HOMEOWNER’S INSURANCE FOR LANDLORDS

Apart from paying off a bond on a rental property, property investors/landlords are usually also paying for homeowner’s insurance. What is homeowner’s insurance? Homeowner’s insurance covers the property owner against damages to the structure of the property. This damage could be caused by flooding, fire, wind, hail or other natural causes.

However, the above is not the case with all homeowner’s insurance policies. If you have a standard homeowner’s insurance policy, you might not be protected against any damages that occur while the property is occupied by a tenant or empty. Additionally, this policy might also not cover you for loss of rental income when the property cannot be occupied due to damages.

It’s important to take note of the terms of your policy. Most banks won’t approve a bond unless you have homeowner’s insurance, however, if you are a landlord, it would be wise to check the specific terms of your policy, as you need to ensure that your insurer is aware of the fact that your property is occupied by tenants and not by you, the owner. It’s also important to check if there are any provisions in your policy which prevent you from renting to a certain category, for example, students.

It’s also very important to check if the sum insured stated on your policy is the full replacement cost of the property, and not just its market value, as this could be higher or lower.

The correct coverage might be more expensive, however, paying a little more on your premium is better than finding out that your cover is not valid in the event of a disaster hitting your property. It’s important for new homeowners to know that they do not need to accept the homeowner’s insurance offered by their bank; they are entitled to shop around for the perfect insurance for their needs and requirements.

Keep in mind, you might not have as much flexibility if your property is situated in sectional title schemes because there will be only one homeowner’s insurance policy for the whole building or complex. The premium will have to be paid either annually or monthly by all the members of the body corporate.

Additionally, there are several other insurance matters for landlords to be aware of, which include household contents that belong to tenants that must be insured by them; the landlord is not responsible for any damage or theft of tenants’ possessions. However, if you are renting your property furnished, you will need to take out a separate household contents policy to cover the furniture and equipment that belong to you.

In conclusion, if you are renting your property, always make sure that you check your policy, to save yourself both time and money in the event of damage to your property.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

ELECTRONIC SIGNING OF DOCUMENTATION

The commercial world is currently moving to greater levels of digitisation. Organisations are implementing automated and electronic solutions in an effort to improve efficiency and better the environmental footprint at the same time. The move to digitisation and electronic signatures prompted questions surrounding the legality of these documents. This article aims to highlight certain legal aspects of electronic signatures in both a general business environment and an audit industry environment.

Different types of electronic signatures

The Electronic Communications and Transactions Act, 25 of 2002 (ECTA) differentiates between standard electronic signatures and advanced electronic signatures. Standard electronic signatures include digital or scanned signatures. An example would be using an iPad to sign a document or merely printing, signing and scanning the document. Advanced electronic signatures are defined as electronic signatures which results from a process which has been accredited by the Authority as stipulated in Section 37 in the ECTA, for example, Quicklysign.

Standard electronic signatures are sufficient in most instances if and when the method of signing had not been agreed upon by the parties beforehand. Advanced electronic signatures are required for a suretyship agreement as well as signing as a Commissioner of Oaths (Section 18 of ECTA). Some documents are specifically excluded from being signed electronically (as per Schedule 2 of ECTA) for example:

  • an agreement for alienation of immovable property;
  • an agreement for the long-term lease of immovable property in excess of 20 years
  • the execution, retention and presentation of a will; and
  • the execution of a bill of exchange as defined in the Bills of Exchange Act, 34 of 1964.

Electronic signature of financial statements

Stakeholders in the audit industry will be all too familiar with the challenges being posed by printing various sets of financial statements, only to be scanned again after signature. The industry seems to be one of those that will benefit from the efficiencies provided by electronic signatures but are these electronic signatures on a director’s and auditor’s report acceptable?

The Independent Regulatory Board of Auditors (IRBA) identified the increase in usage of electronic signatures on financial statements and audit reports and reported on the matter through the 2017 public inspections report. IRBA communicated that the following challenges are experienced by the practice of electronic signatures:

  • uncertainty as to the identification of the final version of the auditor’s report and annual financial statements;
  • uncertainty as to the approval by the company’s board of the exact final version of the annual financial statements; and
  • the risk that the incorrect annual financial statements are published.

We are of the opinion that an advanced electronic signature service provider, as approved by the ECTA, will sufficiently mitigate the above-mentioned challenges identified by IRBA. Contact us in order to obtain more information as to how we can assist in finalising documentation efficiently.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)