Sharp practice in the shade

Snatched: Hijacking buildings usually involves criminals controlling rent collection. Jo’burg’s mayor Herman Mashaba has embarked on a campaign to resolve the problem. (Madelene Cronjé & Cornel van Heerden/Gallo/Beeld)

Snatched: Hijacking buildings usually involves criminals controlling rent collection. Jo’burg’s mayor Herman Mashaba has embarked on a campaign to resolve the problem. (Madelene Cronjé & Cornel van Heerden/Gallo/Beeld)

Zaheer Ali Hoosen was perplexed last month when the results of a deed search for his property, which was auctioned off in 2015, showed that he and his former wife were still registered as the owners. Next, he found the water and lights bill was also still in their names.

Sitting on a sunk-in couch at the run-down Bezuidenhout Valley property in Johannesburg, an unnerved Hoosen explains how he was under the impression that the property had been successfully auctioned off by Standard Bank. After all, the bank has not been in contact about bond repayments ever since.

After the auction a representative for the new owner presented Hoosen with a signed offer to purchase.
The new owner’s agents then proceeded to collect rent from the property’s tenants — R25 000 a month, Hoosen estimates — and have continued to do so for two-and-a-half years. The transfer of title, which typically takes three months, is yet to take place.

The hijacking of buildings has plagued the Johannesburg inner city for decades. Often it takes the form of heavy-handed criminals who take over rent collection in an occupied building they don’t own.

The Bez Valley property appears to have fallen victim to a different kind of property rights game — one that operates in grey areas of the law, using loopholes and delay tactics while the collection of rent goes ahead unhindered.

Hoosen lost his property to auction after his import-export business suffered and he struggled to make the bond payments even with added income from renting out portions of the property. When a geyser burst in February, Hoosen, who lives on the property, found the water tap could not be turned off, was surrounded by loose concrete and that the water meter was missing. Hoosen made inquiries and found the transfer of title had never happened and that the rates remained in his name.

Hoosen’s questions about the water meter to presumed representatives of the purchaser went unanswered. Hoosen has never met the buyer but a person who collected rent on behalf of the purchaser referred the Mail & Guardian to a Mr Chopdat. Chopdat could not be reached at any of the four cellphone numbers provided for him.

Standard Bank, however, told the M&G this transfer could not be lodged until a rates clearance certificate from the city council is obtained.

And the struggle to get the rates clearance has continued since the recorded sale on September 17 2015 “on account of missing water meters and council delays/inconsistencies in order to lodge and transfer the property to the purchaser’s name”, the bank said in a written response.

Further, Standard Bank said it cannot legally cancel the sale as the purchaser has disputed the rates clearance.

The council has been unable to issue new figures to date because of the “unavailability of water readings”.

Standard Bank noted that the purchaser has paid a substantial sum in rates consultants’ fees to finalise the water problems, to no avail.

Although the number of times this property has encountered water problems is “unusually high”, Standard Bank said the property was sold by a sheriff on public auction to the highest bidder present.

“We therefore have no control over who purchases the property on auction to enable us to limit individuals who regularly ‘play the system’ or use delay tactics to legally collect rental monies for tenants put in the property until the property is transferred, if this is indeed the case.”

Advocate Victoria Rammala, director of property hijacking investigations at the City of Johannesburg’s Group Forensics and Investigation Services, said the investigations unit was aware of a modus operandi that prevents conditions of sale being fulfilled and so an offer to purchase never goes through. The ultimate aim is to ensure the property cannot change hands, Rammala said.

“This is an organised crime kind of activity; it’s a syndicate,” said Rammala. “We are trying to crack it.”

It can take various forms. An estate agent may approach a distressed homeowner to facilitate a bogus sale. Or the owner may be shown a fraudulent writ of execution and the property is auctioned, only to find there was never a legitimate order at all.

Rammala said she had also come across a scenario in which, after a legitimate auction, only the deposit is paid, causing the sale to fall through, but not before the prospective buyer has collected rent from occupants.

In all instances, someone in the value chain is not doing their job — “there must be corrupt activity”, Rammala said. The investigations team is working closely with parties such as banks and estate agents.

The name “Chopdat” has arisen in other matters of interest, two of which were reported to the unit last year. “We then received a complaint of more than 10 properties where the same person was implicated,” Rammala said.

The South African Board for Sheriffs, a statutory body, did not respond to questions, but one Johannesburg sheriff, on condition of anonymity, explained that the auction process can be exploited by wily operators in various ways.

The attorneys are required to place an advert for the auction but this itself is not evidence that an auction has taken place.

For example, “the owner can still stop it through a successful negotiation with the bank”.

Upon completing an auction, both the sheriff and the purchaser sign a conditions of sale agreement.

“But the mere fact that there is a signed agreement doesn’t mean this sale goes through,” the sheriff said. 

The sheriff will require a 10% deposit of the purchase price and his or her commission before the deal is done. If the 90% balance is not paid up within the stipulated time, the sheriff can cancel the sale.

It’s never been required that the sheriff notify occupants if a sale has been cancelled.

But amendments to the law, effective December last year, now do require this.

If a sale falls through the bank can reinstate the auction and schedule a new date, or they may find a private buyer or elect to renegotiate with the former owner.

“Some guys try to do this, and they do their homework where the 10% deposit they stand to lose when the sale is cancelled at times counters what they might collect from rent in that time,” the sheriff said.

If a sheriff notices a pattern of such behaviour with any particular bidder, he or she has a duty to ban that person from the auction, the sheriff said.

The city is trying to tackle particular grey areas that have been exploited in the past, Rammala said.

Hoosen sees this peculiar situation as an opportunity to get his property back. The rental alone would cover the bond repayments and the water bill, he says.

“Standard Bank shouldn’t really be harsh on me because they basically never bothered to collect here, for two-and-a-half years … so why be hard on me when I want to get my house back?”

The tenants at the Bez Valley property see a potential opportunity too. Christian Ombola, a burly man who has rented a two-bedroom space here since 2012, says he’s not sure what he must do now.

“I’m confused. Maybe I will be the winner. I can’t pay to Zaheer, I can’t pay to Chopdat. They must sort out the documents.”

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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