaking down a home with a tenant etc currently occupying - you'd be just creating liability for yourself.

 

[zerocool2009]

Update: FNB (own bank) came back after 1 day with 90% approval at prime minus 0.43 over 20 years. Originator is going to go back and see if they’d be willing to up the amount (maybe even by extending the term).

Aiiiii, I sometimes wonder why originators still exist. Going direct is the way. It aint that huge mountain of admin

 

[Speedster]

Aiiiii, I sometimes wonder why originators still exist. Going direct is the way. It aint that huge mountain of admin

What do you lose by using an originator?

 

[zerocool2009]

What do you lose by using an originator?

A better rate (as banks needs to pay a MO for sourcing a client), that gets worked into the interest rate

And the “going” direct perks (eB (FNB) and Nedbank now offers the same huge discounts)

Last night a friend called me, they submitted, and FNB is taking their time. My first question was, did you use a MO, and the reply was YES. I just laughed. My reply, wish the 11th commanded would be, if you buy a house, GO DIRECT. Once a link exist with an OTP and ID (you cant cancel it). I just said follow up with the MO (they are getting paid for the job, so go moan in their ears)

 

[PotatoGuardian]

Aiiiii, I sometimes wonder why originators still exist. Going direct is the way. It aint that huge mountain of admin

As I told you in a private DM when you messaged me with your advice. Our circumstances are a bit complicated and the originator gave us really good advice. I’ve seen some comments on threads where a better rate was secured by an originator.

A risk we are willing to take given our situation

 

[Speedster]

A better rate (as banks needs to pay a MO for sourcing a client), that gets worked into the interest rate

And the “going” direct perks (eB (FNB) and Nedbank now offers the same huge discounts)

Last night a friend called me, they submitted, and FNB is taking their time. My first question was, did you use a MO, and the reply was YES. I just laughed. My reply, wish the 11th commanded would be, if you buy a house, GO DIRECT. Once a link exist with an OTP and ID (you cant cancel it). I just said follow up with the MO (they are getting paid for the job, so go moan in their ears)

In my past two home loan applications the originator obtained a lower rate than I was offered on my own application.

 

[APoc184]

We were happy with the originator and deal he got us.

Each to his own.

 

[zerocool2009]

In my past two home loan applications the originator obtained a lower rate than I was offered on my own application.

Strange how FNB would process the same application privately and via a MO.

Well, in life, you score sometimes.

This is the same on banking profiles (products), it doesnt mean being on top, you would get the best rate. I applied now recently at ABSA and FNB PW/RMB, and both couldnt beat my rate being on a lower level product. RMB wanted to upgrade me automatically. I said no thanks.

 

[The_Ogre]

In my past two home loan applications the originator obtained a lower rate than I was offered on my own application.

My application (that I applied for on my own) was declined outright (and the originator told me they will change some things and submit it again.

These guys lie to the banks, but as long as I can afford my monthly bond and the bond is registered in my name I couldn't care less

 

[Toxxyc]

I took a 25 year term to get 100% at a better rate. I'm just paying more so the actual amortized term means nothing to me

This is exactly what I want to do. 30 year term, but additional payments to pay it off sooner. Hopefully A LOT sooner.

 

[Speedster]

My application (that I applied for on my own) was declined outright (and the originator told me they will change some things and submit it again.

These guys lie to the banks, but as long as I can afford my monthly bond and the bond is registered in my name I couldn't care less

Indeed. They know how best to package my application

 

[Toxxyc]

I sincerely hope your OTP has explicit written conditions stating the tenant will have vacated the premises at time of your occupation and the remedies should that not be the case - you cannot rely on anything not written in this agreement, verbal or other. Because you have the right to occupation of a home on transfer doesn't guarantee that the current tenant and co will not be there and not interfere with your plans. You also need to consider the complication of the sub-letted parties as they can most likely jointly or severally create a huge amount of headache for you. As far as what is due to you in rental that would be based on the current rental agreement and nothing more and nothing less unless renegotiated based on the current agreement. Either way you need visibility of this agreement - if it's only verbal you'll have even more complication. Also, you cannot simply start breaking down a home with a tenant etc currently occupying - you'd be just creating liability for yourself.

I'm aware of this, yes. The OTP states that I will get occupation on registration. It also states if I can't occupy for whatever reason, I'm due occupational rent by the party enjoying current occupation. In other words, the seller.

Luckily my fam is filled with legal eagles.

 

[quovadis]

I'm aware of this, yes. The OTP states that I will get occupation on registration. It also states if I can't occupy for whatever reason, I'm due occupational rent by the party enjoying current occupation. In other words, the seller.

Luckily my fam is filled with legal eagles.

The wording is important. Hopefully occupational rent is specified however if it states "occupational rent by the party enjoying current occupation" then the tenant owes occupational rent and since the tenant isn't party to the OTP good luck in enforcing it. You may wish to consult your legal eagles.

 

[Toxxyc]

Well I told the agent that they need to be out by registration, and they said the executor will evict them if they're not. I don't give a crap about the current tenants - my contract is not with them.

 

[The_Ogre]

Well I told the agent that they need to be out by registration, and they said the executor will evict them if they're not. I don't give a crap about the current tenants - my contract is not with them.

You need to understand how the law works. If there is a lease in place and the place is sold before the lease ends, the lease is still valid since it predated the sale. The one is not more superior to the other as both are contracts.

 

[zerocool2009]

You need to understand how the law works. If there is a lease in place and the place is sold before the lease ends, the lease is still valid since it predated the sale. The one is not more superior to the other as both are contracts.

Tenants take preference! If you want someone to move, you need to provide them with alternative accommodation

I once made an OTP, Standard Bank accepted it, requested the water and lights, it came out the bank is trying to evict them for a while. On that note I politely moved on. Way to much drama and issues

 

[Gozado]

If I've understood it correctly, "occupation" means getting the key, and acquiring the full rights to use the property. If there are tenants in place, then these "rights to use the property" includ the new owner's same rights that he previous owner had, i.e. collecting rent from the existing tenants.

In this case, won't the principle of "Huur Gaat Voor Koop" apply?

HUUR GAAT VOOR KOOP EXPLAINED

When a property is sold when it has a tenant in occupation, the questions often raised are: “What happens to the tenant if the landlord sells the property?

www.saproperty.com

..... the lease has precedence over the sale and the clause “huur gaat voor koop” is in force, which means that the lease takes precedence over the sale of the property and the tenant has a right to remain for the full duration of that lease. ​

​

The conditions of the existing lease do not fall away, and if it has not been cancelled both the tenant and the new landlord are bound by these until such time that the lease is renegotiated or expires​

​

​

HUUR GAAT VOOR KOOP - Schindlers Attorneys

INTRODUCTION The purpose of this article is to examine the maxim “huur gaat voor koop” that applies in South African Law. MEANING OF THE MAXIM Loosely translated it means that an existing lease trumps a later sale. This means that in the case of a lease of immovable property, a tenant is...

www.schindlers.co.za

This maxim is especially relevant in the context when the property in question is sold to a new party. The purchaser (new owner) will take over the lease agreement by ‘stepping into the shoes’ of the seller and have the same rights and obligations against the tenant as the seller of the property before the sale took effect. The seller is substituted by operation of law, meaning no formal ceding of right is required, and the purchaser will automatically acquire all the rights and duties of the landlord under the lease.​

​

In other words, both the tenant and the purchaser will be bound to the lease agreement and neither party can resile from it without following the provisions contained in the agreement itself.​