The Pitfalls of Repossessed Property

Buying  repossessed property or property in possession (PIP) have numerous advantages such as obtaining a property  in a well known and sought after area, well below the market value. Before you get too excited and jump in with an offer to purchase to the bank and  apply for a home loan,  let’s have a look at the pitfalls.

Most of these properties need some TLC. You probably won’t move into a perfect home.  If it is a house on a fairly large stand, you’ll spent some on gardening services to clean up the garden, get the lawn in shape and pull out some weed.

It is always good to make a clean start in a clean home. Be prepared to buy some paint to make your new home look as good as new.

What happens when the property has not yet been evacuated? Banks are reluctant to call for eviction due to their reputation being at  risk. The costs and effort will be for the account of the purchaser. Yes, you’ll have to do the “dirty” work.

It gets more complicated when tenants occupy the repossessed home or apartment.  Most of the time the offer to purchase to the bank will contain a clause that will take any tenants’ situation into account and it might be that you’ll have to evacuate the tenants in the end. All this drama while you are eager to move into your new home, but can’t due to legal “constraints”.

Only a sheriff of the court can deliver an eviction notice.

An order for eviction has to be done by a magistrate.

The major two laws applicable in these cases are:

i) Prevention of illegal eviction from and unlawful occupation of land Act No 19 of 1998.  Shortly called PIE

ii) Prevention of illegal eviction from and unlawful occupation of land amendment bill (2005)

iii) Rental Housing Act, 1999.

I strongly advise you, to do your homework before you send an offer to purchase to the bank for a repossessed property. Speak to your lawyer and get first hand knowledge about the legal procedures for eviction.

The best is to make an offer on a house that is already empty. If you have a few thousand to throw around and REALLY want the house (with the possible frustration… ) then go for it!

Happy house hunting

DCL