By Nadine Lombard
Contracts and Options – Housing Estates, Sectional Title Developments, Township Development in the Tshwane Municipality
When it comes to land use management there are some dates landowners and developers need to be aware of, not to mention how to comply with the extremely important SPLUMA regulations in the Tshwane area. There’s the approval, consent, guarantees, contracts as well as the all-important clause. Here at Bert Smith Inc. we can assist with every step along the way.
First of all, the Dates
1 July 2015 – The Spatial Planning and Land Use Management Act, No. 16 of 2013 (“SPLUMA”) came into operation.
13 November 2015, the regulations came into operation.
2 March 2016 City of Tshwane’s Land Use Management By-Law released.
How to Comply with SPLUMA
Step 1: Applying for Consent
According to the by-law a landowner must first apply for the approval of a land development application from the Municipality. Then, the landowner must apply for consent to enter into any contract or to grant any option with a prospective developer or buyer.
If the Municipality decides that it will grant consent, it will let you know in writing outlining any conditions which the Municipality feels are both practical and beneficial.
These conditions include the type of guarantee and the engineering services you will need to put in place.
Step 2: Supplying the Guarantee
The next step is to supply the Municipality with a guarantee outlining how you will achieve the engineering services that are required. If you haven’t supplied this detailed guarantee in 6 months the consent will lapse.
You aren’t allowed to enter into any contracts, or grant any options, unless this guarantee has been submitted.
According to the by-law, once the Municipality has made a decision it cannot be appealed.
Step 3: The Contract and the Clause
If the Municipality has given you, the landowner, their consent, any contract you enter into should contain a clause stating that the land use rights have not yet come into operation.
If that clause is not included in the contract or option, the contract or option can be cancelled, but only by the developer or buyer, not you – the landowner. If you do try to cancel the contract you will be guilty of a criminal offense.
In Other Words
- Apply for approval of a land development application.
- Apply for consent to enter into contracts of options with developers or buyers.
- The Municipality will let you know in writing if you are successful and what conditions must be met.
- You can’t appeal their decision if you are unsuccessful.
- Within 6 months, supply the Municipality with a guarantee outlining how you will achieve the required engineering services or the consent is withdrawn.
- You can then enter into contracts with developers or a buyer. The contract should include a clause stating the land use rights have not yet come into operation.
- If your contract doesn’t have that clause only the developer or buyer can cancel it.
- If you – the landowner, try to cancel a contract that doesn’t have that clause you will be guilty of a criminal offense.
Unlike in the past, alienation contracts relating to land and sectional title units are now valid and binding only when the land use right come into operation.
If the Land Use Rights Are Not Met in 5 Years
If the land use rights and the Municipality’s approval conditions have not been met within 5 years by the developer, there is a strong possibility the rights, agreements, contracts or grants that have been signed, will fall away, including any deposits that have been paid.
WE STRONGLY SUGGEST that landowners wait until the land use rights are in operation before they enter into any agreements, contracts or options. If you do not, you are at the mercy of Section 31.
If you need guidance on this matter, contact Bert Smith Inc for expert advice.