PART: 1

Chapter 1 - General Background

Definitions

Diagram - Is an A4 size map prepared by a land

surveyor, generally reflecting the boundaries
and beacons of a property.
- Depicts a small piece of pieces of land
General plan - Is a combination of diagrams on one large
sheet of paper reflecting more than one
property
- Depicts a large of number of properties such
as numerous erven in a township
development scheme
Deed of transfer Is a document by which property is transferred
from one person to another and after transfer it
serves as the owners title to prove his ownership
in land
Certificate of title Is a substitutive title issued to an existing owner
of land but it can never effect transfer of land
Leasehold property Entails qualified ownership in land.
- Before 1991 leasehold ownership was
limited to a fixed period whereafter it reverts
back to its grantor
- After 1991 this limitation fell away and
leasehold property became in effect property
in expectation of freehold
Freehold property Entails full ownership without any time
limitations
Attest Means to sign a document as a witness
Execute The terms is reserved for those instances where
a conveyancer and a Registrar of Deeds sign a
deed, for example a deed of transfer or a
mortgage bond
Title deed Means any deed which proves a persons right in
respect of a piece of land, whether it is the right
of ownership or any other real right
Appearer Means a person appearing for a client in a legal
matter
Endorsement Refers to the Registrars mark or endorsement
on a deed
- Factual endorsement: merely serves to note
a fact on a deed
- Registration endorsement: effect transfer of
ownership of immovable property
Joint estate Refers to an estate of a husband and wife
married in community of property
Marital status Refers to whether a person is married or
unmarried
Mortgagee - Is the person who lent money to another
person and as security for the repayment of
the debt required such a person (the
mortgagor) to register a bond over the
property in favour of the mortgagee
- He is the creditor who holds the bond as
security
- He is called the bondholder
Mortgagor - Is the person who offers his property as
security for fulfillment of an obligation
towards the mortgagee
- He is the debtor
Real right Is a persons right with regard to land
Transferee - Is the person to whom ownership of land is
being transferred
- He is the new owner of land (he is the
buyer)
Transferor - Is the owner of land who transfers his
ownership of land to another person in other
words he is the seller of the land
 Chapter 2 - Transfer Procedures
Steps to be taken from the moment the seller instructs you as a Conveyancer to attend to the
transfer of the property registered in the name of the seller up to the stage when the
documents are ready for lodgement:

1. Conduct a deeds office search, check the property and party descriptions and whether there are
any bonds registered over the property
2. Ask for personal documents from the seller and purchaser
3. Call for the title deed and guarantee requirements (cancellation figures) from the existing
bondholder
4. Prepare all transfer documents and call on both the seller and purchaser to sign. Collect a
deposit for all your costs from the purchaser
5. Apply for a rate clearance certificate; and obtain transfer duty reciepts and obtain the rate
clearance certificate
6. Call for guarantees from the conveyancer attending to the registration of the new mortgage bond
(if a bond will be used to secure the payment of the purchase price)
7. Upon reciept of the guarantees, deliver the guarantee to the conveyancer attending the
cancellation of the existing mortgage bond
8. Arrange simultaneous lodgement with the bond and cancellation attorneys, as soon as they are
ready to lodge

Essential elements of guarantees

1. In whose favour?
2. For which amount?
3. What is the rate of interest?
4. On which amount will the interest be calculated?
5. From which date is interest payable?
6. Where should the interest be payable?
7. Which transactions should be registered?
8. On whose advise should the guaratee be paid out

Exceptions where the title deed to a property Exceptions where it is not necessary to lodge a
need not be lodged mortgage bond for cancellation (release)
1. Where the immovable property is 1. Transfer by a sheriff in execution of a
transferred in execution of judgment of court order
any court order by the sheriff and the 2. Transfer from an insolvent estate
sheriff certifies in writing that he is unable 3. Transfer from an insolvent deceased
to obtain possession of such title deed estate
2. Where the immovable property is 4. Transfer from a company or close
transferred by an officer appointed in corporation in liquidation
terms of a law pertaining to insolvency 5. Transfer by a trustee under the
and such officer certifies in writing that he Agricultural Credit Act
has been unable to obtain possession of 6. Transfer by an order of court
such title deed 7. Transfers of land due to expropriation
3. Where the immovable property is
transferred by an executor referred to in
section 56(1)(b) of the Deeds Registries
Act and such executor certifies in writing
that he has been unable to obtain
possession of such title deed
4. Where the immovable property is
transferred is transferred in terms of a
court order in terms of section 33(1) of
the Deeds Registries Act and the
transferee has declared under oath that
he has been unable to obtain possession
of such a title deed
5. Transfers of land due to expropriation
 Chapter 3 – Agreement of Sale
Formalities of an agreement of sale

1. The agreement of sale must be in writing

2. signed by the parties or their agents acting on their written authority

if the purchaser has a right to revoke the offer or terminate the agreement of sale in terms of a
cooling-off clause, this must be contained in the agreement

the only exception hereto is property sold by public auction, in such a case there need not be a
written document and the signature of the parties is not a requirement

EXAMPLE of clauses in an agreement of sale

SUSPENSIVE CONDITIONS
The agreement is subject to the fulfilment of the following suspensive conditions:

1. Approval of a loan
That the purchaser is able to obtain approval of a loan by a deposit taking financial institution, such a
loan to be secured by a first mortgage bond over the property (property description), in accordance
with the usual terms and conditions for the relevant insitution
The loan shall be granted within (no. of days) of date hereof, for not less than (amount).

Should the loan not be granted within the period stipulated, this agreement shall be null and void and
neither party shall have any claim against the other arising there from.

The loan shall be deemed to have been approved, within the meaning of this clause:
a) If written advice to this effect is furnished by the said institution to the agent, purchaser or
seller
b) Whether or not the institution has imposed conditions for the approval of the loan, relating to
suretyships required, life insurance or any other conditions
The purchaser warrants that his income is sufficient to merit the approval of a loan for the amount
stated above and that he has obtained the consent of the other spouse if so required in terms of the
Matrimonial Property Act.

2. Sale of the purchaser’s property

That the purchaser is successful in selling another proerty of his, within (no. of days) after the signing
of this agreement, situated at (property address/ property description)
The above suspensive condition contained in the agreement of sale of the property, must be fulfilled
by no later than (no.of days) after signature thereof.
Should the conditions not be fulfilled, this agreement shall be null and void and neither party shall
have any claim against the other arising there from.

OUTSIDE OFFER
Until such time that there has been full compliance with all suspensive conditions contained in this
agreement, the seller shall be entitled to continue marketing his/her property, subject thereto that
should he/she receive another or more favourable offer which is not subject to a similar condition, a
copy of the said offer shall be delivered to the purchaser, who shall be given an opportunity:
1. to waive in writing all suspensive conditions contained herein in case of an equal offer; or
2. to make a similar or better offer to the seller
within a period of (no. of days) from receipt thereof.

In such an event, the seller shall be obliged to accept such new offer from the purchaser.
Should the purchaser, however, not make any such offer, the seller may accept the said further
offer, whereupon the original offer to purchase will lapse and be of no legal force or effect
BREACH/ CANCELLATION
In the event of the purchaser failing to comply with any of the obligations hereunder on the due date
and fail to remedy such a breach for a period of (no. of days) after dispatch of written notification
calling upon the purchaser to remedy the breach, the seller shall be entitled at his/her own discretion
and without prejudice of any other of his/her rights in law, either:
1. to cancel the agreement, or
2. to claim specific performance of the purchasers obligations in terms of the agreement

In the event of cancellation of this agreement, the seller shall have, inter alia, the following rights:
1. to retain all amounts which the purchaser has already paid in terms of the agreement, including
the deposit with accrued interest theron, as “rouwkoop” and/or liquidated damages sustained by
the seller, and
2. in addition to forfeiture of the deposit by the purchaser, to claim from the purchaser such
damages as the seller shall have sustained, should the amount of the deposit prove to be
inadequate for this purpose, and
3. the purchaser shall vacate the property without delay enabling the seller to obtain immediate
repossession of the property

Should the seller have to take steps against the purchaser pursuant to a breach by the purchaser,
the seller shall be entitled to receive from the purchaser payment of all the sellers legal costs
incurred on the scale between attorney and client, including tracing fees and collection commission
paid by the seller to his/her attorneys

If the purchaser disputes the sellers right to cancel and/or remains in occupation of the property after
cancellation, the purchaser shall continue to pay interest and levies as herein provided in
consideration of his continued occupation of the property

In the event of cancellation of this agreement due to the sellers breach of contract, the purchaser is
entitled to be refunded with the amount of the deposit, as well as interest thereon

PURCHASE ON BEHALF OF A COMPANY YET TO BE FORMED

It is possible to conclude a contract on behalf a company that still has to be established

The board of directors may-

a) completely,
b) partially
c) conditionally

ratify or reject the contract within three months after the company was incorporated. If the board fails
to do either the company will be regarded as having ratified the agreement

To the extent that the agreement is ratified or deemed as ratified, it will bind the company as if it had
been party to the arrangement when it was concluded

The person (representative/authorised person/agent/trustee) who purchased on behalf of the

company, is held jointly and severally liable with any other such person(s) for liabilities emanating
from the pre-incorporation contract if-

a) incorporation does not take place; or

b) once the process of incorporation has been completed, the company rejects any part of the
agreement

If the company rejects the whole agreement but enters into an agreement on the same terms as, or
in substitution for the rejected agreemet, the representatives liability is discharged

As no new close corporations may be incorporated as from 1 May 2011, it is no longer possible to
enter into a pre-incorporation contract on behalf of a close corporation “to be formed”.
SPECIAL CLAUSE
The representative (agent or trustee) hereby undertakes that he will as a matter of urgency make the
necessary arrangements to register the purchasing company and that, in the event of-
1. the company not having been registered within (no. of days) from the date of signature of the
deed of sale, or within such further extended period as shall be mutually agreed upon in
writing between the seller and purchaser; or
2. the company having been registered, but failing to adopt and ratify this agreement or
rejecting this agreement, either completely, partially or conditionally within (no. of days)
thereafter
then, in such event, the agent or trustee shall be regarded as personally bound and liable in terms of
this agreement, in the same way as if his name and not that of the company had been given as the
purchaser herein, and in such event he shall be entitled to all benefits and subject to all obligations
existing or created in this agreement, as if he had entered into it in person.

Upon incorporation and ratification, the representative by his signature hereto binds himself as
surety and co-principal debtor in sodium with the company for the due and punctual performance by
the company of its obligations arising from the contract

PURCHASE ON BEHALF OF A TRUST TO BE FORMED

Section 6(1) of the Trust Property Control Act, provides that a person appointed as trustee of a trust
“… shall act in that capacity only if authorised thereto in writing by the Master. This means that a
person appointed as trustee of a trust can only act in his/her capacity as trustee of such trust after a
letter of authorisation has been issued by the Master. All acts concluded by such a person prior to the
receipt of the written authority of the Master are null and void. It can not be resuscitated by
subsequent ratification either by the Master or the trustees or even by the court.

The implication of the above is clear, namely the danger of double transfer duty, since the Receiver
of Revenue may regard it as two transactions. In other words, transfer to the person who thought that
he/she was acting as the trustee of a trust about to be formed and thereafter transfer to the trust

Steps to be taken by a prospective trustee of a trust to be formed

Before a prospective purchaser may sign an agreement of purchase and sale in his capacity as a
trustee of a trust, the following steps have to be taken:

a) the trust instrument for the trust must be-

- drawn up and lodged for registration with the Master of the High Court;
- registered by the Master of the High Court
b) the Master must issue a written authorization in which he appoints the trustee

Only after a letter of authorisation has been received from the Master in which he appointed the
trustees to act on behalf of the trust may the trustees sign any documents on behalf of the trust. In
other words, the Master must appoint the trustees before they are permitted to sign the agreement of
purchase and sale or any other documents

Solution in urgent cases

1) Stipulatio alteri

The purchaser can sign an agreement of purchase and sale as the purchaser and later compel the
seller, through a clause in the agreement, to enter into a tripartite agreement in which the sale
between the purchaser and the seller is cancelled, and the seller has to sell the property (subject to
exactly the same terms and conditions) to a trust, once the trust has been established, the trust will
accept the benefit. Once accepted, the trust becomes party to the contract with the seller. The trust is
therefore not bound unless or until it accepts the benefits under the contract.

If the trust is not incorporated or if it elects not to accept the benefits under the contract, the contract
lapses and the promoter (former purchaser) does not become personally liable, unless the contract
provides otherwise
2) Tri-partite agreement

The purchaser can sign the agreement of sale as purchaser and bind the seller to enter into a tri-
partite agreement in terms of which the seller sells, and on the same terms, to a trust which has by
then registered

OFFER, OPTION AND RIGHT OF FIRST REFUSAL (PRE-EMPTIVE RIGHT)

An option gives the optionee (purchaser) the right to purchase a certain property within a certain time
for a fixed amount

A right of first refusal gives the holder of that right a perference to purchase a particular property if the
owner should decide to sell it. If the seller receives an acceptable offer to purchase the property, he
is obliged to first offer the property to the holder of the right of first refusal at the same price and on
the same conditions

An option obliges a seller (optionor) to sell a property to a purchaser (optionee) if the option is
excercised. A right of first refusal imposes no obligation on the seller,except the obligation to give the
holder of the right of first refusal the first opportunity to purchase the property

An option in respect of immovable property cannot be registered in the deeds registry whilst a right of
first refusal can be registered in the deeds registry

WORDING OF AN UNREGISTERED SERVITUDE

CLAUSE TO BE INCORPORATED IN THE DEED OF SALE RELATING TO THE UNREGISTERED

SERVITUDE
The purchaser confirms that he is aware of the fact that the property is subject to a servitude
(servitude description), which servitude has not been registered but will be registered simultaneously
with the transfer of the property
 Chapter 4 – Deed of Transfer
SUMMARY OF THE FOUR TYPES OF DEED OF TRANSFER
1. the conventional deed of transfer – FORM E
2. deed of partition transfer – FORM F
3. deed of transfer of expropriated land or land vested by statute – FORM G
4. deed of transfer in compliance with a court order – FORM H

ANALYSIS OF A DEED OF TRANSFER

CLAUSES IN FORM E
1. The preparation certificate
2. The heading
3. Preamble
4. Causa/ Recital clause
5. Vesting clause
6. Property clause
7. Extending clause
8. Conditional clause
9. Divesting clause
10. Consideration clause
11. Execution clause

1. The preparation certificate

Every deed of transfer, certificate of registered title, mortgage bond and deed of cession must be
prepared by a conveyancer, who must make and sign a preparation certificate in the upper right hand
corner of the first page of the document concerned

The person sigining the preparation certificate must be a conveyancer practicising as such in the
Republic

The conveyancer signing the preparation certificate must state his full names and surname in block
letters in the preparation certificate so that he can be identified easily

The preparation certificate relates only to the conveyancer who prepares the deed and not the
conveyancer who executes it

2. The heading

Every deed must be supplied with a heading that indicates the type of deed at first sight

3. Preamble

The preamble includes two aspects, namely the appearer and the transferor.

a) The appearer

The preamble to a deed of transfer refers to the power of attorney given by the transferor, whereby
the appearer (conveyancer) is authorized to appear before the registrar of deeds on his behalf in
oder to execute the documents to be registered. In the preamble the conveyancer executing the deed
is reffered to as the appearer.

The full names and surname of the conveyancer (appearer) must be mentioned in the preamble

The place and date of signature of the power of attorney must also appear in the preamble
 b) The transferor

The main purpose of the preamble is to identify the transferor. This is the person who sold the
property, in other words the seller. The transferor is the person who gives transfer, and the transfee
is the person who receives transfer

4. Causa/ Recital clause

Form E requires an appropriate recital of the nature of the transaction or circumstances necessitating
transfer to be inserted in the deed of transfer. The purpose of the recital is to disclose the cause of
the transfer. It tells the story of the transaction. The nature of the transaction and the circumstances
necessitating the transfer, namley whether the property has been sold, donated,bequeathed,
obtained by a divorce order, sold in execution etc. the recital has no prescribed form in the deed of
transfer. Therefore the exact wording of the causa can be altered to the discretion of the conveyancer

5. Vesting clause

The vesting clause contains the description of the transferee or transferees to whom the property
must be transferred

The same basic rules as in the description of transferors shall apply

6. Property clause

This part of thedeed of transfer contains the full description of the land. Three aspect of the land must
be mentioned in this clause:

1. the registered number of the land

2. the place where the land is situated, with specific reference to:
a) the name of the town (surburb), agricultural holding or farm
b) the registration division or administrative district in which the property is situated; and
c) the name of the property
3. the extent of the land (expressed in words and figures)
There are three types of full title properties, As far as erven, farms and holdings are
namely – concerned, one finds the description –
1. erven in towns and cities i. the entire erf, farm or holding
2. farms; and ii. the portion of an erf, farm or holding
3. agricultural holdings or plots iii. the remainder of an erf, farm or holding

7. Extending clause

The extending clause immediately follows the property clause in the deed of tranfer, certificate of
registered title or a deed of grant

In order to understand the extending clause, it is important to know what its purpose is. The purpose
of the extending clause is two-fold:

a) Firstly, it refers to the Surveyor General’s approved diagram or general plan of the land. The
Surveyor General’s diagram or general plan is important to any interested party since it
provides the only means of determining where the land is situated, how its boundaries run
and what its length, width and general situation are with respect to the neighbouring land,
b) Secondly, it is the history clause of the deed in the sense that it also refers to the original and
the current title deed by which the deed is held.

Extending clauses may take two forms, because there are two principal types of cases that
determine how the extending clause should be worded:
 1. For a newly surveyed piece of land
which has never been registered
before as a separate entity (it does not
have its own title deed)
This type applies to all newly surveyed pieces of
land, namely to both –
i. Newly subdivided erven, farms and
agricultural holding shown on a sub-
division diagram; and
ii. All new erven shown on a general plan of
a new township, or al new portions of a
farm or agricultural holding shown on a
general plan
This extending clause is formulated according to
the wording which appears in FORM TT
2. For a piece of land which had been
registered before (it has its own title
deed)
Two aspect are important in distinguishing it
from the first case, namely that what is being
transferred here is no longer a new piece of land
(such a new township erf) or a new portion of an
existing piece of land (such as a subdivided erf).
What is being transferred is here is the whole
piece of land (which was transferred before) and
is now being held in terms of its own title deed.
That is to say, it is land that was previously
registered as a separate entity an that is now
being held under its own title deed. This
extention is complied according to the wording
that appears in FORM UU
It should be noted that this scenario has two
applications, namely:
i. For the second transfer, in other words,
subsequent transfer that takes place
after the first transfer; and
ii. For all subsequent transfers, in other
words, all transfers (third, forth, fifth etc.)
that take place after the second transfer

The following general provisions regarding extending clauses are important:

1. If a property has been created by a deed of transfer, term “first tranfered’ is used in the
extension, but where a property has been created by a certificate of registered title, the term first
registered” is used
2. Where a property is still held under the first title deed, the words “… and still held…” must be
inserted into the wording of the extension clause
3. No mention need to be made of the diagram/general plan or the number of the diagram/general
plan if it is not mentioned in the prior deed
4. In the event of a transfer of an entire property that was registered previously but where the
extending clause under which the property is held differs considerably from the prescribed
guideline in FORM TT, the reference to the first diagram or general plan may be omitted. The
extension may simly read as follows:

“Held under deed of transfer No. T …”

5. Where a personal servitude (use, habitatio, usufruct) is held under a separate notarial deed and
is transferred simultaneously with the property in question to a person who acquired the whole
property (in other words, the owner of the property and the holder of the servitude jointly give
transfer of the property and the servitude), the extending clause must refer to that notarial deed.
This reference is placed directly at the end of the extending clause, for example:

“As indicated on the attached diagram S.G. No. 123/2020 and held under Deed of Transfer
T123/2020 and Notarial Deed K456/2013S”
 8. Conditional clause
The conditional clause in a deed of transfer contains all conditions applicable to the property
contained in such a deed. Four categories of conditions can be distinguished, namely:
1. Existing typed conditions
2. Existing endorsed conditions
3. Newly imposed conditions
Must be carried forward to the new deed of
transfer exactly as they appear in the holding title
Existing conditions which have not lapsed or
have not been cancelled are merely carried
forward and are repeated word for word in the
new deed. Those conditions which have lapsed
or have been cancelled are simply omitted.
Endorsed on the back pages of the title deed,
must be carried forward to the new deed of
transfer
Must be included in the deed of transfer
New conditions must be included in the deed of
transfer. New conditions can be created by
means of insertion of a condition in the power of
attorney or they can be created by registering a
notarial deed. However, they must comply with
the requirements contained in section 63.
(Essentially, these requirements are that no
deed, or condition in a deed, purporting to create
or embodying any personal right and no
condition which does not restrict the the exercise
of any right of ownership in respect of immovable
property, shall be capable of registration.
How are new conditions created in a deed of
transfer?
In theory and in practice, powers of attorney
are drawn up before deeds of transfer. New
conditions are theoretically created in the
power of attorney and transferred from the
power of attorney to the deed of transfer. This
is generally referred to as the “carrying
forward” of conditions from the power of
attorney to the deed of transfer. This is how
they are created in the deed of transfer.
Creation of a new servitude simultaneously
with registration of transfer:
Where a personal or praedial servitude is
registered by notarial deed and such notarial
deed is submitted for registration
simultaneously with the deed of transfer, but
linked before the deed of transfer, and where
such personal or praedial servitude affects the
land transferred, a reference to such newly
established servitude must be made in the
deed of transfer the leaving a blank space in
which the number of the notarial deed is
inserted by the registrar of deeds. The
following wording may be used to give effect
thereto:
“FURTHERMORE SUBJECT TO (mention
the servitude)…, as will appear more fully in
the Notarial Deed of Servitude K___/___S”
 4. The general conditions clause The general conditions clause follows
immediately after the conditional clause. The
wording thereof may be as follows:
“AND FURTHER SUBJECT to all such
conditions as are mentioned or referred to in
the aforesaid deed.”

9. Divesting clause

As can be gathered from the name of the clause, this clause declares the current registered owner
divested of his ownership of land. The wording of the clause is fixed and appears in FORM E, directly
after the blank space left for inserting the conditional clause

10. Consideration clause

FORM E prescribes only that the purchase must be embodied in the deed of transfer. The
consideration clause of a deed of transfer, or an application for a tranfer by endorsement must make
refernce to:

a) In the case where the transfer duty Examples:

receipt contains a reference to both the
purchase price and the value of the
property, the purchase price and only
where the value is higher than the price,
also the value of the property, or
b) The value of the property where the
purchase price is not applicable
“And finally acknowledging the purchase price to
be the sum of R2 000, 000.00 (two million rand)
on which amount transfer duty has been paid”
OR
“And finally acknowledging the purchase price to
be the sum of R1 800, 000.00 (one million eight
hundred thousand rand), and that transfer duty
was paid on the amount of R2 000,000.00 (two
million rand)”
“And finally acknowledging the value of the
property to be the amount of R1 200, 000.00 (one
million two hundred thousand rand)”.

11. Execution clause

As the name indicates, this is the clause in which the act of execution by the appearer (or owner)
before the registrar is recorded

Execution of the deed of transfer takes place at the deeds registry when the deed of transfer is
signed by the conveyancer (or owner) and the registrar.

Deeds must follow the sequence of their relative causes

The general rule:

Transfers of land and cessions of real rights therein must follow the sequence of the succussive
transactions in pursuance of which they are made – (section 14)

Three exceptions to the rule:

Only in three cases is deviation from the above rule permissible:

a) If the Deeds Registries Act provides for an exception;

b) If any other Act provides for an exception; and
c) If the court makes an exception.
Exceptions provided for by section 14:

1. Descendant has died

Where the owner of immovable property has died and his descendant has died

a) a minor
b) intestate and
c) no executor has been appointed in his estate

the executor in the estate of the deceased owner may pass the property direct to the heirs ab
intestato of the deceased minor

2. Value = transfer costs

Where the value of the immovable property which has vested in any heir or legatee would be equalled
or exceeded by the costs involved in transferring or ceding it to the heir or legatee;

a) and the heir or legatee has furthermore sold the property –

b) the executor may, with the consent in writing of the heir or legatee, pass transfer direct to
the purchaser

3. Redistribution agreement
a) Where the heirs and legatees of the deceased person have entered into a redistribution
agreement,
b) the executor or trustee of such estate may transfer the land or cede the real rights therein
direct to the persons entitled thereto in terms of such redistribution

4. Divorce/partnerships
a) Where a husband and wife, married in community of property to each, purchase
immovable property
b) but divorce one another before registration of transfer of such property is effected in
favour of the joint estate
c) and where the wife is entitled to the property in terms of the divorce court order and/ or
settlement agreement
d) such a property may be transferred directly to the wife

5. Fiduciary interest

if a fiduciary interest in land or in a real right terminates before transfer of the land or cession of a real
right has been registered in favour of the fiduciary, it shall be competent to transfer the land or cede
the real right direct to the fedeicommissary

6. Sale in execution
a) If the right of any person to claim transfer of such land from any other person (e.g.the
right of a purchaser to claim transfer from the the seller in terms of the contract of sale)
b) has been vested in any third party (the purchaser in execution)
c) in terms of a) any judgement or order of any court or; or a sale in execution held pursuant
to any such judgement or order
d) transfer of such land may be passed directly to such a third person by the person against
whom such right was exercisable (the seller)
Various provisions

1. transfer of two or more pieces of land by one deed

Two or more persons each owning a diffferent piece of land may not transfer those pieces of land to
one or more persons by the same deed of transfer, unless such transfer is authorised by the
provisions of a law or by an order of court

Two or more pieces of land may be transferred under one deed by one person or by two or more
persons holding such pieces of land in undivided shares, to one person or two or more persons
acquiring such pieces of land in undivided shares (provided that each piece of land is described in a
separate paragraph)

Where two or more different properties are each sold by its own separate deed of sale with its own
different purchase price by the same seller to the same purchaser, all the properties may be
transferred from the same transferor to the same transferee by one deed of transfer. The causa of the
deed must make a reference to each of the transactions. The purchase price of each transaction
should be seperately set out in the consideration clause. The deeds office fee shall be calculated on
the total amount of all the purchase prices

2. transfer of undivided shares in land by one deed

Land held by one person may be transferred by one deed from that person to two or more other
persons in undivided shares

Land held by two or more persons in undivided shares may be transferred by one deed from those
persons to any other person, or to two or more other persons in undivided shares

3. transfer of shares in properties to more than one transferee in one deed

undivided shares in more than one piece of land may not be transferred to more than one transferee
in the same deed if the shares appropriated to any one transferee are not the same in respect of
each piece of land
 Chapter 5 – Power of Attorney
Preparation and signing of the preparation certificate

A power of attorney (application and consent) may be prepared by an attorney, notary public or
conveyancer for registration in any deeds registry in South Africa, irrespective of the province in
which he/she is practising. However, the deed (mortgage bond or deed of transfer) must be
registered in the deeds registry in which area the property is situated.

Regulation 44A

In terms of regulation 44A, the conveyancer should ascertain the facts listed below. By signing the
preparation certificate the conveyancer accepts responsibility for the corecteness of the following,
namely:

1. That all copies are identical

2. That all conditions of title have been brought forward in the new deed
3. That any representative appointed by the Master, have indeed been correctly appointed and
acts within his/her powers
that, in the case of a power of attorney, application or consent being signed by any person in
his representative capacity, such as executor, trustee, tutor, curator, liquidator, or judicial
manager, from perusal of the documents evidencing such appointment exhibited to him –
i. such a person has in fact been appointed in that capacity
ii. is acting therein in accordance with the powers granted to him, and
iii. that any security required has been furnshed to the Master
4. That all official information of natural and judicial persons are correct
5. That any representative appointed by a private principal, have indeed been correctly
appointed and acts within his/her powers
6. That all descriptions of natural and judicial persons have been correctly brought forward from
the power of attorney or application to the relevant deed

Attestation (signing by witnesses)

The power of attorney must be attested by –

a) two witnesses above the age of 14 (fourteen), competent to give evidence in a court of law; or
b) a magistrate, justice of the peace, commissioner of oaths or notary public duy described as
such
Power of attorney granted by spouses married in community of property

QUESTION: “May a power of attorney given by both spouses who are married in community of
prpoerty be attested by a Commissioner of Oaths?

ANSWER: There is a two fold answer to this question, namely:

1. Yes, on the condition that both spouses act as grantors in the power of attorney. However, in
cases where the power of attorney was signed by only one of the spouses as grantor, a
commissioner of oaths may attest the signature of that one spouse, but not the signature of
the other spouse
2. The OTHER SPOUSE: In the last mentioned case, there are two possible ways to deal with
the other spouses consent, namely:
i. Either a sperate consent, in terms of section 15(2) of the Matrimonial Property Act,
must be granted by the other spouse as giving his/her consent to the transaction and
lodged
ii. Or the other spouse may counter sign the power of attorney and must state clearly on
the power of attorney that such signature contemplates the necessary consent
In both of these cases the other spouses signature may not be attested by a
commissioner of oath, but must be attested by two competent witnesses

The conveyancer who signs the preparation clause of a power of attorney, may also sign the power of
attorney as a witness, whether as one of two witnesses or as commissioner of oaths

The conveyancer who is appointed as appearer to appear before the registrar of deeds, may not sign
the power of attorney as witness. Neither as one of the two witnesses nor as commissioner of oaths

No one may sign a power of attorney as a witness under which such a person derives any benefit

If a power of attorney consists of more than one page the grantor of, and the witnesses to, the power
of attorney must initial each individual page, except for the last page, which is signed

Initialing of powers of attorney, applications and consent

Material alterarions (such as changes to a transferors or mortgagors name, surname, identity and
marital status), or interlineations (such as the insertion of a word or sentence) in a power of attorney
must be authenticated by the initials of those persons who initially signed the document, such as –

a) the person who signed the power of attorney and the witnesses who attested his signature. If
however, the initials are attested by a person other than an original witness, such a witness
must attach his signature thereto; and
b) the conveyancer, attorney or notary who prepared the power of attorney

if the alteration or interlineation is not material (such as the correction of an erroneous number of a
title deed, surveyor-general diagram, the size of the property, etc), any conveyancer other than the
one who prepared the document may effect and certify such amendment by his signature. However if
it is the same conveyancer who prepared the power of attorney, he may only initial the amendment.

The person and witness who originally signed the document must also initial at the alteration. This is
generally refered to as “full initialling” at the alteration of an error on a power of attorney, application or
consent.
In practice the facts listed below are regarded as material facts and if they are altered on any power of
attorney, application or consent such alteration should be “fully initialled” by the preparer, the person
executing such document and the witnesses thereto. Full initialling will be required at the alteration of
an error –

a) in the name, surname, identity number and marital status of the transferor or mortgagor
b) in the date of the sale
c) in the property description with regard to the number or portion number of an erf, agricultural
holding or farm
d) in the purchase price
e) in the amount of the additional sum (cost clause) of a mortgage bond

where the first page of a special power of attorney or of an affidavit is re-typed, the power of attorney
must be re-executed or a new affidavit done. Full initialling will not suffice.

Authentication

Powers of attorney and affidavits signed outside the Republic of South Africa for use in South Africa
must be authenticated –

a) as set out in Rule 63 of the High Court; or

b) as stipulated in the “Convention Abolishing the Requirement of Legislation for Foreign Public
Documents”

Rule 63 provide that any document executed in any place outside the Republic is deemed to be
sufficiently authenticated for use in the Republic if it has been duly authenticated at such foreign place
by the signature and the official seal of –

a) the head of a South African diplomatic mission or consular mission in that country, or an
official delegated by the head of such a mission;
b) a consul-general, consul, vice consul or consular agent of the United Kingdom;
c) any government official of the foreign country in question who is authorised to authenticate
documents in that country;
d) any person of that foreign country who can prove by a certificate, issued by a person
mentioned in (a), (b), or (c) above, to be duly authorised to authenticate such document; and
e) a notary public of United Kingdom, Northern Ireland, Botswana, Lesotho, Swaziland, or
Zimbabwe, for the authentication of a document in one of these countries

Analysis of a power of attorney

Clauses in the power of attorney to pass transfer

1. the preparation certificate
2. the heading
3. the preamble
3.1. the transferor
3.2. the conveyancer
3.3. the registrar
4. causa
5. the transferee
6. consideration clause
7. property description
8. extending clause
9. conditions clause
10. divesting clause
11. execution clause
Person authorising the power of attorney – (the transferor)

Where the person authorising the power of attorney dies before registration

Where the person authorising the power of attorney dies before registration before registration is
effected, the power of attorney is automatically revoked and a new power of attorney must be
obtained from the executor of the deceaseds estate. When documentation has already been lodged
at the deeds registry, it must be withdrawn before registration is executed and be lodged again after a
new power of attorney has been obtained. The property now vests with the executor of the deceaseds
estate. Therefore the executor must authorise the power of attorney. The executor should therefore
be described as the grantor in the power of attorney and as the transferor in the deed of transfer.

Where registration has been executed without the knowledge of the death of the person authorisng
the power of attorney, such registration will be considered valid and binding on the parties concerned.

Where the marital status of the person authorising the power of attorney changes before registration

When the marital status of the transferor changes after having signed the power of attorney, it is not
required to change the power of attorney. The transferor may, for example, be unmarried when
signing the power of attorney and then marry before the execution and registration of the deed of
transfer. Descriptions of parties to the deed of transfer must, however, be identical to descriptions of
parties to the power of attorney. When the transferor remarries in the meantime, this merely needs to
be certified by the conveyancer.

Transferee

The same rules apply for transferees as in the Deed of Transfer.

Description of the property

The same rules apply as in the Deed of Transfer. The extent of the land need not be provided in the
power of attorney as in the Deed of Transfer.

Description of extending clause

A comprehensive extending description, as in the case of the deed of transfer, is not necessary

Conditions clause

Newly imposed conditions through a will, deed of donation, personal and/ or praedial servitude, must
be set out in the power of attorney. Thus new conditions are created in the power of attorney and from
there they are carried forward verbatim to the deed of transfer. Existing title conditions are not
reflected in the power of attorney.

The causa

The mode, reason or causa of disposal of land must be contained in the power of attorney, as well as
the date of disposal of such land. In this regard it must be kept in mind that the power of attorney is
the authority for all statements made in the deeds of transfer or mortgage bonds. Thus the causa in
the deed of transfer must be the same as in the power of attorney.

The execution clause

The power of attorney must specify the date as well as the place of their execution.
Execution of deeds by the prospective owners

Acording to section 20 of the Deeds Registries Act, deeds of transfer must be signed in the presence
of the Registrar by –

- the owner of the land, or

- a conveyancer authorised by power of attorney to act on behalf of the owner

Although the law makes provision for the owner to sign himself, this is seldom done in practice.
Usually the conveyancer is authorised by the power of attorney to execute on behalf of the owner

In the case of section 20 being applied strictly a person would have to wait until he is registered as
owner of land before signing the necessary documents to transfer land to another person. Furthermre
all subsequent transfers of such land could not be registered simultaneously. This would be extremely
time-consuming. Therefore section 96 of the Deeds Registries Act stipulates the following:

“If any deed or document required to be executed by the owner of immovable property has been
executed by a person who has acquired the right to receive transfer or cession of such property, such
deed or document shall, upon the person aforesaid receiving transfer or cession of such property, for
the purpose of this Act, be deemed to have been executed by the owner of the property”
 Chapter 6 – Servitudes
What is a servitude?

A servitude is a right belonging to one person, in the property of another, entitling the former to
exercise some right or benefit in the property or to prohibit the latter from exercising one or another of
his normal rights of ownership

Distinction between personal and praedial servitudes

Personal servitudes Praedial servitudes

- is always constitued in favour of a
particular person in his capacity,
on whom it confers the right to use and
enjoy anothers property
- a personal servitude is always
enforceable against the owner of the
property that is burdened with it, whoever
he or she may be.
- a personal servitude is inseparably
attached to the person and cannot be
transferred
- a personal servitude lapses on the death
of the holder or if the holder is a juristic
person after 100 years.
- are vested in the owner of the dominant
land who is entitled to enforce it against
the owner of the servient land.
- But it is immaterial who these owners are
at any given time, that is to say: a
praedial servitude is exercised by the
owner of the dominent tenement in the
capacity of owner and likewise enforced
against the owner of the servient
tenement in the capacity of owner
- Neither the benefit nor the burden can be
detached from the piece of land on which
it is conferred and respectively imposed.
- Both are passed from one owner to the
next, where land is transferred and, in
this sense, the benefit and the burden of
a praedial servitude are said to run with
the land
- In principal (there are exceptions) a
praedial servitude continues into
perpetuity

Personal servitudes

Types of servitudes

There is no closed list of personal servitude. The most common personal servitudes, are –

a) use (usus) – gives the user the right, during his lifetime or fro a shorter period agreed upon, to
use a thing belonging to someone else without impairment of the essential qualities of the
thing. The user may only take as many fruits of the thing as meets his own need or those of
his household and may not sell or alienate the exercising of his right
b) usufruct – provides the usufructuary with the right to use another person’s property as well as
to collect and use fruits (proceeds) thereof, with the duty eventually to return the property to
the owner thereof. It may be ceded but only to the registered owner of the burdened land
c) habitatio (occupancy or residence) – entails the right to live in someone else’s house. Unlike
the case of usus, the occupier may let the house. Habitatio lapses upon the death of the
occupier or upon expiry of the period thereof if it was only granted for a specific period
d) fedeicommissum – when a fedeicommissum is created property is transferred to the fiduciary
(first heir) subject to the condition that on the death of the fiduciary, the property must be
transferred to the fedeicommissary heir (second and further heirs, limited to two)
Creation of personal servitudes

The general rule

A personal servitude is generally created by a bilateral notarial deed. It is signed by the owner of the
land encumbered thereby and the person in whose favour it is created, and attested by a notary
public and registered in the deeds office

The cession of a personal servitude of usus, usufruct or habitatio to the owner of the land
encumbered thereby may be done by a unilateral notarial deed, provided that such a deed does not
place any obligations on the owner – and if so, then by a bilateral notarial deed

Exceptions to the general rule

A personal servitude may be reserved by a condition in a deed of transfer of land. According to

section 67 of the Deeds Registries Act, three circumstances exist where …

“A personal servitude may be reserved by condition in a deed of transfer of land if the reservation is in
favour of –

i. the transferor, or
ii. the transferor and his or her spouse or the surviving of them, if they are married in community
of property, or
iii. in favour of the surviving spouse if transfer is passed from the joint estate of spouses who
were married in community of property.”

How is it created

 such a personal servitude is first reserved as a condition in the power of attorney to pass
transfer of the land encumbered thereby; and
 is then carried forward to the deed of transfer where it is embodied in the conditions clause of
such a deed of transfer.

Below are examples of such conditional clauses which may be reserved in a power of attorney and
embodied in a deed of transfer

Where the personal servitude is reserved in favour of the transferor

SUBJECT to the reservation in favour of an usufruct in favour of the the transferor, the said -
John Smith
Identity number: (quoted)
Unmarried/ or married out of community of property
Where a personal servitude is reserved in favour of the transferor and his spouse or the
survivor of them, if they are married in community of property
SUBJECT to the reservation of an usufruct in favour of the said –
John Smith
Identity number: (quote)
and
Mary Smith
Identity number: (quote)
married in community of property to each other, or the survivor of them
Where the reservation is in favour of the surviving spouse if transfer passed from the joint
estate of spouses who were married in community of property
SUBJECT to the reservation of an usufruct for life or until remarriage in terms of the aforesaid will in
favour of –
Mary Smith
Identity number: (quote)
Unmarried
Other exceptions to the general rule

Other exceptions to the general rule may be found in the provisions of section 65(1)

1. in the cases of a personal servitude in favour of the public (or in favour of all or some of the
owners of erven in a township), the registrar may, if in his opinion it is impractical to require
such deed to be executed by the persons in whose favour the servitude is created, register
such deed notwithstanding the fact that it has not been executed by such persons but only by
the owner of the land. In such a case the personal servitude is created by unilateral notarial
deed
2. where it is desired to register a road or thoroughfare in favour of the public at the same time
as the registration of subdivision which it serves, it shall in like manner and without the
registration of a notarial deed be permissible to register it in the deed relating to the
subdivision. The deed of the remainder must be endorsed accordingly. No transfer duty is
payable when a right of way is created in favour of the public, however a transfer duty
exemption certificate must be lodged.
3. The last provisio provides for the creation of negative personal servitudes directly in the deed
of transfer, in other words they don’t have to be created by a notarial deed. It provides that –
“on conditions which restrict the exercise of any right of ownership in immovable property may
be created in the deed of transfer if such conditions are capable of being enforced by some
person who is mentioned therein or who is ascertainable there from and such person has
signified acceptance of such right.”

Registration of lapse of personal servitudes

When a personal servitude has lapsed for any reason, the owner of the land may apply for the
cancellation of the servitude. The registrar shall then note on the title deed of the land (or on the title
deed, if any, of the servitude) that the servitude has lapsed, after which it may be omitted from the
conditions clause of the new deed of transfer

Personal servitudes lapse (comes to an end) upon expiry of the personal servitude or after the
occurance of a specific event referred to in the servitude. In such a case, the lapse of the servitude is
noted.

Together with the application for the cancellation of the servitude, in terms of section 68(1) of the
Deeds Registries Act, the owner must also furnish proof that the servitude has indeed lapsed

Transfer of land with personal servitudes thereon

If the owner of land subject to a personal servitude and the holder of that servitude have disposed of
the land, or any portion thereof, together with the rights of servitude to another person, they may
together give transfer thereof to the persons acquiring it (the transferee)

The deed of transfer must describe the transferors as the owner of the land and the holder of the
servitude respectively, but no mention of the servitude must be made in the description of the land
therein

There are two possibilities regarding mortgage bonds, namely –

a) the owner of the land subject to a personal servitude and the holder of that servitude may
together mortgage the land, or
b) either of them, as principal debtor, may mortgage the land or the servitude respectively and
the other of them may in the same bond, mortgage the servitude or the land as surety
Transfer duty and personal servitudes

Transfer duty is payable on the fair value of a personal servitude when it is created or granted.
Transfer duty is not only payable when a positive personal servitude is created,and also when a
negative personal servitude is created

Transfer duty is further payable on the increased value of a property whenever a personal servitude is
cancelled

However, if no consideration has been paid, SARS will usually accept a declared nominal value of
R100 as the fair value

Where a personal servitude has been cancelled in terms of section 68(1) (lapse) and
68(2)(cancellation) a transfer duty receipt or an exemption certificate must be lodged, unless the
servitude has served it time, for example, the death of a usufructuary or effluxion of time, etc.

Praedial servitudes

Creation of praedial servitudes

The general rule

As in the case of personal servitudes, praedial servitudes are created by an agreement between the
owners of the respective land and such agreement shall be registered by notarial deed. However,
there are two exception to the general rule:

1. in terms of section 76(1) a praedial servitude may be created directly in a deed of transfer of
land, only if the servitude –
a) is imposed on the land transferred, in favour of the other land registered in the name
of the transferor; or
b) is imposed in favour of the land transferred, on other land registered in the name of
the transferor
2. the second exception in relation to the general rule pertains to the creation of unregistered
praedial servitudes. This provisio stipulates that –
a) if the land to be transferred is admitted by the transferor thereof to be subject to an
unregistered rights of servitudes in favour of the land registered in a third persons
name
b) if the transferee consents in writing to such servitude being embodied in the deed of
transfer; and
c) if such a third person appears either in person or by duly authorised agent before the
registrar at the time of execution of the transfer and accepts the servitude in favour of
his land
the servitude may be embodied in such transfer as a condition
Section 76(1) further provides that –
 the appearance of the third person and his acceptance of the servitude
should be mentioned in the deed of transfer, and that
 the title deed of the dominant tenement should also be lodged so that the
servitude can be endorsed against it

Method of creation of praedial servitudes

The condition or servitude should first be created be created in the power of attorney for the transfer
of the portion and then be carried over to the deed of transfer where it will be incorporated into the
conditions clause.
Drafting of praedial servitudes

It is impossible to set down hard and fast rules as regards the drafting of praedial servitudes. Each
conveyancer must draft on his own and in his own wording so at to ensure that the terms of the
servitude are meticulously correct and represent the true intention of the parties. It is, moreover,
impossible to illustrate by example all the various types and variations of servitudes. Examples given
are meant to serve as a guide.

However, two golden rules should be applied when drafting praedial servitudes, namely:

i. always describe a servitude in relation to the way it affects the property being transferred and
not the one being held by the transferor; and
ii. state whether such property is subject to, entitled to, or both subject to and entitled to
servitude rights

Praedial servitudes may be described in three different ways, namely –

1. by servitude diagram
2. by description
3. in general terms
1. BY SERVITUDE DIAGRAM
There is a diagram with a servitude note thereon indicating the location of the servitude on the land. It
can be a subdivision diagram, consolidation diagram, or a mere servitude diagram. The distinctive
feature of this way of description is that you have a diagram with the servitude depicted thereon
2. BY DESCRIPTION
The general rule
According to the general rule, a praedial servitude must be indicated on a diagram which must be
annexed to the deed of transfer

Exceptions to the general rule

However there are a number of exceptions to this general rule where it is possible to describe a
servitude “by description”, that is without the necessity to lodge a diagram depicting the servitude
thereon.
1. a servitude feature of uniform width, or a servitude feature at a specified distance from and
next to and parallel to a surveyed line shown on a registered diagram, in either instance
extending along the entire length of such surveyed line and may be registered by description
without a supporting diagram
2. any other servitude may, at the discretion of the Surveyor – General, be registered if he is
satisfied that such servitude can be plotted on the diagram of the land affected
3. if such servitude is represented on a general plan filed at the Deeds Registry
4. if the servitude had in been in principal been decided on, but the exact route thereof is yet
unknown, and the exact location of the route will be decided upon at a later stage (GENERAL
TERMS)
5. where a servitude is to be registered over the whole property, held under a deed of transfer
3. IN GENERAL TERMS
The servitude had in been in principal been decided on, but the exact route thereof is yet unknown,
and the exact location of the route will be decided upon at a later stage
Mortgage bonds and praedial servitudes

If a servient tenement is mortgaged and a servitude is to be registered in favour of the dominant

tenement (to be transferred), the consent of the mortgagee (the bond holder) of the servient tenement
must be obtained to register such a servitude over such a tenement, free from the bond. The title
deed of the servient tenement and the mortgage bond thereon must be lodged, simultaneously with
the registration of the dominant tenement and the servitude, in order to be endorsed.

If the servitude to be registered, will infringe on any other registered real rights, the holders of such
registered real rights must be also consent to the registration of the praedial servitude. the title deed
of the already registered real must be lodged

However, if the dominent tenement is mortgaged and a servitude registered in its favour is sought to
be cancelled, the mortgage bond and the consent of the mortgagee must be lodged simunltaneously
with cancellation of the servitude.

Lapse and cancellation of praedial servitudes

Lapse

If a praedial servitude for a limited period (by effluxion of time) has lapsed, the owner of the land
affected thereby may lodge an application to the registrar requesting him to endorse the title deeds of
both the dominant and servient properties (and of the servitude, if there is one) to the effect that the
servitude has lapsed. The title deeds of the dominent tenement and the servient tenement must be
submitted to the registrar, together with the title deed of the servitude if there is one, to be endorsed.

No consent of the holder of the bond (mortgagee) over the dominent tenement and no transfer duty
receipt or exemption certificate is necessary where the servitude has served its time

Cancellation

 When cancellation occurs by agreement a bilateral notarial deed, representing the dominant
and servient tenements must be lodged
 When cancellation occurs by abandoment, it must be done by virtue of a bilateral notarial
deed or in terms of a court order. (Abandonment is a unilateral legal act whereby the holder
consciously and freely divests himself irrevocably of the rights which he had.)
 A transfer duty receipt or an exemption certificate must be lodged, in the case of a
cancellaton of a servitude

Restriction on the exercise of servitude rights

If an owner of land has subdivided his property and any portion thereof, or the remainder, is entitled to
a servitude over other, the owner may, when transferring such sub-division, stipulate in his power of
attorney that excersing of the right is restricted to the land still held by him. In that event mention must
not be made to the servitude in the deed of transfer of such a portion, nor is it necessary to record on
the title deed of the servient tenement that the rights are so restricted

Ways in which a servitude may be terminated

1. Lapse of time
2. Agreement to cancel
3. Waiver/abondonment
4. Merger
5. Impossibility
6. Prescription
 Chapter 7 – Estate Transfers
To whom does the property of a deceased person belong

It is necessary to distinguish two cases, namely:

a) Property already registered in the name of the deceased at the time of his/her death

Property already registered in the name of a deceased person automatically forms part of his/her
deceased estate. The executor must first be appointed as such by the Master of the High Court in
respect of a spectific estate, before he shall be entitled to deal in any way with property forming part
of the estate which includes the signing of any document. It is the duty of the executor to administer
the deceased estate. It is the executors task to pay any liabilities (debts) against the estate, and if
there are any remaining asstes, he should ensure that the assests are divided among the heirs. If
there is immovable property in the estate, it is the task of the executor to ensure that the property is
transferred from the deceased estate to another person (person also means company, close
corporation or trust), who is entitled to it.

b) Property which the deceased had purchased before his/her death, but which property had not
yet been registered in his/her name at the time of his/her death

It is again necessary to distinguish between two cases, namely:

1. Immovable property which is not an asset in the joint estate

Where immovable property has been acquired by any person who is –

 unmarried, divorced, widow or widower; or

 married out of community of property
but such property has not yet been transferred to such persons during his/her lifetime, the
deed of transfer must be made out in favour of the estate of such a person

In other words, before any further transactions with that property can be undertaken, the property
must be transferred to the estate of the deceased person. It can thereafter be transferred to an heir
under a separate deed of transfer (which is usually linked)

2. Immovable property which is an asset in the joint estate

Where a marriage in community of property has been dissolved by the death of one of the spouses,
before a property, which on transfer thereof would have formed part of the joint estate, before it could
be transferred into the joint estate, that property must be transferred to the joint estate of the spouses
pending administration thereof. It is deemed to be the joint property of –

 the estate of the deceased spouse, and

 the surviving spouse

In other words, before any further transactions with that property can be undertaken, the property
must be transferred to the estate of the deceased person and the surviving spouse. Before it can
then be transferred to an heir under a separate deed of transfer (which is usually linked), if it is not
due to the surviving spouse.
Who transfers the property out of the deceased estate

It should be established who is responsible for the transfer of the property from the estate of the
deceased to any other person entitled thereto. This is important to estbalish the description of the
transferor in the deed of transfer and the power of attorney.

We have already said that the executor administers the deceased estate, but it is necessary to
distinguish between two cases namely:

1. property which is not an asset in the joint estate

Where property is not an asset in a joint asset, the executor of the deceased estate transfers the
property on behalf of the deceased person. That is for example where a person is –

 unmarried, divorced,widow or widower, or

 married out of community of property

2. property which is an asset in a joint estate

In this case there is a general rule and an exception to the general rule

GENERAL RULE

Where property is an asset in a joint estate –

i. the surviving spouse shall be joined in his or her personal capacity with;
ii. the executor of the deceased’s estate
and they are jointly responsible for passing transfer, unless one of the exceptions apply

EXCEPTION TO THE GENERAL RULE

Where the property is an asset in a joint estate, but one of the exceptions in section 21 is applicable, it
is the executor of the deceased who has to pass transfer of the property on behalf of the deceased
person.

a) Where the executor is dealing with only the share of the deceased spouse; or
b) Where the land has been sold to pay for the debts of the joint estate; or
c) Where there has been a massing of the joint estate and the surviving spouse has adiated; or
d) Where such transfer is in favour of the surviving spouse; or
e) Where the power of attorney to pass such transfer has been signed by the surviving spouse
in their capacity as executor

Section 21 is only applicable to immovable property which

 is an asset in a joint estate; and

 is being transferred by means of a deed of transfer
It does not apply to a section 45(1) estate endorsement
ADDITIONAL REQUIREMENTS WHEN THE EXCEPTIONS OF SECTION 21 APPLY TO ESTATE
TRANSFERS

Three requirements are prescribed by Regulation 50(2) of the Deeds Registries Act, namely:

a) Where land is sought to be transferred by an executor in pursuance of exception (b) to

section 21, a certificate by –
i. the Master, or
ii. the executor, or
iii. a conveyancer
shall be lodged (as supporting document) with such transfer to certify that the land
has been sold to pay the debts of the joint estate – Regulation 50(2)(a)
b) Where land is sought to be transferred by an executor in pursuance of exception (c) to section
21, a certificate must be lodged (as a supporting document) with such transfer to certify that
the surviving spouse has adiated under the will where the joint estate is massed, by –
i. the Master; or
ii. the conveyancer; or
a statement to that effect signed by –
iii. the surviving spouse and duly witnessed – Regulation 50(2)(b)
c) Where land is sought to be transferred by an executor in pursuance of any of the execptions
in section 21, the deed of transfer must indicate in the divesting clause that the transfer is on
behalf of the joint estate and that the joint estate is divested – Regulation 50(2)(c)
In other words, whether the transferor –
 is the executor of a joint will; or
 is the surviving spouse and the executor of a joint estate –
the following operative words must be used to divest all joint estates in the divesting
clause:
“… the joint estate of the late John Smith
estate number: (quote)
and
the surviving spouse Mary Smith,
identity number: (quote)
widow, previously married in community of property with the deceased”
SECTION 42(1) and SECTION 42(2) CERTIFICATES

SECTION 42(1) CERTIFICATE (Administation of Estate Act)

This section stipulates that an executor who desires –

 to have any immovable property registered in the name of any heir or any other person legally
entitled to such property; or
 to have any endorsement made must,
in addition to any other deed or document which he may be by law required to lodge at the
deeds registry, lodge with the said officer a certificate by a conveyancer

In terms of section 42(1) of the Administration of Estate Act this certificate must state that the
proposed transfer or endorsement is in accordance with the liquidation and distribution account

In terms of regulation 49(1)(f) of the Deeds Registries Act this certificate must state that:

i. the proposed transfer or endorsement is in accordance with the liquidation and

distribution account
ii. it has laid open for inspection, and
iii. no objection thereto has been received

The Section 42(1) certificate is a conveyancer certificate in which the conveyancer certifies that all
the above mentioned requirements have been met

Before a conveyancer can issue a section 42(1) certificate, he must first:

i. obtain a copy of the liquidation and distribution account, as it was lodged at the Master’s
office, as well as a copy of the will to ensure that the transfer is in accordance witht the
account and the will;
ii. obtain proof that the liquidation and distribution account has laid open for inspection; and
iii. that no objection thereto has been received

This certificate is not necessary for the cession of a mortgage bond

SECTION 42(2) CERTIFICATE (Administration of Estate Act)

This section stipulates that an executor who desires to effect transfer to a purchaser of any
immovable property from an estate in pursuance of a sale, must lodge at the deeds registry, in
addition to any deed or other document, a certificate by the Master

The section 42(2) certificate is a Masters certificate (endorsement) wherein the Master indicates that
“… no objection to such transfer exists”

Whether the property is sold –

a) by the deceased during his lifetime; or

b) by an executor after the death of the deceased
the Master’s consent to the transfer must always be obtained

The only difference between a sale before and after the death of the deceased is that where the
property was sold by the deceased during his lifetime the consent of the heirs is not necessary, but
where the property was sold by the executor after the death of the deceased the consent of the heirs
must be obtained
In practice the Master’s certificate is obtained as follows:

i. the power of attorney to effect transfer is prepared by conveyancer and signed by the
executor
ii. thereafter it is submitted to the Master for his endorsement. (This is done under the cover of a
JM-33 questionaire.)
iii. if the Master is satisfied that all requirements regarding the sale have been met, he endorses
the power of attorney to the effect that he consents to the transfer
iv. the Master then returns the endorsed power of attorney to the conveyancer
v. the power of attorney with the Masters certificate, which appears thereon as an endorsement,
is then lodged with the deed of transfer and other supporting documents at the deeds registry

Masters requirements: in order to obtain the Masters consent to issue a section 42(2) certificate
(endorsement on the power of attorney) an application must be made to the Master. For this purpose
FORM JM-33 must be fully completed and signed by the executor. In order to obtain the Masters
consent, the following documents must be submitted to the Master:

a) the application form JM-33

b) the written consents to the sale from all the heirs
c) the certified copy of the deed of sale, and
d) the power of attorney to receive the Masters certificate/ endorsement
e) a copy of the will

The certificate is not necessary for the cession of a mortgage bond

Estate endorsements

Section 16 of the Deeds Registries Act stipulates that ownership in land may be transferred from one
person to another only by means of a deeds of transfer executed or attested by the regsitrar, save as
provided by the Deeds Registries Act or any other law.

Section 45 of the Deeds Registries Act, however, provides for transfer of ownership from one person
to another by means of endorsement by the registrar on the existing title deed of the land to be
transferred. Section 45 provides for four types of endorsements:

1. Section 45(1) endorsement (Deeds Registries Act) – registration endorsement

2. Section 39(2) endorsement (Administration of Estates Act) – factual endorsement
3. Section 39(3) endorsement (Administration of Estates Act) – factual endorsement
4. Section 40(1)(b) endorsement (Administration of Estates Act) – factual endorsement

Section 45(1) endorsement (Deeds Registries Act)

If immovable property or a bond which forms an asset in a joint estate is registered in the deeds
registry and the surviving spouse has lawfully acquired the share of the deceased spouse in the
property or bond,

 The executor in the estate of the deceased spouse and the surviving spouse, or
 The surviving spouse, if he/she has signed as executor
may lodge an application that the registrar of deeds shall endorse on the existing title deed or
on the bond that the surviving spouse is entitled to deal with such property or bond, as if she
had taken formal transfer or cession into his or her own name, of the share of the deceased
spouse in the property or the bond
Community of property in a joint estate may be dissolved either by death, divorce, an order of division
or by a change in the matrimonial property system in terms of section 21 of the Matrimonial Property
Act. On dissolution of the community, the shares of the former spouses become determinate and
each of the former spouses or their estates become free co-owners

This endorsement is only available for couples who were married in community of property and is
affixed on the title deed (existing deed of transfer) and/or on a mortgage bond, which is an asset in a
joint estate

The effect of this endorsement is that the deceased spouses common-law half has now formally been
transferred to the surviving spouse. Delivery of the deceased half share has thus taken place by virtue
of the endorsement, the other half share belonging to the surviving spouse, vests in him/her by
operation of law.

The appliaction is prepared by a conveyancer and must contain a preparation certificate

The application should indicate the causa for the endorsement, i.e. that the surviving spouse is
entitled to the property, one-half share by virtue of the marriage in community of property and the
other one-half by virtue of one of the following:

i. stipulations contained in the will; or

ii. a take-over by the surviving spouse in terms of section 38 of the Administration of Estates
Act; or
iii. intestate inheritance in terms of the Intestate Succession Act; or
iv. provisions of a redistribution agreement; or
v. the survivor’s purchase of the deceased’s spouses one-half share of the property

The application may contain more than one property description. Each property must, however, be set
out in a separate paragraph.

The value of the property being transferred must also be set out in the application

The section 45(1) application is not compulsory. Conveyancers have the choice of either using a
formal deed of transfer or the procedure of section 45(1)

An application in terms of section 45(1) can be brought in respect of the following property or rights in
the property, namely –

a) immovable property (land and a registered long term lease),

b) rights in a mortgage bond,
c) exclusive use areas
Section 39(2) endorsement (Administration of Estates Act)

If a right of usufruct or another similar limited right to immovable property, has been bequeathed to
somebody with the instruction that, after the expiry of such usufruct or right –

a) the property should devolve on one or other specified or unspecified person; or

b) the proceeds of the property should devolve on one or other specified or unspecified person –
(in other words the property must be sold after the lapse of the bequeathed usufruct or limited
right)
such provision of the will must be endorsed against the title deed of the property. This will
then serve as record of the third party’s rights.

This is a factual endorsement. A section 39(2) endorsement is a mere caveat against the property,
indicating the rights of the third party. It is not a registration of a limited interest and does not effect
transfer of any rights held over the land. If registration of this limited right is requested, a notarial deed
must be registered.

The executor of the deceased estate must bring the application. The application must contain a
preparation certificate by the conveyancer

Section 39(3) endorsement (Administration of Estates Act)

If an heir is unable or could not without hardship be required to pay the costs involved in having any
immovable property to which he is entitled according to a distribution account, registered in his name,
the Master may authorise the executor to endorse the title deed to the effect that the property has
been bequeathed or inherited

This is a factual endorsement. A section 39(3) endorsement is a mere caveat against the property,
indicating the rights of the third party. It is not a registration of a limited interest and does not affect
transfer of any rights held over the land. If registration of this limited right is requested, a notarial deed
must be registered

Section 40(1)(b) endorsement (Administration of Estate Act)

This endorsement is made use of in circumstances where a trust was created by a testator in his/her
will. In other words a testamentary trust comes into being due to the stipulations of a will and there are
properties in the estate to deal with

If a trustee has been appointed to administer any property of the deceased person under a will, the
executor must deliver such a property to the trustee after the liquidation and distribution account has
been lodged. Delivery of the immovable property, is effected by the executor causing the terms of the
will to be endorsed against the title deed of the immovable property, and against any mortgage bonds
and/or notarial bonds which is an asset in the estate.

To achieve this the executor must lodge a written application at the registrar of deeds requesting that
the title deeds and bonds must be endorsed in terms of section 40(1)(b)

The properties may not be transferred to the trust by means of a deed of transfer but the executor
must ensure that a section 40(1)(b) endorsement is made on the title deed of the property. This
endorsement puts the property in the control of the trustees.

This endorsement is only applicable to testamentary trusts not yet registered and not to existing trusts

An endorsement of a title deed in terms of section 40(1)(b) does not effect the transfer of ownership of
the property to the trustees. The trustees only obtain a limited real right to the property.
This is not a registration endorsement but a factual endorsement

An endorsement in terms of this section means –

1. that a reference to the provisions of the will is noted on the deeds concerned, and
2. that the authority to deal with such assets passes from the executor to the trustees.the
trustees cannot deal with such assets other than in accordance with the provisions of the will

Restriction on –

a) the alienation of immovable property of minors; or

b) the mortgage of immovable property of minors
by natural guardians, tutor or guardians (section 80)

No natural guardian/ shall alienate or mortgage any immovable property belonging to his minor child
and No other tutor or curator shall alienate or mortgage any immovable property which he has been
appointed to administer, unless he is authorised thereto by –

i. the Court, or
ii. the Master, or
iii. in the case of a curator or tutor, by any will or written instrument by which he has been
nominated

The Master may at any time authorise any alienation of immovable property belonging to the minor if
the value of the property to be alienated does not exceed R250,000. If the value of the immovable
property exceeds R250,000 only the court may authorise the alienation

The Master may at anytime authorise any mortgage of any such immovable property to an amount
not exceeding R250,000 if the mortgage is necessary for the perservation or improvement of the
property or the maintanance, education or other benefit of such child

Section 80 is also applicable where the minor waives his/her preference of a usufruct in favour of the
bondholder

Section 80 does not find application when a bond that is registered in favour of a minor must be
cancelled as no alienation of immovable property is taking place
 Chapter 8 – Partition transfers
Background

Partition of land takes place when two or more persons (joint owners) who own land in undivided
share the whole of any piece or pieces of land, have agreed to partition such land

Partition of land can take two forms:

1. in the first instance the land first has to be subdivided in order to enable them to partition the
land, however
2. in the latter instance the land need not be subdivided because it already consists consists of
various pieces of land which can be easily partitioned

FORM F is used for preparing a deed of partition transfer

Partition may be carried out by virtue of an agreement between the joint owners or by virtue of a
court order. A court order can be obtained if the co-owners can not agree about how the land should
be partitioned

Basic requirements for the registration of partition transfers

1. There must be an agreement of partition

2. Each of the partitioners must be one of the joint owners
3. The land must be capable of being partitioned
4. The must be a redistribution of land
5. Each party must receive land or a share in land
6. The co-owners must be competent to enter into partition
7. Partition transfers must be registered simultaneously
8. All the joint owners together must own the whole property

The power of attorney to pass partition transfer

No prescribed form exists for a power of attorney to pass partition transfer. Such a power of attorney,
however, must comply with all the legal requirements applicable to powers of attorney.

Furthermore the power of attorney to pass partition transfers must comply with the requirements
contained in section 26(2). Such a power of attorney (or agreement of partition) must contain the
following:

a) The land to be partitioned

b) The share or shares registered in the name of each, with a reference to all titles
c) The land or share therein awarded to each of the owners
d) The conditions, if any, affecting any land (or shares therein) so awarded, and
e) The consideration, if any, given for the purpose of equalising the partition

in practice, however, the –

1) power of attorney
2) agreement of partition
3) statement concerning consideration to equalise the partition,
are contained in one document
Existing and new conditions on partition

All existing conditions contained in the mother title deed of the land to be partitioned, must be brought
forward to the partition transfers. Only new conditions concerning such allocated land may be created
in the power of attorney and brought forward to the partition transfer. Only conditions concering such
allocated land may be created in the power of attorney.

The parties to the partition may not create a praedial servitude in the power of attorney to partition
over the partitioned land or any portion thereof in favour of other land which belongs to the parties, but
which does not form part of the partition, or vice versa. The granting of such a servitude could
possibly be a condition of partition, but will have to be created by notarial deed and not in the power of
attorney to partition

Mortgage bonds on partition

The existing bond must thus –

 either be cancelled and, if necessary, replaced with a new bond; or

 a portion of land awarded on partition must be substituted for the share mortgaged

Section 27(1) stipulates that the mortgagee (bondholder) must give written consent to –

a) the partition of land, and

b) the substitution of the land awarded on the partition to the mortgagor for the share (or shares)
mortgaged

Rights in land partitioned

If the share (or shares) owned by any of the parties to a partition is subject to a lease agreement,
personal servitudes (usus, usufruct or habitatio), or other real right, the written consent of the holder
thereof to –

a) the partition of land, and

b) the allocation of the lease, servitude or such other real right
must be submitted to the registrar
 Chapter 9: Certificate of Registered Title
Certificates of registered title (CRT’s) are in effect substitutive title deeds which are registered at the
deeds registry in the place of deeds of transfer. To some extent they serve the same purpose as a
deed of transfer, namely –

 they serve to prove ownership of land, but

 they do not effect transfer of ownership of land

The purpose of a CRT is thus to take the place of a title deed, to replace it or to replace certain
aspects thereof, but never to transfer ownership from one person to another

A certificate of registered title may be issued to any registered owner of land. It is obtained upon
written application by the owner to the registrar

A certificate of registered title must be –

i. prepared by a conveyancer; and

ii. furnished with a preparation certificate by the conveyancer

Upon registration of a CRT the registrar endorses the existing title deed as well as the mortgage bond
(if any) to indicate that the certificate has been issued in respect of the property in question

Since no transfer of ownership takes place, in other words, the property remains under the ownership
of the same owners –

i. no transfer duties are payable, and

ii. no clearance certificate regarding payment of tariffs is required

As a general rule a CRT will not be issued if the issue will exhaust the title deed from which it is being
issued. In other words, there should always remain a primary title deed.

However, there are a number of exceptions to this general rule, namely where it is the very purpose
of the CRT to replace the title deed completely, for example a certificate of consolidated title (section
40), CRT’s in terms of section 38 and 39 and in a certain instance a CRT in terms of section 43, to
replace the title deed completely.

Existing conditions must be carried forward verbatim from the title deed to the relevant certificate. No
new conditions may be reflected in the certificate. The only exception to this are section 43 CRT’s in
the case of subdivisions of property. At most all subdivisions new conditions are created, which must
be contained in the CRT.

In the case of all certificates of title, two documents are to be prepared by the conveyancer, namely:

a) the application for the issue of a CRT; and

b) the relevant certificate of registered title for which the application is made
they must be lodged simultaneously in the same cover
the application is signed by the registered owner and no prescribed form exists for any of
these applications
the certificate is signed by the registrar of deed and there is a prescribed form for each
certificate
 1.1. CRT of a joint owners undivided share – section 34(1)

Any person who is the joint owner of a piece of land (or a share in a piece of land), held by such
person and others under one title, may obtain a certificate registered title in respect of his/her
undivided share in such land,if he/she so wishes. The certificate is obtained by application to the
Registrar.

In some instances the owner has a choice to obtain such a CRT, but in other instances it is
compulsory

NOT COMPULSORY: if a joint owner wishes to transfer the whole of his undivided share in the land,
a certificate need not be taken out. In such a case he simply transfers his whole share in the property
to another person by means of a deed of transfer

COMPULSORY: A joint owner must obtain such a certificate of title if –

i. he intends to transfer a fraction of such share, or

ii. he intends to mortgage the whole or a fraction of his share, or
iii. he intends to lease the whole or a fraction of his share

All the joint owners holding the land or share therein under one title deed can, however, jointly –

i. transfer a share in the land, or a fraction of the share held under such deed, or
ii. register a bond or lease over the whole of such land, or a share therein,
without the need of a certificate of registered title to be issued

The heading of both the application and the cetificate refer to section 37, but the causa refers to
section 34(1)
(The reason therefor is that section 37 stipulates the procedure to be followed for the issuing
of this certificate, whilst section 34(1) sets out the circumstances when it can be utilized)

1.2. CRT for a fraction of an owners undivided share – section 34(1A)

Section 34(1A) provides that section 34(1) shall apply, with the necessary changes to any person who
is the owner of, or a share in a piece of land and who wishes to obtain a certificate of registered title of
any fraction of his or her undivided share in such land

Section 34(1A) has been inserted to allow a person who is –

 the owner of the whole land (sole owner of land), or

 the owner of a share in land (co-owner of land)
to apply for the issue to him/her of a CRT for a fraction of his share in such land

The heading of both the application and the cetificate refer to section 37, but the causa refers to
section 34(1)
(The reason therefor is that section 37 stipulates the procedure to be followed for the issuing
of this certificate, whilst section 34(1A) sets out the circumstances when it can be utilized)
2. CRT of a joint owners undivided share where the joint title was lost or destroyed – section 34(2)

If the title deed under which land or shares therein is held in joint ownership, is lost or destroyed, any
joint owner may obtain a CRT in respect of his share in the land without obtaining a certified copy of
the lost or destroyed deed

The heading of both the application and the cetificate refer to section 37, but the causa refers to
section 34(1)
(The reason therefor is that section 37 stipulates the procedure to be followed for the issuing
of this certificate, whilst section 34(2) sets out the circumstances when it can be utilized)

3. CRT of an aggregate share – (due to shares held by more than one title deed) – section 35

Any person who is, by virtue of more than one title deed, the owner of undivided share in one or more
pieces of land, may obtain a certificate of registered title in respect of his agregate share in the land.
Provided if there are two or more pieces of land, the several pieces of land or shares therein must, as
usual, be described in separate paragraphs. In other words, the owner wants to consolidate his
undivided shares into one title deed

If the title deed under which land or shares therein is held in joint ownership, is lost or destroyed, any
joint owner may obtain a CRT in respect of his share in the land without obtaining a certified copy of
the lost or destroyed deed

The heading of both the application and the cetificate refer to section 37, but the causa refers to
section 34(1)
(The reason therefor is that section 37 stipulates the procedure to be followed for the issuing
of this certificate, whilst section 35 sets out the circumstances when it can be utilized)

4. CRT of two or more properties held under one deed – section 36

Any person who holds two or more pieces of land (or undivided shares therein) under one title deed,
may obtain a CRT for one or more of those properties (or shares therein): Provided that at least one
property or share remains under the title deed. (this section may also be utilized in respect of units in
sectional title schemes).

A farm, plot and a township erf that fall within the area of jurisdiction of the same deeds registry may
be incorporated into the same title deed.

The heading of both the application and the cetificate refer to section 37, but the causa refers to
section 34(1)
(The reason therefor is that section 37 stipulates the procedure to be followed for the issuing
of this certificate, whilst section 36 sets out the circumstances when it can be utilized)

5. CRT to replace lost or destroyed title deed (where both copies of a title deed have been lost or
destroyed or are incomplete or unserviceable – section 38

Section 38 provides for those rare cases when both –

 the clients copy of a title deed of land, and

 the deeds office’s copy thereof, is lost or destroyed, incomplete or unserviceable
The owner may then apply for the issue of a certificate in respect of such land in
accordance with the diagram of the land
6. CRT to correct an error in registration – section 39(1)

If, by reason of an error, the same land has been registered in the names of different persons, the
registrar may, after the land has been transferred to the lawful owner, issue the lawful owner thereof a
certificate of registrered title for the land which is owned by his/her under different title deed.

In other words, due to an error in registration two different persons hold title deeds over the same
piece of land. The person to whom the land was erroneously transferred, transfers the land to the land
to the lawful owner by means of a rectification transfer. The legal owner then owns the land under two
different title deeds: his own and the rectifying deed. Therefore an application is made for the issue of
this certificate. The certificate takes the place of the two deeds of transfer in terms whereof the lawful
owner owns the land and becomes the only title deed for the land concerned.

7. CRT to omit lapsed or cancelled conditions – section 39(2)

This section provides for the issue of a clean title where the existing title reflects conditions (or
servitudes) which have been duly noted therein as having lapsed or been cancelled. The only way to
clear a title deed from conditions which are no longer applicable, is to obtain a certificate, free from
such conditions. The certificate shall replace the title deed under which the land was previously held.

The purpose of this certificate is not to let conditions lapse or to cancel them, but to omit those
conditions from the title deed which have already been lapsed (by merger) or have been cancelled.
However, the lapse or cancellation of the condition (or servitude) must be noted against the title deed,
before an application in terms of this section can be brought. It means that an application must first be
brought, in terms of section 68, for the lapse or cancellation of a condition (or servitude) before an
application for the issue of this certificate can be brought

8. Certificate of consolidated title – section 40

A certificate of consolidated title is a certificate of title to consolidate two or more pieces of land into
one single unit of land. Where two or more bordering pieces of land (i.e. two or more pieces of land
sharing a common border line) are owned by the same person (or by two or more persons in the
same undivided shares in each piece of land) and have been consolidated into one piece of land, the
owner(s) may apply for the issue of a certificate of consolidated title

Pre-requisites for the issuing of a section 40 certificate

1. The separate pieces of land which are about to be consolidated –

1) must be contiguous to each other
2) must be owned by the same person or by two or more persons who each hold the same
undidvided shares in each of the components of such property
3) must be registered in the same property register
4) must be situated in the same registration division
5) must be situated in the same province
2. a consolidated diagram of the component properties, prepared by a land-surveyor and
approved by the surveyor-general, must be available to be lodged with the application

If all the above mentioned pre-requisites are met, the title deeds of the components properties may be
substituted by a certificate of consolidated title
Dealing with conditions in the certificate of consolidated title

Qualification of conditions

Whenever a subdivision or a consolidation is attended to, it must always be established whether the
qualification of a condition would be necessary

Qualification of conditions, means adding an additional description to an exisiting servitude or

condition to effect the applicability of the servitude or condition on the relevant property. The necessity
to qualify certain conditions of title arises at the subdivision or consolidation of two or more properties
to form a new unit

The purpose of qualification of conditions in deeds of transfer and certificates of title in the case of
subdivision of land (including the remainder), is subject to existing rights created or imposed on the
original land, before subdivision

Likewise to indicate to what extent a component or components of consolidated land is/are subject to
existing conditions or entitled to existing rights created or imposed on a smaller land unit which now
forms part of the consolidated land

DRAFTING RULE: Scrutinise all conditions in the title deeds of all the components parts and
determine whether qualification of a condition is necessary or not, and if so, to what extent

1. All the components subject to the same condition or servitude

(a) Same conditions
Where the components being consolidated are all subject to the same condition(s) of a
general nature, qualification is obviously not necessary. It is not necessary to qualify the
various components by referring to the letters and figures as depicted on the diagram.
Simply quote the condition, which will be applicable to the whole consolidated property,
as follows –
(b) Same servitude
Where the components being consolidated are subject to the same servitude, created by
the same notarial deed (as a result of previous subdivisons which are now being
consolidated), qualification will likewise not be necessary. However, reference to the
servitude area or line reprsenting the servitude on the consolidation diagram annexed to
the certificate of consolidated title and the notarial deed by which it was created, will be
necessary.
2. Conditions and servitudes only applicable to a specific component
This will be the case where some of the components are subject to a condition or servitude
but not the rest of the components. A distinction should be made between conditions on the
one hand and servitudes on the other
(a) Conditions applicable to only a specific component
The general rule is that conditions contained in the title deed of the component parts,
must be carried forward to the certifcate of consolidated title, with the necessary
qualification if necessary. Conditions which are only applicable to a specific component or
some components and not to the whole of the consolidated property must be qualified by
referring to the letters of the figure of the component as indicated on the consolidation
diagram. The qualification is a new formulation of the condition, indicating that it only
pertains to a specific component of the consolidated property
 (b) Servitudes applicable to only a specific component
Servitudes which are applicable to a specific component or some components and
indicated by lettering on the consolidated diagram, must be qualified by referring to –
 The lettering whereby the affected component is indicated on the consolidated
diagram; and referring to
 The lettering whereby the servitude is indicated on the consolidation diagram

3. Conditions and servitudes that have lapsed through merger

The title deeds of the component parts must be checked in order to ascertain where there are
any conditions or servitudes that have lapsed due to the merger. Due to the fact that an
owner cannot have a servitude over his own land, such servitude will lapse through merger.
As merger occurs by law, no application is necessary for the noting of the lapsed thereof on
the title deed of the affected properties
4. Notarial tie conditions
When the notarial tie condition, as relected in both title deeds of the component properties are
brought forward to the certificate of consolidated title, it has to be brought forward as one
condition, but with a qualification referring to the description and lettering as indicated on the
consolidated diagram of the respective component properties
5. Mineral rights
All mineral rights conditions (including prospecting rights) which appear in the existing title
deeds must be omitted when drafting deeds of transfer and certificates of registered title
6. No new conditions
No new conditions may be included in the certificate of consolidated title, unless created by
statute or by the Premier in terms of a statute or an Ordinance

Disposal of mortgage bonds of properties to be consolidated

Whenever mortgage bonds are registered over some or all of the component constituting the
consolidation, those mortgage bonds must be dealt with.

1. Where all components of the land to be consolidated are mortgaged by the same bond
Where all the components of the land to be consolidated are mortgaged by the same bond.
The consolidated piece of land can be substituted as security for the different components.
2. Where only some components of the land to be consolidated are mortgaged by the same
bond
Where a portion only of the land represented on the new diagram is mortgaged, in other
words only some components to be consolidated are mortgaged by the same bond, you have
two options, namely –
a) The bond must either be cancelled; or
b) The owner can apply for all the consolidated land to be substituted for the the land
originally mortgaged under the bond. The effect thereof is that the original piece or
pieces of land not previously mortgaged by the bond are replaced as security by the
newly consolidated property. The bondholders security is strenthened thereby. The
bondholder must consent thereto – section 40(5)(a)
3. Where different portions of the land to be consolidated are mortgaged under different bonds
If different portions of the land to be consolidated are mortgaged under different bonds, the
bonds must be canelled – section 40(5)(b)
Developer wants to consolidate his erven in a township

If a developer owns an erf in a township which he wants to consolidate with an adjoining piece of land
(farm land or agricultural holding) which still falls in the general land register, section 40 prohibits that
the two pieces of land can be consolidated. However there are two ways to solve this problem. The
developer can take the following steps:

a) One way is to tie the properties by way of a notarial tie agreement entered into between the
owner, and the local authority, which agreement must be registered in the deeds office and
noted on both title deeds
b) Another solution is to register an incision whereby the boundaries of the township will be
extended to include the farm land or agricultural holding – section 49
Thereafter the new erf can be consolidated with the other erf, because they will then fall within
the same property register

Subdivision of a property

CRT in respect of a portion of land (section 43)

Where the owner subdivides his land into two or more portions and wishes to hold those portions
under separate titles, he may make an application to the effect that a certificate of registered title be
issued in respect of the portions of his land

Purpose: such owner is thereafter entitled to mortgage, lease or register other rights over the
portion(s) and the resultant remainder seperately from each other. The owner thus obtains separate
titles for each portion enabling him to deal seperately with each portion

The term subdivision means that the owner is dividing an existing piece of land into two or more
portions. He does this by requesting a surveyor to divide the land into two or more portions. The
surveyor draws up a draft subdivision (diagrams) on which he shows the portions that the owner
wants to subdivide. He then submits the draft subdivisions diagrams to the surveyor-general for his
approval. When an owner receives the approved subdivision diagram from the surveyor-general, no
change in the status of the property has yet taken place in the deeds registry. He is still the owner of
all the undivided portions in terms of a single title deed (the original title deed),as shown on the
subdivision diagrams. Section 43(1) provides that as soon as –

 a particular portion of a piece of land has been surveyed; and

 the surveyor-general has approved a diagram for this portion ,
a CRT may be issued to the owner of such surveyed piece of land

Note that it is possible to take out a certificate of registered title in terms of section 43 in respect of all
the property held under one title deed, leaving no remainder. In this instance the title deed of the land
will therefore be exhausted. The Surveyor-General must however consent thereto. The consent is
usually expressed in an LG caveat stating that the subdivision has been approved, leaving no
remainder.
Compulsory issuing of section 43 certificates

There are three instances where a section 43 certificate must be taken out. They are the following: -

1. a mortgage bond cannot be registered over a subdivided portion of land unless a CRT has
been issued for such a portion
2. the owner of a township (township developer) in whose title deed the individual erven are not
separately described, may not deal seperately in any way with an individual erf in such a
township or any portion therof or share therein, until a CRT has been issued for such an erf.
The word “deal” excludes the transfer of a whole erf. In other words, a whole erf can be
transferred by means of a deed of transfer. The word “deal” refers to the registration of a
mortgage bond or servitude over a property or portion thereof.
There are three instances where a CRT must first be issued, namely:
a) where a townhip developer intends to –
i. a mortgage bond, or
ii. a servitude
over a single or portion of an erf he must first apply for the issue of a CRT for
such an erf; and
b) where a township developer intends to consolidate two or more erven directly from the
township title. Two or more erven may not be consolidated directly from a township title.
Certificate of registered title must first be issued in respect of all the erven to be
consolidated
c) the remainder of a property may not be transferred before any of the portions of the
original property unless CRT’s have been issued for each portion thereof

Condtions and servitudes

Existing conditions – general rules

Existing conditions are reflected in the conditional clause of the title deed from which the certificate is
issued, must be carried forward to the certificate(s), with qualification of the conditions where
necessary

Qualification of conditions means adding an additional description to an existing servitude or

condition, to effect the applicability of the servitude or condition on the relevant property. The
necessity to qualify certain conditions of title arise at the subdivision of a property or the consolidation
of two or more properties to form a new unit

As a general rule no new conditions may be created in the application and registered in the certificate
of registered title, unless created by statute or by the Premier in terms of a statute or ordinance. This
will include conditions imposed by the local authority with respect to such subdivision, in which case
they must be embodied in the certificate

Qualification would not be necessary:

 if a servitude or condition is of such a nature that it becomes a separate servitude or condition

on the portion being with, and/or
 if a servitude is clear and unambiguous without qualification. Where non-qualification,
however, causes confusion or misstatement of fact, qualification is necessary

The lettering of servitudes described in the holding title deed and referring to the parent diagram (of
the original property) will differ from the lettering used on the subdivided diagram. However it is the
letters on the subdivided diagram that should be used in describing these already registered
servitudes in the certifcate (or new deed of transfer)
Conditions of title which do not affect the newly defined portion must be omitted from the certificate.

Conditions which are subject to ancilliary rights, must be reflected in the certificate with the necessary
qualification, since they may be applicable to the land concerned due to the ancilliary rights. Ancilliary
rights are supplementary to the main servitude, which enable the holder of the servitude to gain
access to the servitude and to properly utilise, maintain and repair the servitude, if necessary

Qualification of conditions in the former Transvaal

Personal servitudes

If the property to be subdivided is subject to a usufruct, usus or habitatio, no qualification of this

servitude is necessary in the deed for the subdivision

If the property to be subdivided is subject to a personal servitude together with ancilliary rights and
both the portion and the remainder are subject to both the main servitude as well as the ancilliary
rights, no qualification of this servitude is necessary in the deed for the subdivision

If the property to be subdivided is subject to a personal servitude with ancilliary rights and the portion
is not subject to the main servitude but only to the ancilliary rights (as ancilliary rights have not been
restricted to the remainder) qualification of this servitude shall be necessary in the deed for
subdivision

If the property to be subdivided is subject to rights of enjoyment which are numerically or otherwise
restricted or definded, qualification is necessary

If there is a personal servitude that is indicated on the subdivisional diagram, the servitude must be
qualified by reference to the figures on the said diagram

If the property to be subdivided is subject to a personal servitude described in general terms or

described vaguely so that it is impossible to determine whether the servitude does or does not affect
the subdivision, qualification of this servitude or condition shall be necessary in the deed for the
subdivision

Township conditions/ holding conditions and restraints

If all the township or agricultural holding conditions are of a general nature, no qualificaion is
necessary in the deed for subdivision (portion)

Where there are conditions that must be qualified amongst conditions not to be qualified, it is incorrect
to qualify all the conditions. Only those conditions that need qualification must be qualified

Praedial servitudes

If the praedial servitude is also applicable to the portion to be transferred or registered, the servitude
must be qualified

If the subdivision (portion) to be transferred or registered is not subject to the praedial servitude to
which the property to be subdivided are subject to, due to its situation, and there are no ancilliary
rights, the servitude must be omitted from the deed of the portion

If the property to be subdivided is entitled to rights of enjoyment which are numerically or otherwise
restricted or defined, the condition must be qualified in the deed of the subdivision to indicate that the
portion transferred (registered) is only entitled to such rights on a pro-rata basis

If a praedial servitude is indicated on a subdivisional diagram, the servitude must be described in

accordance with the lettering on the said diagram
Mineral rights

All conditions relating to mineral rights (including prospecting rights) must be omitted when drafting
deeds of transfer and certificates of registered title, irrespective of whether such mineral rights
conditions contains ancilliary rights or not

Transfer duty and rate clearance certificates

Since no transfer of ownership takes place, in other words, the property remains under the ownership
of the same owner –

i. no transfer duties are payable

ii. no clearance certificate regarding the payment of tariffs is required

CRT of land previously held under registered sectional title (section 43A)

When a development scheme under the provisions of the Sectional Title Act has been laid out, and
the title deed of the land affected is endorsed to the to the effect that a sectional title register has been
opened

Under certain circumstances (for example upon application by the developer – section 14(6) and upon
deemed desctruction of the buildings of the scheme – section 17 of STSMA), the sectonal title register
is closed and the land must be restored or reverts to the land register. In such cases a certificate of
registered title must be registered, in order to restore or revert the land to the land register. Where
only a portion of such land is reverted or restored, a diagram of such piece of land must be annexed
to the certificate.
 Chapter 10 – Township Estbalishment
Background

Where the owner of a piece of land wishes to establish a township and have it registered as such, he
must, in terms of the Deeds Registries Act, follow the following procedure:

1) he must obtain approval from the relevant municipality for township establishment, which
approval is normally subject to certain conditions (conditions of establishment). This approval
falls under the concept of compliance with any other law as referred to in section 46(1) of the
Deeds Registries Act
2) thereafter he must subdivide the land into erven (or lots) and indicate these on a draft general
plan. Such draft plan must be drawn by a land-surveyor
3) the draft general plan must be submitted to the Surveyor-General for his approval. The
Surveyor-General approves the draft general plan and alocates a number thereto. With the
approval of the draft general plan, the plan becomes the official general plan for such a
township
4) finally, the owner of the land must apply to the Registrar of Deeds for two things, namely for –
a) the opening of a township register; and
b) registration of the general plan

Section 46(1) of the Deeds Registries Act stipulates that: if land has been subdivided into lots or
erven shown on a general plan, the owner of the land subdivided shall furnish a copy of the general
plan to the registrar of deeds with an application for –

i. registration of the general plan; and

ii. opening of a township register
in which all registrations pertaining to the land must be registered.
(the effect is, that the piece of land on which the township is laid out is transferred from the
general land register to the township register)

Three possibilities

A clear distinction should be drawn between a township laid out –

1. on the whole of a piece of land held by the title deed – section 46(3), or
2. on a portion only of a piece of land held by the title deed – section 46(4), or
3. on two or more pieces of land held by different title deeds – section 46(5)

FIRST SCENARIO: Township on the whole piece of land

The regsitrar must –

 endorse the title deed (and the registry duplicate thereof) to the effect that the land held
thereunder has become become a township in accordance with the plan

This one piece of land can be held by any of the following types of title deed:

 deed of transfer – (the title deed by which it was transferred), or

 certificate of consolidated title – (if it was consolidated before), or
 certificate of registered title – (if it was subdivided before)
SECOND SCENARIO: Township on a portion only of a piece of land

Certificate of Township title – section 46(4)

The registrar must –

 on written application by the owner of the land, issue a certificate of township title in his favour
in respect of the said portion
(the township is laid out on a portion only of a registered piece of land held by the title deed)

The procedure to be followed is as follows:

Before the general plan can be registered and the township regsiter can be opened by the registrar of
deeds, the owner of the land must first –

 bring an application to the registrar of deeds for the issue of a certificate of township title for
that specific portion of land on which the township is to be laid out. The certificate of township
must be as nearly as practiciable in the prescribed form and in accordance with a diagram for
that portion –
 a certificate of township title must be issued as set out in FORM V
 a diagram of the subdivided land must be annexed to the township title

After obtaining the title deed for the portion of land on which the township is to be established, the
application for the regsitration of the plan and the opening of the township register can be proceeded
with. It can be done in the same batch as the application for the issue of the certificate of township
title

THE ALTERNATIVE PROCEDURE TO BE FOLLOWED IS AS FOLLOWS: as an alternative to the

issue of a certificate of township title, the owner can before launching the township establishment on a
portion of such land, can apply for a certificate of registered title in terms of section 43 in respect of
such portion of land on which he wishes to establish a township. He can then continue with the
township establishment on the portion held under the certificate of registered title

The requirements for the issue of a certificate of township title are the same as those applying to the
issue of a certificate of registered title in respect of a portion of land.

THIRD SCENARIO: Township on two or more pieces of land

If the land subdivided as shown on the general plan comprises the whole or portions of two or more
registered pieces of land, the registrar may require the owner to obtain a certificate of consolidated
title of the land to be subdivided. It is at the registrars discretion whether or not to require such
certificate. In such a case if so required, the stipulations of section 40 (consolidation of properties) will
apply mutatis mutandis

Where consolidation is impossible, it is however still possible to open a township register over more
than one piece of land. A township register cannot however be opened on more than one property if
these properties are owned by different owners
Permanent filing of township title

A title deed may be permanently filed at the deeds registry in order to avoid waiting for delivery of
such title deed after registration of each individual property has taken place. Usually this will be the
case where a large number of properties are held under one title deed, which properties must be
transferred one by one from such mother (parent) title deed

On lodgement of a transaction, a reference must be made to where the deed is filed. A request for a
title deed to be filed is made by way of a request to the Registrar and includes an indemnity in favour
of the Registrar against any damages the owner may suffer as a result of the loss or destruction of the
deed

It is not only a deed of transfer that can be permanently filed, but also a mortgage bond in terms
whereof multiple properties are being mortgaged. A title deed can also be permanently where land
has been subdivided into a number of portions.

Dealing with individual township erven by the developer

Section 43(5)(a) provides that save in the case of a transfer of a whole erf, no township owner, in
whose title deed the individual erven are not seperately described, shall deal seperately in any way
with an individual erf in such township (or any portion thereof or share therein) until he has obtained a
certificate of registered title of such erf in the prescribed form

This means that the townhsip owner can sell and transfer a whole erf in terms of his title deed. He can
further deal with the whole of any erf, provided that it is seperately described in the title deed

Transfer of a whole township or a portion thereof

Transfer of whole -/portion of -/or share in a
twonship
The transfer is governed by section 47 of the
Deeds Registries Act
All the obligations in respect of the township or
portion thereof or share therein are passed to the
new owner (transferee)
Everything that is regarded in the name of the
township owner (including public places) are
transferred to the transferee
Everything that is regsitered in the name of the
township owner (including public spaces) are
described with one paragraph in the deed of
transfer
The property transferred is made subject to the
conditions as set out in the existing title deed.
The proclaimed conditions, to which all the
individual erven in the township are subject, must
however not be inserted in this deed of transfer
Transfer of all the erven or of some individual
erven in the township
The transfer is not governed by section 47 of the
Deed Registries Act and is merely regarded as a
transfer of a substantial number of erven by the
township owner
The transferee does not become the township
owner
The public spaces are not included in the transfer
and remain registered in the name of the
township owner
In the deed of transfer, all the erven are
described in separate paragraphs
All the erven are made subject to the conditions
as set out in the existing title deed, read together
with the proclaimed conditions
 Chapter 11 – Endorsement
The Deeds Registries Act and certain other laws make provision for the transfer of ownership from
one person to another by virtue of an endorsement made by the registrar of deeds on the existing title
deed of the land concerned. When one speaks of an endorsement in relation to a deed, it means that
the registrar of deed affixes a stamp on a title deed

Section 4(1)(b) endorsement

TO RECTIFY AN ERROR

Background

Occasionally an error in a title deed may be overlooked by the conveyancer and the examiners at the
deeds registry. Such a deed is then registered with that error. An application in terms of section
4(1)(b) can then be brought to rectify the error.

Type of errors that can be rectified

According to section 4(1)(b) the following errors can be rectified in deeds or other documents that
have been registered or filed at the deeds registry, namely an error in –

i. The name or description of a person (the name, surname, identity number and marital status
of a person can be rectified by this endorsement, because these three elements constitute the
description of a person),
ii. The name or description of property (for example such as the correction of the number of a
diagram in the extending clause although the extending clause does not form part of the
property description), and
iii. The conditions affecting any such property

If immovable property is registered in the name of both spouses before before the rectification,
irrespective of how they are married, it must still be registered in both their names after the
rectification. Such an amendment will not result in the transfer of a real right.

Where immovable property is purchased and registered in the name of an owner described as
married out of community of property and subsequent to the registration, it is discovered that no
antenuptial contract was registered and the spouses apply for the registration of a post nuptial
contract, which contract is silent as to the immovable property, the way in which this should be dealt
with has been stipulated in a Registrars’Conference:
It was resolved that the title deed in terms whereof immovable property is held must first be rectified in
terms of 4(1)(b), to indicate the parties as being married in community of property, where after an
application in terms of section 45bis(1A)(b) must be brought by both spouses

A section 4(1)(b) application can only be brought to correct an error which occurred at the time when
the relevant deed was registered. Facts that change after the registration of the deed and the deed
consequently needs to be amended, other procedures have to be considered
Requirements for a section 4(1)(b) application

A section 4(1)(b) rectification must be made by virtue of an application. Such an application is usually
lodged in the form of an affidavit. The following facts must be stated explicitly in the application and
affidavit:

i. a description of the kind of error made

ii. a description of the rectification applied for
iii. a description of all deeds and documents affected by the rectification
iv. a statement to the effect that no other registered deeds that would require rectification exist,
and
v. a statement that the rectification does not entail any transfer of rights

The application must be brought by the owners, or theirs lawful representatives, of any title deed(s) on
which there is an error that must be rectified

Section 16 endorsement

TRANSFER TO THE STATE OR A LOCAL AUTHORITY

Section 16 provides the first exception to the general rule that the ownership of land shall be
transferred from one person to another only by means of a deed of transfer

This section stipulates that –

i. where the state acquires all land held under any title deed, whether by means of expropriation
or otherwise; or
ii. where a local authority by virtue of the provisions of any law acquires all land held under one
title deed by any other local authority
the registrar shall make an endorsement on any such title deed as may be necessary to
register transfer to the State or such authority of the property so acquired free of charge

NOTE –

That the state must acquire all of the land held under any title deed. Where two or more properties, or
portions of land, are held under one title deed and the state or local authority acquires only one or
some of the properties (portions of land) the stipulations of this section shall not apply. In such a case,
transfer has to be effected –

- by means of a normal deed of transfer, or

- a CRT in terms of section 36 must be taken out for the property (or portion of land) to be
transferred.
Section 17(4) endorsement

CHANGE IN STATUS/ PARTY TO A MARRIAGE IN COMMUNITY OF PROPERTY

This section provides that where immovable property, a real right in immovable property, or a bond –

a) is registered in the name of a person who has married since the registration took place,
b) is registered in the name of a person who on the date of the registration was married out of
community of property, or whose marriage was on the date governed by the laws of another
country, and whose marriage was subsequently dissolved by death or divorce,
c) forms an asset in a joint estate and was registered in the name of the husband only,
d) is registered in the name of a person who on the date of the registration was a party to a
customary marriage (governed by the Recognition of Customary Marriages Act)

the registrar shall, on the written application by the person concerned, and on the submission
of the title deed in question and of proof of the relevant facts,
- endorse the change in status, or
- make an endorsement to the effect that the said person is a party to a marriage in
community of property, as the case may be

Comments on section 17(4)

Section 17(4)(a) – is applicable where a person purchased property while he or she was still
unmarried, but has subsequently entered into a marriage. The type of marriage is of no consequence.
The property is still registered in his or her name, and his or her marital status is still given as
unmarried in the title deed.
Section 17(4)(b) – if the property was registered in the name of spouses married in community of
property to each other and the joint estate is dissolved through death or divorce, section 17(4) may
not be utilized. Depending on the circumstances, section 45 or 45bis will find application.
If the parties to a marriage out of community have applied for the change of their matrimonial property
system to in community of property, section 17(4) may not be used. An application in terms of section
3(1)(v) must be brought to note such change
Section 17(4)(c) – is applicable to cases where persons were legally married in community of property
at the time when the property was registered but the property was registered in the name of the
husband only, being the administrator of the joint estate. This type of registration was found before 1
November 1984
In order to bring the title deed in line with the de facto situation, the husband can apply to the registrar
of deeds for a note to be made on the title deed to the effect that he is a party to a marriage in
community of property
Section 17(4)(d) – applies where a party is described in the title deed as being unmarried but in actual
fact was already married at the time of registration of such deed, which marriage is governed by the
Recognition of Customary Marriages Act
Section 24bis(2) endorsement

TRANSFER FROM A PARTNERSHIP TO INDIVIDUAL MEMBERS

There are three possible scenarios with the transfer of property which belongs to a partnership,
namely:

1. TRANSFER TO ONE PARTNER ONLY – section 24bis(1)

Section 24bis(1) stipulates that where land, registered in the name of a partnership, is acquired by
any one of the partners of such partnership in his individual capacity, transfer thereof must be given
by all the partners constituting such partnership and transfer must be passed by means of a deed of
transfer and not by means of an endorsement. This means that all partners must sign the power of
attorney.

2. TRANSFER TO ALL THE PARTNERS OF A PARTNERSHIP – section 24bis(2)

This subsection provides that land owned by a partnership can be transferred from such partnership
to all the partners by means of an endorsement rather than by means of deed of transfer. Transfer
may be passed by endorsement if the following requirements of section 24bis(2) are met:

a) if a partnership is dissolved through –

- agreement by the partners, or
- death of one of the partners, or
- for any other reason, and

b) if on such dissolution any land owned by such partnership is awarded to all the partners, the
registrar shall on written application signed by all the partners constituting such partnership
endorse on the title deed of the land that such land vests in the individuals therein named,
and thereupon such persons shall be entitled to separately deal therewith as if they had taken
formal transfer in their names of their share in such land. They now beocme co-owners of the
property that they formerly owned jointly as a partnership.

If the partnership is dissolved as a result of the death of one the partners, the share of the deceased
in the property will vest in the estate of such late person.

3. WHERE THE SHARE OF ONE OF THE PARTNERS IN THE PARTNERSHIP IS

TRANSFERRED TO THE REMAINING PARTNERS OR TO THE REMAINING PARTNERS
AND SOME OTHER PERSONS – Regulation 34(3)

Such property, shall not be passed unless the whole of the property, and not merely the share of the
disposing partner, is transferred to the new partnership.

The power of attorney must be signed by each of the partners of the original firm
Section 25(3) endorsement

TRANSFER TO UNASCERTAINED CHILDREN

Section 25(1) states stipulates that if land or a real right or a bond is –

 donated, or
 bequeathed to the children born or to be born of any person or of any marriage, or
 is otherwise acquired on behalf of such children
transfer of the land or cession of the real right or bond on behalf of such children may be
passed
i. in the case of children born or to be born of a person, to that person in trust for such
children, and

Section 25(3) stipulates that when the identity of all such children has been established, an
application may be made to the registrar to make an endorsement on the title deed or bond setting
out their names

Thereupon the title deed or bond shall be deemed to be in favour of such children in the same
manner as if the transfer or cession had originally been passed to them by name

Section 44 endorsement

RECTIFICATION OF A DIAGRAM

If rectification of a title deed is required because of –

 a survey or re-survey of land; or

 the correction of any error in the diagram thereof,
under the Land Survey Act, the registrar may, on the written appliaction by the owner of land,
endorse on the aforesaid deed a description of the land according to the new or corrected
diagram, which description shall supercede the description already appearing in the aforesaid
deed. The new diagram can be substituted for the old one.

Section 45bis(1)(a)

ENDORSEMENT OF DEEDS ON DIVORCE

If immovable proerty or a bond is registered in the deeds registry and it formed an asset in the joint
estate of spouses who have been divorced, and one of them has lawfully in terms of the divorce order
acquired the share of his or her former spouse in the property or bond, the registrar may, on the
written application by the spouse concerned, endorse the title deed(s) of the property or the bond that
such spouse is entitled to deal therewith as if he or she had taken formal transfer (or cession) into his
or her name of the share of the former spouse in the property or the bond

This section only applies to spouses who were married in community of property and have been
divorced. Such an application will usually be the result of –

 a settlement agreement which was made an order of court, or

 a redistribution agreement following an order of court, provided that the interest of third
parties are not affected thereby

The application is brought by the former spouse who has lawfully acquired the share of his or her
former spouse in the property or bond. The reason for the application must be stated therein.
Section 45bis(1)(b)

CHANGE OF MATRIMONIAL PROPERTY SYSTEM

If immovable property or a bond is registered in the deeds registry and it forms or formed an asset in
a joint estate, and –

In terms of which the property or bond is awarded to one of the spouses, the registrar may, on written
aplication by the spouse concerned, endorse on the title deeds of the property or the bond that such
spouses is entitled to deal therewith as if he or she had taken formal transfer (or cession) into his or
her name of the share of his or her spouse in the property or bond

Section 45bis(1A)

UNDIVIDED SHARES IN PROPERTY

If immovable property or a bond is registered in the deeds registry and it -

a) formed an asset in a joint estate of spouses who have been divorced, and such property
accrues to both spouses in undivided shares in terms of the division of the joint estate; or
b) formed an asset in the joint estate and -
i. the court has made an order in terms of section 20 of the Matrimonial Property Act, or
ii. a court has made an order and given authorisation under section
 section 21 of the Matrimoial Property Act, or
 section 7(6) of the Recognition of Customary Marriages Act for the change of the matrimonial
property regime

in terms of which the property or bond is awarded to both spouses,

the registrar may, on written aplication by both spouses, endorse on the title deeds of the property or
the bond that such spouses is entitled to deal therewith as if he or she had taken formal transfer (or
cession) into his or her name of the share of his or her spouse in the property or bond. They now
become co-owners, each with half an undivided share in the property

Section 58(2)

TRANSFER TO AN INSOLVENT

As soon as the estate of an insolvent has been sequestrated, the insolvent is divested of his estate.
The estate then vests in the Master, and on appointment of a trustee, in such a trustee.

There are three ways in which an insolvent can be re-vested with immovable property vested in the
trustee of his insolvent estate:

1. Composition – (in terms of section 119 of the Insolvency Act)

Procedure: section 58(2) of the Deeds Registries Act

An insolvent may, at any time after the first meeting of the creditors of his insolvent estate, submit to
the trustees of his estate a written offer of composition. If the offer of composition has been accepted
by the creditors, the insolvent shall be entitled to a certificate under the hand of the Master of the
acceptance of the offer

If it is a condition of the composition that any property in the insolvent estate shall be restored to the
insolvent, the acceptance of the composition shall divest the trustee of such property and re-invest the
insolvent therewith
Section 58(2) of the Deeds Registries Act must be invoked. The section provides that –

i. if by virtue of the provisions of the law relating to insolvency an insolvent is re-invested with
the ownership of any property
ii. such property may not (subject to the provisions of section 25(3) of the Insolvency Act), be
transferred, mortgaged, or otherwise dealt with by the insolvent
iii. until an endorsement that the property has been restored to him has been made by the
registrar on the title deed of the property

An application containing the request for endorsement of the title deed must be made to the registrar
of deeds by either –

a) the insolvent
b) his curator
to the effect that the property be restored to him

2. Re-vesting in terms of a court order – (in terms of section 127 of the Insolvency Act)
Procedure: section 58(1) of the Deeds Registries Act

Immovable property which has vested in a trustee in accordance with the law relating to insolvency
and which property has not in terms of that law has been re-vested in the insolvent may, whether
before or after rehabilitation of the insolvent, be transferred only by the trustee. Such property may
not, even after rehabilitation of the insolvent, be transferred, mortgaged or otherwise dealt with by the
insolvent, until it has been transferred to him by the trustee

This will be the case where the court has made an order in terms whereof the insolvent shall be
entitled to a particular property.

3. Automatic rehabilitation – section 25(3) of the Insolvency Act

An insolvent is automatically rehabilitated after a period of 10 years since his sequestration, if he has
not been rehabilitated by the court before such time. No registration act is necessary, as the registrar
of deeds will on his own accord remove from his records any sequestration order after the lapse of 10
years

Section 68(1)

LAPSE OF PERSONAL SERVITUDE

If for any reason a personal servitdue has lapsed, the registrar of deed must, upon written application
by the owner of the land encumbered thereby, or by the person entitled to the land, note on the title
deed of the land and on the servitude that the servitude has lapsed

A written application must be submitted to the registrar.

Proof of the lapse of the servitude must be submitted to the registrar. The proof to be lodged will
depend on the reason of the lapse of the servitude

Where a personal servitude is cancelled (either in terms of section 68(1) or section 68(2) of the Deeds
Registries Act), a transfer duty receipt or exemption certificate must be lodged, unless the servitude
has served its time.
Section 78(1) endorsement

TERMINIATION OF REGISTERED LEASE

When a registered lease or sublease has terminated, the owner of the land affected thereby, or holder
of the lease, as the case may be, may apply to the Registrar of Deeds to endorse the title deed of the
land to the effect that the lease has been terminated

Proof of the termination of the lease must be lodged together with the application and the title deed

Section 93(1)

CHANGE OF NAME

If any natural person, partnership, church, trust or company whose name appears in any registered
deed or other document has changed his name or its name, the Regsitrar may, upon written
application by that person, partnership, church, trust or company endorse on the said title deed that
the name of the perosn, partnership, church, trust, or company has been changed to the name stated
in the application

The change of name must be proved

If a natural person has changed his surname,
the following must be lodged as proof:
In the case of a partnership or church:
In the case of the change of the name of a trust:
In the case of a company:
Proof can either be –
 a certified copy of the relevant notice in the
government gazette in terms of section 27
of the Births and Deaths Registration Act, or
 a certified copy of the letter by the
Department of Home Affairs
proof would be the resolution in terms of
whereof the name has been changed
a document containing the old and new name,
issued by the Master of the High Court must be
lodged
a certified copy of the amended registration
certificate issued in terms od section 14 or 16 of
the Companies Act, or
amended registration certificate containing a
verification cerficate by the conveyancer

No change of legal personality may be implied by such change of name. If a change of legal
personality is implied, transfer or cession from one legal person to another legal person, must be
passed by means of a normal transfer in terms of section 16 of the Deeds Registries Act

Reference must be made to all the deeds and documents to be amended

Usually the application is made in the form of an affidavit in which the applicant declares that –

i. the change does not constitute a change of person, and that

ii. no further deeds or documents need amending

Every person who has an interest in the deed or document about to be amended must consent to the
change
 Chapter 12 – Lost Deeds
Regulation 51(1) stipulates that the original title deed or a certified copy thereof, must always be
lodged at the deeds registry together with the new deed of transfer. If the original title deed is lost, the
certified copy then replaces the original title deed.

Application for the issue of a certified copy – Regulation 68(1)

If any deed of transfer, certificate of registered title, certificate of consolidated title, deed of servitude,
certificate of real right in respect of any exclusive use area or right of extension, mortgage bond,
notarial bond, or registered lease is lost or destroyed and a copy is required for registration purposes,
the registered holder thereof, or his/her duly authorised agent, may lodge a written application for
such a certified copy. This application should be accompanied by an affidavit.

The application must contain the conveyancers preparation certificate.

Content of affidavit

The affidavit follows the wording of regulation 68(1) and must contain the following details:

a) a description of the deed

b) a statement that it has not been pledged and it is not being detained by anyone as security for
debt or otherwise
c) a statement that it has actually been lost or destroyed
d) a statement that it cannot be found after a diligent search
e) where possible, a description of the circumstances under which it was lost or destroyed, and
f) finally, an application for the issue of a certified copy of the lost or destroyed deed

Publication

Before the issuing of a certified copy of a deed under regulation 68(1), the applicant must publish a
“notification of intention to apply for a certified copy” in an issue of a newspaper circulating in the area
in which the land is situated – regulation 68(1E)(a)

The Notification of intention to apply for a certified copy must be in the prescribed form –

 FORM JJJ in respect of a lost or destroyed deed

 FORM KKK in respect of a lost or destroyed mortgage or notarial bond

Proof of compliance with regulation 68(1E)(a) will therefore also have to be lodged in the deeds
registry together with the application and affidavit in terms of regulation 68(1)

A copy of the lost or destroyed deed shall be open for inspection in the deeds registry, free of charge,
by the any person, for a period of 2 weeks from the date of publication of the notice, during which
period any interested person may object to the issue of a copy

Objections must be lodged in writing with the relevant registrar of deeds within the said two weeks
from the date of publication of the notice. An application for a certified copy in terms of regulation
68(1) can therefore not be lodged at the deeds registry until the expiry of the two week period
Certified copy that was issued and is now also lost or destroyed

Regulation 68(1) also applies when a certified copy has already been issued to serve as an original
and such duplicate has now also been lost or destroyed – regulation 68(7)

The application and affidavit for the issue of the deed must disclose the full facts, in other words, it
must be stated that the copy being applied for, is a copy of an already certified copy, the latter of
which is also lost or destroyed

The application must be brought in terms of regulation 68(1) and not in terms regulation 68(7).
Publication in a newspaper is also required in this instance

Application of copy where the land is mortgaged

If the land, interest or real right held under the deed is mortgaged and the mortgagee may by virtue
thereof be in possession of the deed, the mortgagee must state in writing that –

 title deed is not in his/her possession, and that

 he/she consent to the issue of a copy thereof to the applicant

The application is still brought by the registered holder of the deed, but in addition, the consent of the
mortgagee must also be lodged

The consent of the mortgagee must be given even if the mortgage bond is cancelled simultaneously
with the issue of the certified copy of the title to which it relates.

Aplication for the replacement of unserviceale deeds – regulation 68(8)

In any deed referred to in regulation 68(1) has become unserviceable the holder thereof or his duly
authorised agent may apply to the Registrar of Deeds to issue a certified copy thereof to serve in
place of the original. The original title must be lodged with such an application

Application by the mortgagee of lost, destroyed or unserviceable mortgage that must be cancelled

If a mortgage bond has been lost or destroyed or is unserviceable and the mortgagee wishes to
cancel the mortgage bond (normally this will be on the instruction of the mortgagor), -

 the mortgagee, or
 his/her duly authorised agent
may apply for the cancellation of the mortgage bond without a copy of such bond having to
be issued

it is not necessary for the mortgagee to apply for the issue of a certified copy of the lost or destroyed
bond. The registrar will cancel the registration duplicate of the mortgage bond, and such cancellation
is deemed to be a cancellation of the bond notwithstanding that the original, or a certified copy of the
original deed, was not submitted for cancellation. The application is therefore for the cancellation of
the mortgage bond and not for the issue of a certified copy. It is not necessary for the mortgagee to
give consent for the cancellation of the mortgage bond, since the application implies such consent

The application will have to be accompanied by an affidavit or the affidavit must form part of the
application. Note that no publication in a newspaper is required for a regulation 68(11) application

The purpose of regulation 68(11) is to provide a short cut in cases where a bond is lost, destroyed or
unserviceable and has to be cancelled
If an application is made in terms of regulation 68(11), the mortgagee must still give his consent in
terms of regulation 68(2) for the issue of a certified copy of the deed of transfer, if same is lost,
destroyed or unserviceable

Application by the sheriff

Whenever a deed, as referred to in regulation 68(1), is lost or destroyed and the rights held
thereunder are attached, then the application and affidavit may be made by the sheriff concerned

A sheriff may therefore, instead of the owner of the immovable property, apply for acertified copy of a
lost deed. Upon compliance with regulation 68 requirements, the registrar shall issue a certified copy.

Regulation 51(2) provides for four exceptions where the original title deed or certified copy thereof
need not be lodged

As an alternative, he can certify in writing that he has been unable to obtain possession of such title
deed. This certificate is usually in the form of an affidavit, but this is not essential. Where such a
certificate is provided, it is not necessary to lodge the title deed or certified copy thereof

Copies for purposes other than to replace the original

Any person may apply to the deeds registry for a copy of a title deed or deed conferring title in land or
for a copy of mortgage or notaral bond, to be issued to him or her for information only

An attorney or judicial officer of a government department can apply to the deeds registry for a copy
of a title deed or deed conferring title in land or for a copy of mortgage or notaral bond, to be issued
to him or her for judicial purposes
 Chapter 13 – Bond Procedures
Purpose of this chapter

This chapter deals with the registration procedure where –

 a new mortgage bond has to be registered over a property, and where

 an existing mortgage bond (registered over the same property) has to be cancelled

with the registration of a deed of transfer into the name of the purchaser. It specifically deals with the
financial side of these transactons and indicates how to prepare the statements of account for both
the seller and the purchaser.

Drawing up of statements of account

There are two types of pro-forma accounts:

 the FIRST pro forma account, also called the “provisional account” or “request for deposit”, is
tendered to the purchaser in order to obtain funds before registration to enable the
transferring attorney to proceed with registration of the transfer
 the SECOND type is the “pro forma account on prep” (also to the purchaser) which a
conveyancer prepares the day before execution, in other words before registration takes
place. The purpose of such an account is to determine whether there are sufficient funds
before proceeding with registration. If there are, transfer may take place, however if not, the
necessary funds must first be obtained from the purchaser before transfer may take place.
After registration this account, witht the necessary amendment, becomes the “final account”
of the purchaser

Once a transaction has been completed, accounts are always prepared for both the purchaser and
the seller. These two accounts are interrelated.

Parties involved in a single transfer

With the cancellation of a mortgage bond and the registration of a new bond, which usually goes
along with the transfer of property, there are actually three acts of registration taking place:

If three law firms are involved, they would be the following:

a) Transferring attorney: he is responsible for effecting the transfer of the property by registering
the deed of transfer. He acts on behalf of the seller.
b) Bond Cancellation attorney: he is responsible for the cancellation of the existing mortgage
registered over the property. He acts on behalf of the exisitng mortgagee, the bank, and
secondarily on behalf of the seller.
c) Bond Registration attorney: he is responsible for the registration of the new mortgage bond,
which takes place simultaneously with registration of the deed of transfer. He acts on behalf
of the new mortgagee, the bank, and secondarily on behalf of the purchaser.
Items for the sellers account

The sellers account consists of a minimum of three columns, namely –

The first column in which the
various items are described
and in which column is
indicated whether money is
“received” or “paid” by the
seller;
The second column in which all The third column in whch all
the sellers “debits” are listed – the sellers “credits” are listed-
those accounts payable by the
seller; and
The first item for inclusion in
the sellers account is always
the purchase price. That is an
amount received by him/her.
This amount is credited.
Also included in the credit
column:
1. pro rata rates and
taxes
2. pro rata levies
those amounts receivable by
the seller
The seller is responsible for
payment of the following items,
which must be inserted in
his/her debit column:
1. the estate agents
comminssion
2. the cancellation
attorneys fees for the
cancellation of the
bond
3. the municipalities rates
and taxes
4. the body corporate
levies (where a
sectional title is sold –
for the period required
by the managing agent
of the body corporate)

After all the items have been inserted in the sellers debit and credit columns,
the total sum of all debit and credit amounts must be obtained.
The total debit amounts must be deducted from the total credit amount.
The difference between the total debit and credit amount is the amount due to the seller
Items for the purchasers account

The purchasers account consists of a minimum of three columns, namely –

The first column in which the
various items are described
and in which column is
indicated whether money is
“received” or “payable” by the
purchaser;
The second column in which all The third column in whch all
the purchasers “debits” are
listed – those accounts
payable by the purchaser; and
The purchase price is the first The purchaser is responsible
item for inclusion in the
purchasers account. That is an items, which must be inserted
amount paid by him/her for the in his/her debit column:
property and must be included
in the debit column.
the purchasers “credits” are
listed- those amounts
receivable by the purchaser
for payment of the following
1. transfer duty payable
2. deeds office fees
3. transfer attorneys fees
4. municipal rates and tax
clearance certificate
fees
5. levy clearance
certificate fees
6. postages and petties
7. FICA –fees
8. deeds office search
fees
9. occupational rent (it is
important to note that
rent is calculated from
the date of occupation
to the day before
registration)
10. pro rata rates and
taxes (payable to the
seller for the period
from the date of
registration till the end
of the last month for
which the rate
clearance certificate
was issued – which
amount was paid by
the seller in advance)
11. pro rata levies (only in
the case of a sectional
title unit) payable to the
seller for the period
from the date of
registration till the last
month for which the
levy certificate was
issued – which amount
was paid by the seller
in advance

After all the items have been inserted in the purchasers debit and credit columns,
the total sum of all debit and credit amounts must be obtained.
The total debit amounts must be deducted from the total credit amount.
The difference between the total debit and credit amount should always be positive amount.
This is the amount due to the purchaser
If there is a mortgage bond to be regsitered in the purchasers name, the purchaser will pay such an
amount directly to the bond attorney. The purchaser will sign all documents related to the mortgage
bond at the bond attorney who will furnish the purchaser with his/her account.

Registration of a bond only

On receipt of the instructions to attend to the registration of a mortgage bond, the following steps
should be taken:

1. Immediately send an acknowledgement of receipt to the client from whom the instructions
were received
2. Study the instruction document carefully in order to ascertain what information, document and
special instructions have been received
3. Advise the mortgagor (the purchaser, applying for the registration of the bond) that the
registration of the bond is being attended to
4. Check whether all his/her particulars are correct
5. A search must be done at the deeds registry regarding the particulars of the mortgagor and
the property by obtaining by obtaining a computer print-out. This will enable the secretary to
establish at an early stage –
a) Whether there are any interdicts recorded against the mortgagor and the property, or
b) Whether any other mortgage bonds, which should be cancelled, are registered over
such a property, or
c) Whether any contract in terms of the Alienation of Land Act, is recorded against the
relevant property
d) Whether any servitude is regstered over the property which affect the rights of the
bondholder
e) Whether a statutory restriction exists regarding the property

If any of the above exists the client must be advised thereof. Usually the bondholder will require a
renunciation of the said rights in his favour

6. Where the mortgagor is already the registered owner of the property and no simultaneous
transfer of the property will take place, the conveyancing secretary must obtain the title deed
of the property.
If it appears from the search at the deeds registry that another bond has previously been
registered over the property, it is likely that such bondholder will have it in his/her/its
possession
Registration of a bond over the property of a company

Whenever instructions are received from a bank or building society to register a mortgage bond over
immovable property belonging to a private company, the following steps must be taken to ensure that
the bond to be registered will be valid:

1. Conduct a deeds office search in the deeds registry to confirm ownership, property
description and to ascertain whether any bonds or interdicts have been registered against the
property and company
2. Check the conditions in the title deed throughly to ascertain whether any restrictive conditions
have been registered with regard to the registration of a mortgage bond
3. Obtain certified copies of the certificate of incorporation and the certificate to commence
business
4. Obtain a resolution by the directors (or shareholders if applicable) of the company wherein the
transaction is authorised and the one of the directors is authorised to sign on behalf of the
company
5. Obtain a copy of the Memorandum and Articles of Association of the company to confirm the
capacity of the company and the duties and powers of the directors
6. Obtain an auditors certificate confirming:
- that the company is still registered;
- that no resolution has been passed to amend the Memorandum and Articles of
incorporation
- that the company is not in contravention of section 22, 44, 45, 75 and 112 of the
Companies Act
- that a certificate of incorporation has been issued
- that the company is solvent
 Chapter 14 – Mortgage Bonds
Background

A mortgage bond serves a four-fold purpose.

a) On registration of a bond, the mortgagee is vested with a real right against the immovable
property of the mortgagor
which lends him three competencies:

1. It entitles the mortgagee to sell the property burdened by the bond and from the proceeds,
satisfy his claim against the mortgagor where the mortgagor fails to fulfil his obligation
towards the mortgagee

2. In the case of insolvency of the mortgagor it provides the mortgagee with a secured claim
on the property over which the bond is registered

3. It restricts the mortgagors (owners) ability to sell the land

The loan agreement establishes a personal right between the parties which can only be enforceable
between them. The mortgage bond establishes a real right which is also enforceable against third
parties. The personal right established by the loan agreement is converted into a real right by the
registration of the mortgage bond.

Notarial bonds are registered against movable property and mortgage bonds are registered against
immovable property. Notarial bonds are prepared and attested by a notarial public. Mortgage bonds
are prepared by a conveyancer and attested by a registrar.

Power of attorney to register a mortgage bond

The first document to be prepared by a bond attorney is the power of attorney to register the bond.
The same rules as for the power of attorney to pass transfer apply to the power of attorney to register
a bond. The power of attorney must authorise the conveyancer to register the bond containing
specific terms and conditions

Structure of a mortgage bond

Structure of a mortgage bond

1. Preparation certificate
2. Heading
3. Preamble – (description of the mortgagor)
4. Acknowledgement clause – (acknowledgement of debt and description of the mortgagee)
5. Cause of debt – (amount and cause of debt of the bond)
6. Terms and conditions
6.1. Continuing covering security
6.2. Renunciation of exceptions
6.3. Interest and payment
6.4. Additional amount
6.5. Non-prejudice clause
7. Ranking clause
8. Property clause
9. Dealing with title conditions
10. Renunciation clause
11. Execution clause
 1. Preparation certificate

A mortgage bond must be prepared by a conveyancer, practising as such in the Republic

2. Heading

Not only is it common practice to furnish a deed to be lodged at the deeds registry with a heading, but
it is also important to be able to see at a first glance exactly what kind of document is being lodged
without having to read the entire document

3. Preamble

The mortgagor must be described in the preamble in the same manner as the transferor in the deed
of transfer

More than one mortgagor

No mortgage bond shall be passed by two or more mortgagors (debtors) unless it purports to bind
immovable property of each mortgagor. Acknowledgement clause

The acknowledgement clause consists of two components, namely –

a) the acknowledgment of debt, and

b) the description of the mortgagee

Acknowledgement of debt

A mortgage bond may be registered to secure –

a) an exisitng debt (in an ordinary bond)

where the indebtedness is complete on the passing of a bond, the acknowledgment clause
will read as follows:
“… AND the appearer acknowledged that the mortgagor is lawfully and truly indebted to
and on behalf of… ”

b) both an existing and future debt (in a covering bond)

a bond securing an existing debt arising from money lent and advanced but containing a
covering clause extending the coverage afforded by the bond to future loans or other
obligations or debts, the acknowledgment clause will read as follows:
“… AND the appearer acknowledged that the mortgagor is lawfully and truly indebted
and held firmly and firmly bound to and on behalf of… ”

c) only a future debt

where a bond secures future indebtedness only, the acknowledgment clause will read as
follows:
“… AND the appearer acknowledged that the mortgagor is lawfully and truly held firmly
and firmly bound to and on behalf of… ”
Description of the mortgagee

The name of the mortgagee must be mentioned in the acknowledgement clause. The mortgagee
must be described in the same manner as a transferee in the deed of transfer.

More than one mortgagee in the same bond

One mortgagor (debtor) may pass a bond in favour of two or more mortgagees (creditors), provided
that one one of these mortgagees does not rank above the other mortgagee. Both mortgagees must
be of equal rank.
The key fact here is that one mortgage bond is registered in favour of two or more mortgagees. It is
thus one instrument. Where there is more than one mortgage bond, however, the bond can be ranked
in order.

4. Cause of debt
The cause of debt clause consists of two components, namely:
a) the amount, and
b) the cause of debt
of the bond

a) amount of the bond

There must always be a definite amount secured by the bond.
Two amounts appear in the cause of debt clause, namely –
a) the capital sum, and
b) the additional sum
a) the capital sum or capital amount must always be stated. It is impossible to pass a
bond for an unlimited amount. The capital sum is the amount of the loan which is
secured by the bond
b) the additional amount is the amount added to the bond in order to serve as additional
security for the mortgagee should the mortgagor not fulfil his obligations in terms of
the bond
 b) cause of debt or causa of the bond
The mortgage bond must disclose a valid cause of debt which is responsible for registration of
the bond. The cause of debt is also referred to as the causa, the reason or the “story” of the
bond
The most common examples of causa or reasons for the bond:
for an existing debt (in an ordinary bond) “… for money lent and advanced by the
mortgagee to the mortgagor…”
for an existing and future debt (in a covering “… for money lent and to be advanced from
bond) time to time at the discretion of the
mortgagee to the mortgagor … ”
the so-called kustingsbrief for the payment “… for the purchase price of the property
of the purchase price of immovable property mortgaged hereby …”
OR
“… for the balance of the purchase price of
the property mortgaged hereby …”
for an existing and future debt “… for goods sold and delivered or to be
delivered …”
for an existing and future debt “… for services rendered or to be rendered
…”
in a substituted bond “in the sum of (quote) being the capital sum
arising from and being the amount of a
hitherto existing bond B(quote)
passed by the mortgagor in favour of the
said mortgagee for money lent and
advanced,
which said bond is cancelled simultaneously
with the registration hereof”

Multiple causes of debt

A bond may secure more than one cause of debt. The different amounts owing under the various
clauses must be specified seperately in the cause of debt clause.

More than one mortgagee

“Save as authorised by any other law or by order of the Court, debts or obligations to more than one
creditor arising from different causes may not be secured by one mortgage bond” – section 50(5)

The causa in the case of more than one mortgagee (bondholder)

Where there is more than one mortgagee, the full amount of the bond must be stated first and
thereafter the separate amounts due to each mortgagee.
COVERING BONDS

Future debts

It is possible to register a mortgage bond to secure future debts.

The test for a covering bond is simple: when a bond contains a clause which makes provision for a
future debt, it is a covering bond. A covering bond can therefore serve as security for a future debt
only or an existing and future debt

Description of a covering bond

A covering bond is a bond that serves to provide continuous cover or security for a future debt which
the mortgagor may owe the mortgagee at any time and which may arise from a general or a specific
cause of debt. A bond of this debt secures a fluctuating level of debt.

Security is provided to cover a liability that the parties expect to arise in the future.

Requirements of a covering bond

Section 51(1) stipulates two requirements which a covering bond has to comply with before such a
bond will be of any force or effect for the purposes of affording any creditor preference or priority with
respect to any debt incurred after the registration of such debt, namely –

a. it must be expressly stipulated in the mortgage bond that the bond is intended to secure future
debt, and
b. the maximum amount to be secured should clearly be stated in the bond. A limit has to be set
to the amount secured.

Drafting or preparation of a covering bond

The format of an ordinary bond is generally used when drafting a covering bond. This is done by
inserting a continuing covering security clause into the bond. In this way an ordinary bond is
converted into a covering bond in order to cover future debts.

Furthermore, it should be expressly mentioned in the cause of debt that the debt is subject to the
provisions of this continuing covering security clause.

Kustingsbrief

A kustingsbrief is a special type of bond which secures the purchase price or the balance of the
purchase price due to the seller of immovable property. This would apply in cases where purchaser is
unable to obtain a loan from a bank and the transaction is financed by registering a bond in favour of
the seller in order to secure the purchase price or the balance of the purchase price. It can be
registered in favour of a third party, who advances money for the purchase of the property. It is
registered simultaneously with the transfer of such immovable property to the purchaser, to secure
the mortgagee for payment of the purchase price with the property as security.

It will generally be the first bond giving the holder thereof preference over other bondholders. It can,
however, also rank as a second bond as long as the second bond is registered simultaneously with
the transfer of the property.

In practice it does not differ from a bond that secures a loan for money, except that the wording of the
cause of debt clause is different.
SECTION 88 OF THE INSOLVENCY ACT

Section 88 of the Insolvency Act stipulates that a mortgage bond (passed for securing the repayment
of a debt not previously secured) should be lodged with the registrar within two months after the debt
was incurred. If the mortgage bond is not lodged within two months, the mortgagee (creditor) will not
be entitled to a preferent claim if the mortgagor (debtor) is declared insolvent within six months after
lodgement

Note that the effect of this section is not to set aside the mortgage bond, but merely not to recognize
any preference conferred by the bond if the estate of the mortgagor is sequestrated within six moths
of lodging the bond

However section 88 of the Insolvency Act does not apply to kustingsbrief

Terms and conditions – (miscellaneous clauses)

Continuing covering security clause

Its purpose is to provide continuing security for the amount of existing and future debts of the
mortgagor arising from the bond, as well as to secure preference in respect of such debts.

This condition further stipulates that the hypothecation is not automatically terminated on payment of
the debt by the mortgagor, but that it will continue to exist to provide continuing covering security in
respect of future debts arising from whatever causes and the mortgagee will be entitled to readvance
sums to the amount of the capital sum under the security of the bond, which advances will be secured
under the bond and in every respect be subject to the terms and conditions of the bond, save that
such advances will be repayable in whatever manner may be stipulated

Renunciation of exceptions clause

Our law provides for exceptions which can be taken by a debtor if the debtor is called upon in terms of
the bond to fulfil his obligation. Because of this risk, mortgagees usually insist on the mortgagor
renouncing these exception clauses. The mortgagor therefore renounces the benefits of these
exceptions in a possible action by the mortgagee against the mortgagor.

If the National Credit Act is applicable to a credit agreement, certain legal exceptions may, however,
not be waived in such an agreement. Regulation 32 of the Act provides that the following three
exceptions may not be waived in a credit agreement, namely –

a) exceptio non numerate pecuniae

b) exceptio non causa debiti, and
c) exceptio errore calculi

The waiver of the legal exceptions will not be binding on the debtor and will be regarded as an
unlawful provision. The provision will be unlawful, not the whole agreement. The provision must be
severed from the agreement. However, a court can declare the entire agreement unlawful.
The National Credit Act is not applicable to the following agreements, namely –

1. credit agreements where the consumer is a juristic person whose asset value or annual
turnover exceeds R1 million at the time the agreement was entered into
2. a large agreement described in terms of section 9(4) where the consumer is a juristic
person whose asset value or annual turnover is below the R1 million threshold
3. a credit agreement between a juristic person and someone who has a controlling interest in
that juristic person
4. a credit agreement between family members
5. a credit agreement where the consumer is the South African Reserve Bank, the state or an
organ of state
6. all leases of immovable property

Summary
Regulation 32 of the National Credit Act prohibits the inclusion of the first three exceptions below in a
mortgage bond if the National Credit Act is applicable to such a bond
However, if this Act does not apply to a credit agreement and accompanying mortgage bond the
following exceptions are usually renounced in such a mortgage bond
The exceptions
1. non numerate pecuniae
 this is an exception which may be taken by the debtor (the mortgagor) on the ground
that, the acknowledgement of debt has been signed but, the amount thereof was not
paid over
 this exception is usually renounced in all bonds where the causa pertains to loans of
money
2. non causa debiti
 this is the exception to be taken to the effect that there is no causa or reason for the
obligaion
 this exception is usually renounced in all bonds where the causa pertains to loans of
money (for money lent and advanced) and is not for a loan of money (BUT FOR goods
sold and delivered)
3. exceptio errori calculi
 this is an exception to be taken to the effect that the outstanding balance which the
creditors avers the debtor owes him, is incorrectly calculated
 this exception is usually renounced where the cause of debt is for covering bonds,
building bonds when the capital is paid in installments, and goods sold and delivered
4. de duobus vel pluris reis debendi
 according to this exception two or more persons who are joint mortgagors are each
liable for their proportionate share of the debt. When this benefit is renounced, it makes
the two or more mortgagors jointly and severally liable for the debt. In other words, any
of the debtors can be sued for the whole debt
 this exception is usually renounced where the there are two or more mortgagors
5. beneficium ordinis seu excussionis
 this is an exception open to a surety by which he can compel the creditor to proceed
against the principal debtor first and obtain all he can from such debtors estate before
proceeding against the surety. The renunciation has the effect of permitting the creditor
to proceed against the surety before acting against the principal debtor, should he feel
so inclined.
 this exception is usually renounced in surety bonds
6. beneficium divisionis
 this exception provides that the liability under a suretyship must be apportioned among
the sureties, and each surety cannot be sued for more than his pro rata share. The
renunciation has the effect of permitting the creditor to sue one of the sureties alone
without reference to the others and to claim the whole amount of the debt from him
 this exception is usually renounced in surety bonds with two or more sureties
Interest and repayment clause

There is no statutory requirement that the interest rate be mentioned in the mortgage bond. It is also
not prohibited to mention the interest rate in mortgage bonds. It is also acceptable that the capital be
repaid at an interest rate adapted from time to time and agreed upon between the mortgagor and
mortgagee, or at a general interest of the mortgagee.

Cost/ additional amount clause

The cost clause of a bond, is also referred to as the additional amount. The cost clause provides
security for the payment by the mortgagor of the costs involved in preserving and realising the
security. It further provides security for payment by the mortgagee on behalf of the mortgagor
concerning insurance premiums, costs of notice or bank exchange, etc. as well as legal costs incurred
in claiming the amount owed in respect of the bond, etc. An additional amount is included in the bond
in order to provide for the security of such costs and expenses. The additional amount is merely
additional security for the mortgagee. Generally it amounts to 25% of the capital amount.

Non-prejudice clause

This is an unusual type of clause which is found only in second, third and subsequent bonds. Non-
prejudice clauses are clauses usually insisted upon by a first bondholders if the mortgagor requires a
further bond to be registered over his property in favour of another bondholder.

It is effectively an agreement and acknowledgement by the holder of the second bond that his rights
will not infringe on the rights of the first bondholder nor weaken the first bondholders rights. The right
of the holder of the second bond to call up the second bond and to sell the property by public auction
is as a rule also restricted by the non-prejudice clause.
Ranking clause

This clause serves to indicate the ranking of the mortgage bond, in other words, whether it is a first,
second, or third mortgage bond. Legally there is no requirement that a mortgage bond must disclose
the order in which it ranks over the property bonded. In the absence of an explicit ranking clause,
mortgage bonds rank in preference in order of their date of execution.

The ranking order of the bond indicates the preference the creditor enjoys in respect of a secured
debt against a particular property

The following are examples of the ranking of bonds:

a) first mortgage bond – the first mortgage bond “AND as security of the above obligations the
over immovable property must, without
exception, be described as a first mortgage,
but may also be referred to as a mortgage
b) second mortgage bond – the following
mortgage bond to be registered in respect of
the same immovable property is commonly
described as a second mortgage, but may
also be described as a mortgage or as a
further mortgage
c) third mortgage bond – regardless of the
description of the previous bond, the bond
must be described as a third mortgage.
However, it may also be described as a
mortgage or as a further mortgage
d) pari passu ranking
e) if a mortgage bond has to be registered over
a property of which the title deed has been
endorsed, in terms of section 20(2)(a) of the
Alienation of Land Act, the recording of such
contract must be described in the ranking
clause as follows
appearer, on behalf of the mortgagor declares to
bind specially as a first mortgage the following
property”
“AND as security of the above obligations the
appearer, on behalf of the mortgagor declares to
bind specially as a second mortgage the following
property”
“AND as security of the above obligations the
appearer, on behalf of the mortgagor declares to
bind specially as a third mortgage the following
property”
“As a mortgage bond ranking pari passu with
mortgage bond NO.”
“As a second mortgage bond subject to contract
B(quote) AL recorded on (date)”
OR
“As a second bond subject to the recording of a
contract in terms of section 20 of the Alienation of
Land Act in favour of
and registered vide B(quote) AL”

The ranking of a registered bond (or bonds) may be renounced in favour of a new bond that is being
registered and any such renunciation must be recorded against the existing bond(s).

Preference can be waived in respect of a registered bond so as to give another bond equal ranking –
or what is known as pari passu ranking. A new bond being passed to rank pari passu with an existing
bond (or bonds) must indicate this in the ranking clause

Property or security clause

This clause contains the description of the property mortgaged and the same rules apply to the
description of the property in a bond as apply to a deed of transfer

Reference to the title deed whereby the property is held must be disclosed directly after the property
description. This clause is referred to as the holding clause

Where a mortgage bond is registered together with a deed of transfer (for the transfer of property), the
number of the deed is left open in the holding clause
Dealing with title conditions

There are two types of title conditions which must be dealt with in the mortgage bonds, namely:

a) general title conditions, and

b) restrictive title conditions

a) general title conditions

which appear in the title deeds, such as township conditions, praedial servitudes, etc must not be
quoted in th bond but must be referred to in the bond in general, just after the property clause, as
follows:
“… SUBJECT to the conditions of title …” or alternatively
“… SUBJECT to such conditions as set out in the aforesaid deed …”
NOTE: that this description is applicable to both full-title mortgage bonds and sectional-title
mortgage bonds

b) restrictive title conditions

Background
This is about title conditions restricting the rights of the owner of the land, such as –
 a restriction to mortgage land, to alienate or dispose such land, or
 where the rights of the owner are restricted by the rights of the holder of a personal
servitude of usus (use), usufruct or habitatio, or
 the holder of a reversionary right, a pre-emptive right, or by the lessee of a registered
lease

Drafting of restrictive title conditions

These restrictive title conditions must be set out in the bond (or a suitable reference made
thereto). Generally it is said that the bond is specially made subject thereto.

FOUR OPTIONS
Where a personal servitude is registered over a piece of land and a mortgage bond has to be
registered over the land, one of the following must be done to protect the interests of the
mortgagee (the bondholder), namely –
1. the holder of the personal servitude can waive preference in favour of the mortgagee by
means of
a) a notarial deed, or
b) in the bond itself by inserting a renunciation clause
2. the owner of the land subject to a personal servitude and the holder of that servitude may
jointly mortgage the land. They are then co-mortgagors
3. the owner of the land may pass a bond over the property and the holder of the servitude
can bind the personal servitude as surety in the same bond
4. the personal servitude may always be cancelled, if the holder of such servitude consents
thereto
Renunciation clause

A renunciation clause would only apply if a personal servitude or any other real right has been
registered over the property which is being mortgaged. This is the only case where a renunciation
clause is included in a mortgage.

Because the holder of a personal servitude enjoys preference over the bond, the prospective
mortgagee would insist on a renunciation clause. Generally the mortgagee will request that the hodler
of such personal servitude waives his preference in terms of the servitude before he will lend or
advance money to the mortgagor and register the bond over the immovable property.

Note that the servitude holder does not renounce his perosnal servitude (or other real right); he or she
merely renounces the preference that the servitude enjoys over the bond

In practice the preference is waived by virtue of a power of attorney, signed by the holder of the
personal servitude (or real right). This power of attorney must be lodged together with the power of
attorney to pass the bond and the draft bond itself (containing the renunciation clause) in the deeds
registry.

Execution clause

Section 50(1) of the Deeds Registries Act stipulates that a mortgage bond shall be executed in the
presence of the deeds registrar by the owner of the immovable property therein described or by a
conveyancer duly authorised by such owner by power of attorney and shall be attested by the
registrar.

Various kinds of mortgage bonds

Collateral bond

A collateral mortgage bond, as the name indicates, is a bond giving additional security for a debt or
obligation for which security has already been given by the debtor to the creditor

Definition – a collateral can be described as follows –

A collateral is passed –

a) by the same mortgagor (debtor) as in the principal bond

b) by the same mortgagee (creditor) as in the principal bond
c) for the same debt or obligation (or part thereof) which has been secured by the principal bond
d) over another property (of the same mortgagor)
e) as additional security (towards the same mortgagee)

A collateral bond is usually registered to compliment a principal bond

Surety bond

A surety bond is registered by a third party to provide additional security for a debt or obligation of
someone else (the principal debtor)

Definition – a surety bond can be described as follows –

A surety bond is registered –

a) by a surety (a third party) over his own property

b) on behalf of a principal debtor (another person)
c) in favour of the creditor of the principal debtor
to provide security for the obligation of the principal debtor towards the creditor

In practice two types of surety bonds are encountered:

1. a surety bond can be registered in respect of a debt or obligation already secured by a

registered mortgage or notarial bond. This is a very common kind of surety bond passed to
provide further security in respect of an existing bond
2. a surety bond can also be passed in respect of a debt or obligation which is not secured by a
registered bond. In such an instance the fact that the surety bond is passed as security for an
unsecured debt must be disclosed in the surety bond

Indemnity bond

An indemnity bond is nothing more than a type of surety bond

Definition – an indemnity bond is passed by a principal debtor in favour of a surety who carries
suretyship for the payment of

a) overdraft facilities, or
b) a debt
by the principal debtor to a creditor. The bond is passed by the principal debtor as security to
cover the surety when asked to repay money.

Substituted bond

A substituted bond substitutes an existing bond, in other words, it takes the place of the existing bond
which bond is cancelled simultaneously with the registration of the substituted bond

A substituted bond is passed –

a) by the same mortgagor (debtor) as in the existing (original) bond

b) to the same mortgagee (creditor) as in the existing (original) bond
c) for the same debt or obligation which has been secured by the existing (original) bond must
be quoted in the substituting bond
d) over either –
the same property
a different property, or
an additional property to that hypothecated in the existing bond
Participation bond

Definition of participation bond –

a) can only be registered over immovable property

b) must be clearly described as such
c) must be registered in favour of a nominee company
d) must be a first ranking bond or it may rank pari passu with another first participation bond
registered by the same mortgagor

Variation of conditions

It is possible to vary the terms of a registered mortgage bond – section 3(1)(s)

If an agreement has been entered into by the mortgagor (debtor) and the mortgagee (creditor and
holder of the bond) whereby the terms of the mortgage bond have been varied, the regstrar must
register such agreement, whereupon the terms contained in such bond have effectively been varied

Section 3(1)(s) imposes a restriction on the type of conditions that may be varied, however. Not all
the conditions of a mortgage bond may be varied by agreement between the parties. This section
provides that the following conditions of a mortgage bond may not be varied:

a) the cause of debt (causa);

b) the mortgaged security (the property over which the mortgage is registered); and
c) the amount of debt secured by the bond
it is impossible to vary these three terms of a mortgage bond by agreement between the
parties

If the parties wish to vary any of the above mentioned terms, the existing mortgage bond must be
cancelled and a new mortgage bond with new terms must be registered

Except for the above-mentioned three instances provided for in section 3(1)(s) of the Act, two
registrars’conference resolution further stipulate that –

a) the cost clause of a bond may not be amended, and

b) the continuing covering security clause in a bond cannot be deleted from a bond. Therefore,
an agreement cancelling a condition in a bond, which made the bond a covering bond cannot
be registered. In other words, the nature of a bond can not be changed from a covering bond
to an ordinary bond.
Two exceptions to the general rule

In practice the security and the amount of debt of the bond may be adjusted in certain circumstances.
The application of section 3(1)(s) should therefore be qualified

Qualification of section 3(1)(s)

1. MORTGAGED SECURITY:
there are two exceptions to the general rule:
1.1. section 40(5)(a) – FORM WW
Only some components to be consolidated are mortgaged by the same bond –
a) The owner can apply for all the consolidated land to be substituted for the the land
originally mortgaged under the bond. The effect thereof is that the original piece or
pieces of land not previously mortgaged by the bond are included and replaced as
security by the newly consolidated property. The bondholders security is strenthened
thereby. The bondholder must consent thereto – section 40(5)(a)

1.2. section 27(1) – FORM MM

If the share (or shares) owned by any parties to a partition is mortgaged by mortgage
bond, such share (or shares) must be substituted with such land awarded on partition to
the mortgagor.

2. AMOUNT OF DEBT:
a) the amount of an ordinary bond can be reduced by the noting of a part payment – FORM
MM is used
b) the cover provided by a covering bond can be also be reduced by the noting of a reduction
of cover – FORM MM is used

Cession of a mortgage bond

Cession is defined as the transfer of real rights – including rights held under a mortgage bond.

A mortgagee may cede his rights held under a bond to another mortgagee. Take note that a
mortgagee, and not a mortgagor, can cede his rights held under a bond to another mortgagee. A clear
distinction must be drawn between the cession of a mortgage bond, and the substitution of a debtor.

A cession must be registered in the deeds registry in order to cede (transfer) the ownership of the
rights of one mortgagee to another

Bonds can be ceded in two ways –

1. A bond can be ceded “out and out”. This is a complete transfer of the mortgagees rights to
someone else with the result that the existing mortgagee no longer has any interest in the
bond whatsoever. This usually occurs when the bond is ceded “for value received”.
2. A bond may further be ceded “as security”. A cession as security is merely a pledge of the
bond. In such a case the existing mortgagee retains an interest in such bond. In this instance,
the bond is ceded “as security”.
Consent of the mortgagor

a) where the mortgagors consent is not required

i. The consent of the mortgagor is not required for the registration of a cession where the full
amount under the bond is still due
ii. The consent of the mortgagor is also not required if there is a condition in the bond which
provides that it may be ceded without the consent of the mortgagor

b) where the consent of the mortgagor is necessary

i. The consent of the mortgagor is necessary where only a portion of the bond is ceded.
ii. The consent of the mortgagor is also necessary where the cession is effected to two or more
cessionaries.

There is a difference, however between the cession of an ordinary bond and the cession of a
covering bond, where only the outstanding balance of the amount owed under the bond is ceded.

Ordinary bond: if the balance owed under an
ordinary bond is ceded, a note reflecting partial
payment must be endorsed against the bond
before or simultaneously with the registration of
the cession
Covering bond: a covering bond may be ceded
for the full cover of the bond or the cover reduced
by a registration of a reduction in cover against
the bond. It is not necessary to endorse a
reduction in cover against a covering bond if only
a portion of the amount (balance) which is owed
under the bond is being ceded
EXAMPLE: if an ordinary bond was registered
R100,000 and R40,000 had been paid, then only
the balance of R60,000 can be ceded. In such an
instance a notification of part payment must be
made on the bond
EXAMPLE: if a covering bond was registered
R100,000 and R40,000 had been paid, the
mortgagor can still borrow money against this
facility, due to the fact that it secures a fluctuating
level of debt. It is not compulsory to register a
reduction in cover in such an instance. If it is not
done, the mortgagor retains his original facility of
R100,000 but if it is done then the level of cover
will be reduced to R60,000

The cession should state whether the full amount is, or is not, still outstanding under the bond

Cession of a bond in favour of an usufructuary

If the will of a deceased person provides that a bond which is an asset in his estate be bequeathed to
an heir subject to a usufruct and in favour of someone else, the bond should be ceded to the
usufructuary, and not to the heir.
Consents

Regulation 39 stipulates that the mortgagee or where applicable the mortgagee and the mortgagor,
or the person about to be substituted as mortgagor or his duly authorised agent, must consent in the
prescribed form to the following acts of registration in relation to bonds, namley –

a) to cancel a bond
b) to release a property, or the property and the person of a joint debtor, from the operation of a
bond
c) to note a part-payment on a bond in respect of the outstanding capital due thereunder
d) to note a reduction in cover on a bond in respect of the cover afforded thereby
e) to waive the preference of security which one bond enjoys over another bond
f) to cede the bond
g) to cancel the cession of a bond
h) to substitute one debtor for another debtor under a bond
i) to register an agreement varying the terms of a bond, and
j) to substitute one property for another in the case of consolidation of properties in terms of
section 40(5)(a)

Consent to cancellation

General rule

Land mortgaged under a mortgage bond can not be transferred unless the bond has been –

a) cancelled, or
b) the land has been released from the operation of the bond

In practice this means that if land has been mortgaged and such land is to be transferred, the
mortgage bond must be lodged (as part of the set) at the deeds registry for cancellation. The
mortgagee must consent to the cancellation of the bond.

Exceptions to the general rule

There are a number of exceptions to the general rule in which instances it is not necessary to lodge a
mortgage bond for cancellation in the deeds registry
Consent to release

The same general rule and exceptions thereto, as in the case of “consent to cancellation” discussed
above, apply to the release of a property (along with its owner), from the operation of a bond

There are three possible scenarios regarding the release of a bond, namely where a bond has been
registered:

i. over more than one property

ii. by two or more mortgagors, and
iii. by a couple married in community of property

FIRST SCENARIO: Bond over more than one property

Where a bond has been registered over more than one property, one or more of the properties may
be released from the operation of the bond. It is also possible to release only a portion of a property
from the operation of a bond, for example where a property has been subdivided and consists after
subdivision of the remainder and Portion 1 of the erf. Then Portion 1 can be released from the
operation of the bond simultaneously with the taking out of a CRT for Portion 1 or transfer of Portion
1.

The consent of the mortgagee is required to release a property from the operation of a bond

One consent may be used to release more than one property from the same bond

SECOND SCENARIO: Bond by two or more mortgagors

If a mortgage bond has been passed by two or more mortgagors over the respective properties
owned by each mortgagor –

a) only a portion of the property, or

b) all of the property of a mortgagor can be released from the operation of the bond

In both instances the consent of the mortgagee and the other mortgagors must be obtained

THIRD SCENARIO: Spouses married in community of property

If a bond was passed by a huband and wife married in community of property (or by only one of the
spouses) and the marriage is terminated -

a) by the death of either spouses, or

b) by divorce, or
c) by an order of court

in terms whereof the property is awarded to the surviving spouse or one of the spouses in the case of
a divorce or court order, the estate of the deceased spouse or one of the former spouse may be
released from liability under the bond

Both the consent of the mortgagee and the spouse to whom the property is awarded (mortgagor)
must consent to the release of the other spouse from the operation of the bond
Consent to the noting of part payment or reduction of cover

Part payment – (in the case of an ordinary bond)

When a mortgagor has paid part of his debt to the mortgagee, an endorsement of part payment can
be made on the bond. This endorsement has the effect that the amount secured by the bond is
reduced by the amount that has already been paid. An endorsement of part payment is made where
the balance owed under an ordinary bond (a bond securing existing debt) is ceded either as security
or out and out

Reduction in cover – (in the case of a covering bond)

If a mortgage bond is passed as a covering bond (whereby future debts are also secured), a part
payment cannot be registered against the bond but a reduction in cover must be registered instead.
The cover offered by the bond must be reduced by the registration of a reduction in cover. The
provision is due to the fact that the amount owing under a covering bond fluctuates from time to time.
It will always be option to register the noting of a reduction in cover if the balance owed under a
covering bond is ceded

The noting of a part payment or reduction in cover is not possible against a surety or collateral bond.
In such an instance, the surety or collateral bond must be cancelled and a new bond for a lower
amount must be registered

Waiver of preference of bonds

Mortgage bonds usually indicate the ranking of the bond, for example, whether it is the first bond,
second or third bond. If no ranking is stated explicitly, a mortgage bond ranks in preference in order of
its date of execution

The preference held by a registered mortgage bond may be waived by virtue of a consent that the
bond ranked first be replaced by another bond of lower rank.
Consent to various registration procedures

The consent of the mortgagee is required in the following cases:

1. Personal servitudes
The consent of the mortgagee is required in all cases where a personal servitdues has to be
registered over a property

2. Praedial servitudes
The consent of the mortgagee is required in two categories of cases, namely:
a) If a praedial servitude has to be registered over a property and this registration would
make the property a servient tenement (i.e. the servitude in favour of another
property), the mortgagee of the servient tenement must consent to such registration
of the servitude. (This is necessary because the registration of the servitude reduces
the value of the erf).
b) If a praedial servitude that has already been registered over a servient tenement and
has to be cancelled, the mortgagee of the dominent tenement must give consent to
the cancellation of the servitude (This is necessary because the cancellation of the
servitude reduces the value of the dominent tenement)

3. Partition transfers
The mortgagee must consent to –
a) the partition of the land,
b) the substitution of the mortgaged undivided share by the land granted to the
mortgagor upon subdivision

4. Consolidation of properties
The consent of the mortgagee is required in two categories of cases, namely where a bond
has been registered –
a) over all the properties that have to be consolidated
b) over only some of the properties that have to be consolidated

5. Subdivision of a property
The consent of the mortgagee must be obtained when an erf is subdivided by the issue of a
certificate of registered title in respect of a portion of the land

6. Opening of a township register

The consent of the mortgage to the opening of a township register is required. The mortgagee
must consent to –
a) the opening of the township register
b) the registration of the general plan

7. Opening of a sectional title register

The consent of the mortgagee is required for the opening of a sectional title register. The
mortgagee must consent to –
a) the opening of the sectional title register
b) the registration of the sectional plan
c) the endorsement of the mortgage bond to the effect that it secures:
i. the sections and the common property shown on the sectional plan
ii. the certificate of real right of extension of the scheme (if any)
iii. the certificate of real right of exclusive use area (if any)
Substitution of debtor

General rule – section 57

If the owner of land which is mortgaged under a registered mortgage bond transfers the whole of the
land mortgaged thereunder to another person, and has not reserved any real right in such land, the
registrar may register the transfer and substitute the transferee for the transferor as debtor in respect
of the bond

This means that a mortgagor can be substituted by another mortgagor under the same bond, if –
a) the whole of the mortgaged property is transferred to the new mortgagor; and
b) the mortgagor has not reserved any right in such land

Exceptions to the general rule

It is not possible to substitute the debtor (mortgagor) in the following cases:

1. where only part of the property mortgaged is to be transferred

2. where the transferor has reserved a real right in such land, for example, a personal servitude
OR usufruct
3. where the transferor (i.e. the existing debtor) of the land is one of the following persons –
a) a trustee in an insolvent estate
b) an executor in an insolvent deceased estate
c) a liquidator of a company or close corporation which is being wound up under the
supervision of the court and is unable to pay its debts
4. where the new owner (transferee) is a person who is not competent to mortgage the land, for
example a minor or fiduciary
5. where the bond is a surety bond
6. mortgagors under a notarial bond

The consent of both the mortgagee and the new mortgagor (transferee) must be given for the
substitution
Miscellaneous matters

Notarial bonds

A notarial bond must be registered within three months after the date of execution or within such
extended period, as the court on application may allow

A notarial bond must be registered in different deeds registries if the debtor (mortgagor) resides and
carries on business in area served by different deeds registries.

In order to cancel a notarial bond registered in different deeds registries, the following procedure must
be followed:

a) lodge a consent to cancellation as envisaged by regulation 39, of the Deeds Registries Act, in
each of the registries,where the bond is registered. A copy of the consent to cancellation
certified by the registrar where the original consent was lodged may be accepted by the other
registries

A short term lease is deemed to be movable property and must be mortgaged by notarial bond (it
remains movable property even if it s registered)

A long lease (10 year and more, or for the lifetime of the lessee, etc) becomes immovable property by
registration and must be mortgaged by means of a mortgage bond

Specific bond codes

Bond endorsement on the title deeds sometimes contain the code “WOP” above the endorsement.
This stands for “with other property”, which means that the bond in question not only mortgages the
property held by the particular title deed, but also other properties held under another title deed.
 Chapter 15 – General
Expropriation transfers

Expropriation amounts to a forced transaction whereby the expropriating authority unilaterally takes a
persons land.

Power of attorney: the Registrar of Deeds concerned and not the current registered owner must
transfer the land to the expropriating authority or the body in whom authority vests in terms of law. In
view of the fact that the registrar of deeds is the transferor, there will be no power of attorney lodged
with an expropriation deed of transfer. In the case of only a portion being expropriated, no
subdivisional consent are required.

The expropriating authority must furnish the regstrar with a certificate to the effect that the provisions
of any law in connection with the change of ownership in the land have been complied with

The transferee (i.e.the expropration authority) must lodge the title deed of the expropriated land with
the aforesaid deed of transfer. The registrar shall thereupon endorse the title deed regarding the
expropriation transfer

If the title deed is not lodged: if the transferee (i.e. the expropriating authority) was unable to obtain
possession of the title deed, then the transferee must submit an affidavit to the satisfaction of the
registrar to the effect that he has been unable to possession of the title deed. The registrar shall
thereupon endorse the deeds registry duplicate of the title deed regarding the expropriation transfer.
The registrar futhermore notes a caveat in the regsisters that should the original title deed is at any
time be lodged in his office for any purpose, he shall make a similar endorsement thereon

Transfer duty: expropriation transfers are exempt from transfer duty and no transfer duty receipt need
to be lodged

Rate clearance certificate: a rate clearance certificate need not be lodged

Deed office fees are payable on all expropriation transfers

If the land being expropriated is subject to mortgage bonds: the fact that the expropriated land has
been transferred must be endorsed against the deeds registry duplicate of the relevant mortgage
bond. The registrar furthermore notes a caveat in his register that if the original mortgage bond is at
any time be lodged in his office for any purpose, he shall make a similar endorsement thereon

The expropriating authority can acquire no greater rights that the owner of the land. If the
expropriating authority also wishes to to acquire the rights of the third party over the expropriated
land, those rights must also be expropriated

Mortgage bonds

The expropriating authority acquires the land free from the bond. Therefore, when the expropriating
authority takes formal transfer of the expropriated land, neither the bond nor any consent by the
bondholder is required.
Transfer by virtue of a court order

Section 33 of the Deeds Registries Act makes provision for the registration of transfer in a manner
other than normal procedure

This section provides that any person who has acquired the right of ownership of immovable property
in any manner, other than expropriation and who is unable to procure registration of such property in
his name in the usual manner, may apply to the High Court by way of notice of motion for an order
authorising the registration of such property in his name

The procedure prescribed under section 33 can be made use of –

a) where one or more of the persons in successive transactions has disappeared or cannot give
effect to a preceding transaction
b) in the case of acquisition by prescription
c) by a local authority if municipal rates and taxes in respect of unoccupied immovable property
have not been paid for five years

The deed of transfer must be registered subject to all conditions, servitudes, mortgages bonds or
other encumberances to which the property is subject, unless the court order provides otherwise.

The title deed of the property must be lodged, unless if the transferee was unable to obtain
possession of the title deed, then the transferee must submit an affidavit to the satisfaction of the
registrar to the effect that he has been unable to possession of the title deed

The person who acquires the property in pursuance of the court order (i.e. the transferee) is liable to
pay such taxes, duties and deed office fees as he would been liable to pay if the property had been
transferred to him in the usual manner

Transfers in terms of section 18(3) of the Administration of Estates Act

If the value of a deceased estate is not more than R250,000, the Master can in terms of section 18(3)
of the Administration of Estate Act, waive the requirement of appointing an executor. In stead of
appointing an executor, the Master in this instance appoints a representative and gives instructions in
rescpect of the manner in which the estate must be liquidated and distributed

The letters of authority issued by the Master to a representative in a section 18(3) estate direct such
representative to take control of assets, pay the debts and transfer the residue of the estate to heirs
entitled thereto by law. The authorization does not include the sale of assets. Should the Masters
representative need to sell immovable property a further direction which authorises the same needs to
be obtained from the Master in terms of section 18(3)

Futhermore, the representative may not proceed with the transfer without the written consent of the
Master. This consent is obtained in the same manner as a consent in terms of section 42(2) of the
Administration of Estates Act

A representative appointed in a section 18(3) estate may not donate property belonging to such
estate, as no authorization thereto can be found in the Administration of Estates Act
Cancellation of deeds

NO –

a) deed conferring or coveying title to land or any real right in land other than a mortgage bond,
and
b) cession of any registered bond not made as security

shall be cancelled by a registrar except upon an order of court

Upon the cancellation of any deed conferring or conveying title to land or any real right in land other
than a mortgage bond –

a) the deed under which the land or such real right in land was held immediately prior to the
registration of the deed which was cancelled, shall be revived to the extent of such
cancellation
b) the registrar shall cancel the relevant endorsement thereon evidencing the registration of the
cancelled deed

Miscellaneous matters

Lien

Definition –

It is a right enjoyed by the possession of the property of another which he or she has spent money or
labour, to retain possession of that property until properly compensated for that expenditure, either
according to contract or if there is no contract, for actual expenditure of money or labour.

However, in the case of the absence of a contract regulating compensation, it may not exceed the
extent to which the owner has been enriched
Ante-nuptial contracts

Validity of ante-nuptial contracts

i. Execution
In order for an ante-nuptial contract to be valid, it must have been executed before the notary
prior to the date of the marriage. The contract must also have been followed by a marriage to
have any force and effect whatsover

ii. Registration
Contracts executed in the Republic must be attested by a notary and must be registered in a
deeds registry within three months after the date of its execution, or within such extended
period as the court may on application allow
Contracts executed outside the Republic must be attested by a notary or otherwise be
entered into in accordance with the law of the place of its execution,and must be registered in
a deeds registry within six months after the date of its execution, or within such extended
period as the court may on application allow
Contracts not registered in a deeds registry within the time period as set out above, will have
no force or effect against third parties, but will however be valid inter partes.

iii. Which deeds registry

An ante-nuptial contract may be registered in any deeds registry irrespective of where the
contract was executed or where the parties reside. Registration of an ante-nuptial contract in
a deeds registry is effective in the whole of South Africa

iv. Donation of immovable property in a ante-nuptial contract

Note that a donation in an ante-nuptial contract only creates a personal right in favour of the
donee to claim transfer or cession of the property that was donated
If the property is identified in the ante-nuptial contract, the registrar will note a caveat against
the property in order to make sure that the requirements regarding payment of transfer duty
can be complied with in the future
Transfer duty payable in respect of acquisition of property
donated in an ante-nuptial contract
Transfer duty will be payable in respect of acquistion of the donated property. The amount of
transfer duty is calculated on the fair value of the property as at the date of conclusion of the
ante-nuptial contract.
Transfer duty must be paid within six months of conclusion of the ante-nuptial contract, in
order to avoid penalties.
Even where the donation is conditional, transfer duty is payable within six months from the
date of acquisition
No transfer duty is payable if the donation will only be effective on the date of the donors
death
 PART 2:

Chapter 1: Sectional titles

Definitions in the Sectional Titles Act

Section Means a section shown as such on a sectional

title plan
Unit A section together with its undivided share in
common property apportioned to that section in
accordance with the quota of the section
Common property In relation to a scheme, means –
a) the land included in the scheme (refers to
land indicated on a diagram or general plan
approved by the Surveyor-General
b) such parts of the building as are not in a
section
c) the addition of land to common property by
the body corporate to provide amenities and
facilities
Undivided share in common property The owners of sections are joint owners of the
common property in undivided shares in
proportion to the quota of their respective
sections as indicated on the sectional plan
concerned
However, these owners are also the sole owners
of their own respective sections
Draft sectional plan Means a sectional plan already prepared but not
yet approved by the Surveyor-General
Sectional title deed Means –
a) a certificate of registered sectional title;
or
b) a deed of transfer
Exclusive use area
Means a part or parts of the common property reserved for the exclusive use by the owner or owners
of one or more sections
1. In practice, we distinguish between two types of sectional title schemes, namely –
 Those without (registered) exclusive use areas; and
 Those with registered exclusive use areas
A sectional title scheme without registered exclusive use areas is fairly simple in the
sense that everything shown on the sectional plan as part of a section belongs to
that section and is transferred to the purchaser by means of a deed of transfer
2. The Act provides for such exclusive use areas. These areas must be indicated on the
sectional plan and the developer must impose the exclusive use of such areas as a condition
when a sectional title register is opened
3. The purpose for which the exclusive use area may be used must also be disclosed
4. A sectional owner’s title to his unit (i.e. his section and undivided share in the common
property) will then be subject to, or will be limited by such exclusive use rights of others, but
will be positively affected by such right if registered in his or her name
5.
With the opening of a sectional title register and the registration of the sectional plan a
developer may reserve two types of real rights in his own name, namely –
 The real right of extension of the scheme; and
 The real right of exclusive use areas
6. If a developer sells a specific unit, he simultaneously with the transfer of the unit cedes the
relevant exclusive use area to the new owner by means of a unilateral notarial deed
7. If a private owner sells a specific unit together with an exclusive use area, he simultaneously
with the transfer of the unit cedes the relevant exclusive area to the new owner by means of
a bilateral notarial deed
 8. The owner of a unit in whose favour such an exclusive use area of the common property has
been regsitered, may sell his exclusive use right, but only to the owner of another unit in the
scheme. Transfer between the parties takes place by means of a bilateral notarial cession
9. Exclusive use areas can be created in three ways, namely –
a) the developer can create exclusive use areas by registering real rights of exclusive use in
his name with the opening of the sectional title scheme
b) the body corporate, authorised thereto by an unanimous resolution
c) the developer or body corporate may make rules which confer the right of exclusive use
Developer means –
A person who is the registered owner of land situated within the area of jurisdiction of a local
authority on which is situated or to be erected a building or buildings and which he has divided or
proposes to divide into two or more sections in terms of a scheme
A distinction must be made between a developer –
a) who is the owner of land on which buildings have already been erected (which buildings are
not yet sectionalised but in respect of which he intends to open a sectional title register), and
b) who is the owner of undeveloped land on which he intends to erect buildings and develop
them as a sectional title scheme
Regarding this distinction, section 4(3) provides in respect of (a) above where buildings have
already been erected, that where a part of such building has already been let for residential
purposes, the developer should –
a) give every lessee at least 14 days notice in writing of a meeting to be held at which the
developer intends to be available to provide the lessee with
a) particulars of such a scheme as they may reasonably require, and
b) the information regarding their rights as set out in section 10
b) thereafter hold a meeting whereat he is available to provide the said particulars and
answer all reasonable questions of the lessee
It will not be necessary to comply with the above requirements if all the lessees have stated in
writing that they are aware of their rights as contemplated in section 10, and that they do not wish
to purchase the proposed units which they occupy AND a conveyancer has certified in writing that
such statements have been received in respect of all the units
The developer should do the above before he causes a draft sectional plan to be submitted to the
Surveyor-General for approval
SECTION 10 was set up to protect lessees in an unsectionalized building from a developer who
intends on opening a sectional title register in respect of such building, since it prevents the
developer from offering for sale or to sell any unit in the building to any person other than the
lessee unless –
a) the developer has (by letter delivered either personally or by registered post) offered the
unit for sale to the lessee, and
b) the lessee has refused the offer within a period of 90 days
If the lessee –
a) refuses such an offer within the applicable period; or
b) has at the expiration of the 90 days period not accepted the offer;
OR
c) the developer shall not, within a period of 180 days from the date on which the lessee
refused the offer, or on which such applicable period has expired, offer for sale or sell the
relevant unit to any person other than the lessee concerned at a price lower than the price
at which it was offered for sale to the lessee, unless the developer has again offered the
unit at that lower price for sale to the lessee, and
d) he has refused the offer within a period of 60 days from the date thereof, or has on
expiration of that period not accepted

Any contract of purchase and sale concluded contrary to the provisions of section 10 shall be void
Participation quota In relation to the section or the owner of a
section, means the percentage (determined to
four decimal places) determined according to
following formulae:
Dividing the floor area of the section BY the floor
area of all sections in the building(s) comprised
in the scheme
There following two types of resolutions
must be clearly distinguished from one another.
Both can be passed at a general meeting or in writing.
SPECIAL RESOLUTION
a) passed at a general meeting
 a resolution passed by a majority of
 at least 75% of the votes (calculated in
value and number) of members of a body
corporate who are present or represented
by proxy
 of which at least 30 days written notice has
been given (the rules may provide for a
shorter notice period)
 specifying the proposed resolution
UNANIMOUS RESOLUTION
 passed at a general meeting
 is a resolution passed unanimously
 at which meeting at least 80% of all
members (calculated in value and number)
of members of a body corporate who are
present or represented by proxy
 all the members who cast their votes do so
in favour of the resolution
 of which at least 30 days written notice has
been given (the rules may provide for a
shorter notice period)
 specifying the proposed resolution

b) agreement in writing  agreement in writing

 a resolution passed in writing by at least
75% of all members of the body corporate
(calculated in value and number)
 be it personally or by proxy
Block plan
 a resolution passed in writing by all
members of the body corporate
 be it personally or by proxy
Shows the details of the land and building at
ground level

Summary of steps in the establishment of a sectional title scheme

i. the developer should instruct a land surveyor or an architect to prepare draft sectional plans
for a proposed sectional title scheme
ii. the draft sectional plan is then submitted at the Surveyor-General for his approval
iii. only after the draft sectional plans have been approved by the Surveyor-General, can the
conveyancer proceed with lodgement of the application for the registration of the sectional
plan and the opening of the sectional title register

No unit in the scheme may be transferred before the sectional title register has been opened
A scheme on one or more pieces of land

A scheme may relate to more than one building situated, on more than one piece of land, whether
(such pieces of land are) contiguous or non-contiguous: PROVIDED that the building or buildings
to be divided into sections shall be situated only on one such piece of land or on two or more
such contiguous pieces of land registered in the name of the same person AND which have been
notarially tied

If you are approached by a developer who wishes to erect a sectional title scheme on two or more
adjacent pieces of land and the buildings to be divided into sections are to be erected on all the
pieces of land, you must consider one of two possibilities, namely:

1. to consolidate the two or more pieces of land – (in terms of the provisions of section 40 of the
Deeds Registries Act)
2. to tie the two or more pieces of land to each other by way of a notarial tie agreement

When a sectional title regster has been opened on a piece of land and a real right of extension has
been reserved in respect of such sectional title scheme over another piece of land and the extension
entails the erection of further sections on such other piece of land, then the notarial tie agreement
must be registered simultaneously with the application for the opening of the sectional title register
and not only when the right of extension is to be exercised.

Definition of boundaries

The boundaries of a section in a building shall be defined –

a) by reference to the floors, walls and ceillings thereof or as may be prescribed:

Provided that any window, door or other structure which divides a section from another
section or from another common property, shall be considered to form part of such floor, wall
or ceilling; and
b) in respect of a part of a section (such stoep, porch, balcony, atrium or projection) of which
boundaries cannot be defined in terms of paragraph (a) but being appurtenant to a part of a
section which can be defined in terms of that paragraph, in the manner prescribed
Lost or destroyed schedule of conditions

After the opening of the sectional tile rgister, the original section 11(3)(b) schedule of conditions is not
delivered back to the conveyancer. The deeds registry flies it on the relevant sectional title file kept at
the deeds registry

If the schedule of conditions is lost or destroyed, the procedure as set out in regulation 13A must be
followed to enable the Registrar of Deeds to file a replacement copy of such schedule of conditions

The procedure is briefly the following:

a) written application must be made by the body corporate or developer (if a body corporate has
not yet been established), which application must be accompanied by a replacement
schedule of conditions
b) before the filing of the replacement schedule, the Registrar must (at the expense of the deeds
registry), advertise a notice of intention to file a replacement schedule in the relevant sectional
title file
c) the draft schedule of conditions shall lie open for inspection in the deeds registry for a period
of six weeks after the date of first publication of the notice in the Gazette
d) if no objection is received, the schedule shall take the place of the lost or destroyed shedule
and shall embody every condition, servitude, lease or other encumberance
e) the replacement schedule must be endorsed accordingly and filed in the sectional title file
f) if the original is subsequently found, it will be void

The same procedure is followed where a document referred to in terms of section 25(2) is lost or
destroyed

The deed of transfer of a sectional title unit

Background

Section 15B(1) stipulates that when a sectional register has been opened and the sectional plan
concerned has been registered, ownershipof a unit (or any undivided share in such a unit) can be
transferred by means of a deed of transfer (except where the Act or any other law may prescribe
otherwise)

The deed of transfer for a sectional title unit must be prepared in accordance with FORM H
(prescribed by the regulations to the Sectional Titles Act), whereas the deed of transfer for full title
property must be prepared in accordance with FORM E (prescribed by the regulations to the Deeds
Registries Act). FORM H is therefore an important form. It differs in a number of aspects from FORM
E. These differences will be considered in the following paragraphs:

CLAUSES IN FORM H
1. The preparation certificate
2. The heading
3. Preamble
4. Causa/ Recital clause
5. Vesting clause
6. Property clause
7. Extending clause
8. Conditional clause
9. Divesting clause
10. Execution clause
The first three clauses of a full title and sectional title deed of transfer are exactly the same. There are
no differences.
1. The preparation certificate
2. The heading
3. Preamble

4. Causa/ Recital clause

FIRST DIFFERENCE: Unlike the conventional transfer for the transfer of ownership of land, the
prescribed form for the sectional title transfer does not make provision for a consideration clause. The
consideration clause is included in the causa clause of the transaction and does not follow, as is the
case in conventional deeds of transfer, at the end of the deed. The causa of such deed must contain
–

i. the date of the transaction; and

ii. the consideration paid for the unit (and the exclusive use area, if any)

SECOND DIFFERENCE: If the consideration paid for the unit includes the purchase price for any
exclusive use area, this fact must also be reflected in the causa. In other words, it should be stated in
the causa whether one or more exclusive use areas where sold with the unit or not.

Note that, the consideration should reflect both the purchase price and the value of the property, but
only in those instances where the transfer duty receipt indicates that the value of the property is
higher than the purchase price

5. Vesting clause

THIRD DIFFERENCE: The clause contains the full names, marital status, identity number (and/or
date of birth) of the person who is entitled to the unit. In the case of natural persons no reference is
made to “his/her/their heirs, executors, administrators or assigns”. Similarly in the case of companies,
close corporations, local authorities, associations, etc, no reference must be made to “its successors
in title or assigns”, or in the case of a trust to “its successors in office or assign”.

6. Property clause

FOURTH DIFFERENCE: The description of the unit is explicitly defined in FORM H and must be used
in all other relevant forms prescribed in which a unit is to be described. The clause must contain the
following informantion:

a) the section number

b) the sectional plan number
c) the name of the scheme
d) the situation of the land and building(s) – that is the name of the township (suburb) and local
authority or the description of the farm
e) the floor area of the section, and
f) reference to the undivided share in the common property as referred to on the sectional plan

FIFTH DIFFERENCE: Regarding paragraph (d) above, the name of the local authority must also be
provided in the property description. This is not the case at a full title property’s description

7. Extending clause

SIXTH DIFFERENCE: The extending clause is simplified since no variation, as in the case of
conventional transfers, is possible. In this clause reference must only be made to the existing title
deed. Prescribed forms TT and UU of the Regulations to the Deeds Registries Act, do not apply.
 8. Conditional clause

SEVENTH DIFFERENCE: General conditions are not included in the deed of transfer, but are
incorporated in the schedule of conditions. FORM H contains two prescribed conditional clauses
referring to the schedule of conditions and they must appear in the conditional clause – the wording
has been prescribed and is therefore always the same. Only certain special conditions may be
inserted after these two clauses.

Only special conditions which restrict the rights of the owner and which are applicable to the unit as
such must be incorporated. Such as home owners association conditions must be recorded in the
deed.

The wording in FORM H is inserted in the following clauses:

9. Divesting clause
10. Execution clause

The power of attorney for a sectional title deed of transfer

The same principles pertaining to a power of attorney for a conventional transfer are applicable to a
power of attorney for a sectional title transfer, except that the property description follows the wording
of FORM H.
The SECTION 15B(3)(a) Conveyancers certificate

A conveyancers certificate must be lodged with each and every deed of transfer of a sectional title
unit (or share therein) in which certificate the conveyancer must certify two aspects:

FIRST ASPECT: paragraph 1 of the conveyancers certificate – Have all levies due to the body
corporate been paid?

In order to be able to formulate the first paragraph, the conveyancer needs to be able to distinguish
between two kinds of cases, namely –

a) where the body corporate has not yet been established; or

b) where the body corporate has been established

a) where the body corporate has not yet been established

1) where the body corporate of the scheme has not yet been established because the developer
still owns all the units of the scheme, the developer is responsible for all rates and levies
payable to the municipality
2) where transfer of the first unit in a new sectional title scheme is passed (i.e. where no body
corporate has as yet been established), the developer is the transferor and must obtain a
clearance certificate from the municipality as proof that all rates and taxes in respect of the
land and buildings in the scheme concerned have been paid
3) the clearance certificate must be lodged as a supporting document forming part of the set at
the deeds registry
4) on the tranfer of the first unit of a scheme a body corporate is deemed to be established. A
Certificate of Establishment of a Body Corporate must be lodged in triplicate. The certificate is
prepared in accordance with FORM W
5) if a number of units are registered/transferred simultaneously with the opening of the sectional
title register and registration of the sectional plan, the same sentence must be used in all the
conveyancers certificates of all such units because the body corporate was not established at
that stage

b) where the body corporate has already been established

1. on the transfer of any unit in a scheme after a body corporate has been established, the body
corporate certifies that as at the date of registration all levies due to the body corporate by
the transferor in respect of the said unit have been paid, or that provision has been made to
the satisfaction of the body corporate for the payment thereof
2. the certificate by the body corporate (also called a levy certificate) is issued by either the
managing agent of the body corporate or the body corporate itself, if there is no managing
agent.

SECOND ASPECT: paragraph 2 of the conveyancers certificate – has a real right of extension of the
scheme been registered, or not?

The second aspect which the conveyancer has to cover in his section 15B(3)(a) certificate, only
where the causa for the transfer is a sale, is whether a real right of extension in respect of the scheme
has been registered. In order to be able to formulate the second paragraph, one has to distinguish
between four cases, namely –

a) where no real right of extension has been registered

b) where a real right of extension has been registered, which was disclosed in the deed of sale
c) where a real right of extension has been registered, but was not disclosed in the deed of sale
d) where a real right of extension has been registered, but such real right has lapsed
Affidavit by the developer

If the transfer is by a developer, an affidavit by the developer must be lodged which states whether
the provisions of section 10 apply to the unit or not, and if those provisions so apply, that the particular
transfer is effected in terms of a contract which is not contrary to any provisions of the said section 10.

Section 10 stipulates that in the case of a erected building being transformed to a new sectional title
scheme (and where the developer is the transferor) the developer may not sell any unit to a person
other than the lessee, unless it has been offered to the lessee.

This means that in the case of a new building not occupied by any lessees, section 10 does not apply.
However, in the case of an existing building, it must be stipulated whether or not section 10 applies

Joint ownership of a unit in undivided shares

A unit shall be capable of being held by two or more persons in joint ownership.

Any person who is –

a) the joint owner of a unit

b) the joint holder of a right of a right to an exclusive use area
c) the joint holder of a right of a right of extension of a scheme
held by such person and one or more other person under one sectional title deed (in the case
of “a” above), or a by one certificate of real right or notarial deed of cession (in the case of “b”
and “c” above) may upon application obtain –
a “certificate of registered sectional title” in respect of his undivided share in such a
unit (in the case of “a” above); or
a “certificate of real right” (in the case of “b” and “c” above)

FORM I is used for the application in all instances (in other words in the case of “a” and “b” and “c”
above); and

 the certificate of registered sectional title is issued on FORM J only in respect of a unit in “a”
above;
 the certificate of real right is issued on FORM AI only in respect of an exclusive use area in
“b” above and a real right of extension in “c” above

A joint owner shall be obliged to obtain such certificate if he wishes to –

i. to transfer or cede a fraction only of his undivided share in –

a) such unit; or
b) such right of exclusive use area; or
c) such right of extension of a scheme; or
ii. to register a mortgage bond or a lease over –
a) the whole or
b) any fraction
of his undivided share in –
a) such unit; or
b) such right of exclusive use area; or
c) such right of extension of a scheme.
Dealings with the common property

The owners and holders of a right of extension, contemplated in section 25, may, if authorised in
terms of section 5(1)(a) of the Sectional Titles Schemes Management Act direct the body corporate
on their behalf to alienate common property or any part thereof, or let common property or any part
thereof under the lease

Section 5(1)(a) of the Sectional Titles Schemes Management Act requires a unanimous resolution of
the body corporate as well as the written consent of any holder of a section 25 real right of extension
for such alienatin or letting

The body corporate shall have power to deal with such common property or part thereof in
accordance with the direction and execute any deed required for such purpose

If the whole of a section 25 right of extension is affected by the alienation of common property, such
right shall be cancelled by the Registrar with the written consent of the holder thereof on submission
of the title to the right

Mortgage bonds must be disposed of in terms of section 18 of the Act, which provides amongst others
that section 56 and 57 of the Deeds Registries Act shall be applicable to the transfer of common
property under section 17.

Therefore all mortgage bonds registered over the units (sections and their undivided share in the
common property) in the scheme and related written consent of the bondholders over undivided
shares in the common property as at date of sale to either –

a) the cancellation of the bond; or

b) where only a portion of the common property is alienated.

Section 17(1) requires compliance with any law relating to the subdivision of land and where a portion
only of the common property is alienated, the consent of the municipality to the subdivision of the
common property is required

Section 17(3) further requires a diagram of that portion of the common property to be transferred (if
only a portion is alienated), approved by the Surveyor-General, to be annexed to the deed of transfer
Subdivision and consolidation of sections

The owner of a sectional title unit may subdivide his/her section, or if he/she owns two or more
secctions, he/she may consolidate

The provisions of section 21 and 22 apply to the subdivision of a section and the provisions of section
21 and 23 apply to the consolidation of sections

If an owner of a sectional title unit proposes to subdivide his section, or to consolidate two or more
sections registered in his name, he must do the following:

i. He must obtain the consent of the trustees of the body corporate to –

a) subdivide his section; or
b) consolidate his section
ii. Thereafter he must appoint a land surveyor or architect to prepare the draft sectional plan of
the proposed subdivision or consolidation
iii. Subsequently he must submit the draft sectional plan of a subdivision or consolidation to the
Surveyor-General for approval
iv. After approval of the draft sectional plan, he must apply to the Registrar of Deeds for
registration of the sectional plan of subdivision or consolidation
v. If the unit is mortgaged, the bond as well as the consent of the mortgagee to –
a) the cancellation of the bond; or
b) the release of the section from the bond; or
c) the substitution of the new sections in lieu of such section as security under the
bond
must be lodged together with the applicaion for the registration of the sectional plan
of subdivision or consolidation
Extension of sections

If an owner of a section proposes to extend the boundaries or floor area of his section, he must take
the following steps –

i. he must obtain the approval by the body corporate, authorised by a special resolution of the
owners
ii. he must submit through his land surveyor or architect the draft sectional plan of the extension
to the Surveyor-General for the approval
iii. (after approval of the sectional plan) he must make an application to the Registrar of Deeds
for the registration of the sectional plan extension

Since the extension of a section will affect the participation quotas of other sectional owners, the
approval of the body corporate, authorised by a special resolution of the owners, must be obtained

The Registrar endorses the existing title deed to the effect that the floor area of the section has been
increased by the extension

Deviation in the participation quota:

a) Where the deviation in the participation quota of the section to be extended is not more than
10% a certficate issued by the land surveyor or architect must be lodged confirming that the
deviation in the participation quota is not more than 10%. This would be required even if the
extended section is not mortgaged, but other sections in the scheme are subject to mortgage
bonds
b) If there is a deviation of more than 10% in the participation quota of the section that is being
extended, a conveyancers certificate must be lodged, stating that the mortgagee of each
section in the scheme has consented to the registration of a sectional plan of extension of
that section.
Extension of schemes

Extension of schemes by the addition of sections and/or exclusive use areas – section 25

1. Reservation by the developer, simultaneously with the opening of the sectional title register
A developer may in his aplication for the registration of a sectional plan, reserve in a
condition imposed in terms of section 11(2), the right to erect, complete or include from time
to time, but within a period stipulated in such condition, [or such extended period as may be
agreed upon (by unanimous resolution of the body corporate and with the consent of the
bondholders existing on the date of the taking of the unanimous resolution, which resolution
and consent must be obtained by the notary and filed in his or her protocol) prior to the expiry
of the stipulated period, by way of a bilateral notarial deed], for his personal account –
a) a building or buildings
b) a horizantal extenstion of an existing building
c) a vertical extension of an existing building

on a specific part of the common property, and to develop it as a sectional title scheme

In other words, he may divide such building or buildings into a section or sections and common
property and confer the right of exclusive use over parts of such common property and confer the
right of exclusive use over parts of such common property upon the prospective owners of the
sections or he may delineate exclusive use areas on or in specific parts of the land and confer the
right to exclusive use over such area upon the owner or owners of one or more sections

It was resolved that a real right of extension cannot be reserved for an indeterminable time, as the
wording wording of regulation 14, read in conjunction with prescribed FORM F, and section 25 of the
Sectional Titles Act, clearly indicates that the legislature intended that there should be a specified
period

Manner of reservation by the developer:

The real right of extension is reserved by the developer by –
a) applying for the issuing of a certificate or certificates of real right of extension
together with applying for the opening of the sectional title register
b) reserving the real right of extension in the section 11(3)(b) schedule of conditions
c) lodging one or more certificates of real right of extension for issuing by the Registrar;
and
d) lodging the additional documents required by section 25(2)
It should be noted that the right of extension of the scheme by the addition of sections and/or
exclusive use areas is reserved in the certificate of real right of extension. If the developer
wishes to exercise his real right he must lodge an application for the registration of an
amending sectional plan of extension

2. Reservation by the developer, after the opening of the sectional title register
If no reservation was made by the developer in terms of section 25(1) and the body corporate
has not yet been established, the developer may still apply for the issuance of a certificate or
certificates of real right of extension of the scheme
If a section 25 right has expired, the developer may, prior to the establishment of the body
corporate, reserve another/further right to extend. An application must be lodged in terms of
section 15B(1)(d) of the Sectional Titles Act, read together with section 68(1) of the Deeds
Registries Act for the noting of the lapse such right before the developer applies for a right to
extend in terms of section 25(6A)
 3. Reservation by the body corporate
If no reservation for an extension of the scheme was made by the developer, or if such a
reservation was made and for any reason lapsed, the right to extend a scheme is vested in
the body corporate

An application must be lodged in terms of section 15B(1)(d) of the Sectional Titles Act, read
together with section 68(1) of the Deeds Registries Act for the noting of the lapse such right
before the body corporate may obtain a right to extend in terms of section 25(6).

The body corporate is automatically vested with the right to extend the scheme. However, if
the body corporate wants to enter into legal commerce with the right, the body corporate
must first obtain a title deed for such right, by means of lodging a certificate of real right of
extension

When the body corporate lodges the certificate at the deeds registry for issuance thereof, it
must be accompanied by –
a) the written consent of all the members of the body corporate; and
b) the written consent of every holder of a bond over a unit in the scheme
c) section 25(2) documentation
The body corporate can only exercise its right of extension (by applying for the registration of
the sectional plan of extension and the incorporation of additional sections and the exclusive
use area in the sectional title register concerned after having obtained –
a) the written consent of all the members of the body corporate; and
b) the written consent of every holder of a bond over a unit in the scheme

Effect of the right of extension of a scheme

A right of extension reserved by a developer or body corporate, for which a certificate of real
right has been issued –
a) shall for all purposes be deemed to be a right to immovable property which can be
mortgaged; and
b) may be transferred by the registration of a notarial deed of cession in respect of the
whole, a portion or a share in such right

In all cases where a developer or a body corporate has a real right to extend a scheme, such
right must be disclosed in the deed of sale to every purchaser in the scheme concerned
A deed of sale in which the real right of extension has not disclosed shall be voidable at the
option of the purchaser
After notice by any purchaser to the seller that he annuls the sale, the sale shall be void

Exercising of real right of extension by registering of the amending sectional plan of extension

The stipulations concerning the approval of the draft sectional plan by the Surveyor-General
apply to the approval of the sectional plan of extension of a scheme.
The draft sectional plan of extension shall be accompained by a revised schedule indicating
the participation quota of every section of the building
After the approval of the Surveyor-General of the amending sectional plan of extension of the
scheme has been obtained, the developer or the body corporate must make an application to
the Registrar of Deeds for –
a) the registration of the sectional plan of extension; and
b) the incorporation of the additional sections and exclusive use areas
 in the sectional title register concerned
c) the issue of certificates of registered sectional title in terms of the provisions of
section 25(11), in respect of the sections shown on the said sectional plan of
extension

Exclusive use of common property

Exclusive use areas can be created in three ways, namely:

a) the developer can create exclusive use areas by the reservation of real rights of exclusive
use in his name simultaneously with or subsequent (but before the establishment of the body
corporate) to the opening of the sectional title register;
b) the body corporate can create exclusive use areas by the reservation of a real right of
exclusive use in its name
c) the developer or body corporate can create exclusive use areas by way of rules

Creation of exclusive use areas by the developer

There are three manners in which the developer may create exclusive use areas, namely –

a) simultaneously with the opening of the sectional title register

b) subsequent thereto, but in the latter instance prior to the establishment of the body corporate
c) by incorporating provisions regarding exclusive use in the rules of the scheme

1. Creation simultaneously with the opening of the sectional title register – section 27(1)(a)
In terms of section 27(1)(a) of the Sectional Titles Act, a developer may when making an
application for the opening of a sectional title register and the registration of the sectional plan
impose a condition in terms of section 11(2) in the section 11(3)(b) schedule of conditions,
whereby the right to exclusive use of such part or parts of the common property is allocated
for this purpose on the sectional plan is conferred upon the owner/s of one or more sections.
This right will be ceded by the developer by way of a unilateral notarial deed in favour of the
owner/s of the respective sections

2. Creation subsequent to the opening of the register – section 27(1A)

In terms of section 27(1A) if no reservation was made by the developer in term of section
27(1) and the body corporate is not yet established, the Registrar may issue a certificate of
real right in respect of exclusive use areas contemplated in section 12(1)(f) on aplication by
the developer who may thereupon cede exclusive use areas to the owner/s to whom such
rights are allocated by the registration of a unilateral notarial deed in their favour

Creation of exclusive use areas by the developer and the body corporate in the management or
conduct rules

In terms of section 27A of the Sectional Titles Act, which previously dealt with this aspect, has
been replaced by section 10(7) and section 10(8) of the Sectional Titles Scheme
Management Act.
A developer or a body corporate may make rules which confer rights to exclusive use and
enjoyment of parts of the common property upon members of the body corporate provided
that such rules shall:
a) include a layout plan to scale which clearly indicates:
i. the locality of the distinctively numbered exclusive use area and enjoyment
parts; and
ii. the purpose for which such part will be used; and
 b) include a schedule indicating to which section each such part will be allocated
c) not create rights contemplated in section 27(6) of the Sectional Titles Act

Dealings with the real right of exclusive use area by the body corporate

A developer must cede the right to the exclusive use of parts of the common property to the owners to
whom such rights are allocated, by the registration of a unilateral notarial deed in their favour

An owner (not the developer or body corporate) of a section in whose favour the right to exclusive use
of a part of the common property is allocated on the sectional plan is registered, may transfer his
interest in such right to the owner of another section in the scheme by the registration of a bilateral
notarial deed of cession entered into by the parties

According to Registrar’s Conference Resolution 49 of 2005 as amended by RCR 2/2006, section

27(4)(b) and 27(4)(c) provides that: if the holder of the real right of exclusive use area is no longer a
member the body corporate, the exclusive use area vests in the body corporate (free from any
mortgage bond). Such a holder will cease will cease to be a member of the body corporate when he
ceases to be the owner of a unit in the scheme. The body corporate can apply at the Registrar of
Deeds for the issue of a certificate of real right of the exclusive use area whereafter the exclusive use
area can be ceded.

If the holder of the real right of exclusive use is still a member of the body corporate (if he is the still a
owner of a unit in the scheme), the real right of exclusive use vests in him and not the body corporate.
The provisions of section 14 read in conjunction with section 33 of the Deeds Registries Act must be
adhered to. The exclusive use area can be transfer by way of cession of the real right of exclusive
use. If a person is unable to procure registration of the cession of the exclusive use area, the holder of
the can apply to court by petition for an order authorising the registration (cession) in the name of
another to such property (exclusive use area).

Creation of servitudes

The body corporate/owners may, if authorised in terms of section 5(1)(g) of the Sectional Titles
Scheme Management Act, direct the body corporate/owners –

a) to execute on their behalf a servitude or restrictive agreement burdening the land shown on
the relevant sectional plan; or
b) to accept on their behalf a servitude or restrictive agreement benefiting the said land

The Sectional Titles Schemes Management Act requires that the body corporate be authorised by a
special resolution of the owners

Such servitude must be embodied in a notarial deed –

If the land to be burdened by a servitude or restrictive agreement is subject to a mortgage bond, the
written consent of every mortgagee, existing on the date of execution of the notarial deed, to the
registration of such servitude or restrictive agreement, shall before such registration be obtained by
the notary and filed in his or her protocol
Shares of developers in schemes

The developer is the owner of any section in respect of which the ownership is not held by other
person

After every section in the scheme has been transferred to other persons (in other words, every
section is held by persons other than the developer), the developer ceases to have a share in the
common property, unless he has reserved himself a right of extension of the scheme, in terms of
section 25(1)

Alienation of the developers share in the scheme – section 34

When a developer has, in one transaction alienated the whole interest in the land and building or
buildings comprised in a scheme, or a share in such interest, to any person, the Registrar must
register the transaction –

a) by means of a deed of transfer, in the case of the units; and

b) by means of a bilateral notarial deed of cession in the case of rights of extension of the
scheme and exclusive use areas, reserved under section 25 and 27 respectively

FORM H to the Sectional Titles Act must be used for this transfer and paragraph 3 therein should be
used for the property description

Rules

A scheme shall as from the date of the establishment of the body corporate be regulated and
managed by means of rules

The rules must provide for the regulation, management, administration, use and enjoyment f the
sections and the common property, and consist of management and conduct rules

The prescribed management rules appear in Annexure 1 to the regulations issued under the
Sectional Ttitles Schemes Management Act and –

i. may be subject to approval of the Chief Ombud, substituted, added to, amended or repealed
by the developer when submitting an application for the opening of a sectional title register,
to the extent prescribed by regulation 63 issued under the Sectional Ttitles Schemes
Management Act; and
ii. may, subject to approval of the Chief Ombud, be substituted, added to, amended or repealed
from time to time by the unanimous resolution of the body corporate as prescribed by
regulation 6(6) issued under Sectional Ttitles Schemes Management Act if at least 30
percent of the sections are owned by a person or persons other than the developer

The prescribed conduct rules appear in Annexure 2 to the regulations issued under the Sectional
Ttitles Schemes Management Act and –

i. may be subject to approval of the Chief Ombud, substituted, added to, amended or repealed
by the developer when submitting an application for the opening of a sectional title register,
and
ii. may, subject to approval of the Chief Ombud, be substituted, added to, amended or repealed
from time to time by special resolution of the body corporate
any conduct rule substituted, added to or amended by the developer or the body corporate,
may not be ireconciliable with any prescribed management rule
Recovery from the owners of units of unsatisfied judgement against the body corporate

If a creditor of the body corporate has obtained judgement against the body corporate, and such
judgement remains unsatisfied, the judgement creditor may apply to the court which gave the
judgement, for the joinder of all members of the body corporate in their personal capacities as joint
judgement debtors in respect of the judgement debt, and upon such joinder, the judgement creditor
may recover the amount of the judgement still outstanding from the said members on a pro rata basis
in proportion to their respective participation quotas.

Sectional mortgage bonds

FORM Z must be used for compiling sectional mortgage bonds that is to be registered over a unit,
exclusive use area and/or real righe of extension. Two further forms were introduced on 16 April
2010:

FORM AJ for a collateral sectional mortgage bond

FORM AK for a surety sectional mortgage bond

 Chapter 2 – Deeds Office Procedures
Cover codes for lodgement

All deeds and documents lodged for registration at the deeds office have different codes which have
to be indicated on the lodgement cover. These codes later form part of the number allocated to the
deed in question. The various codes and the meaning of each code are indicated below.

CODES DEED/DOCUMENT
T Deed of grant, deed of transfer, certificate of registered title, transfer by
endorsement
B Mortgage bonds
K Servitudes and real rights
BN Notarial bonds
PA General and special powers of attorney
VA Lost or destroyed deeds
H Ante-nuptial contracts and court orders declaring marriages to be out of
community of property
BC Dealings with bonds, eg. Consent to the cancellation of bonds, consents to
releases, cessions, substitutions, noting of part payments, noting of reduction of
cover, waiver of preference, section 3(1)(s) amendment of conditions, section 45
subsitutions, endorsements under section 40 of the Administration of Estates Act
Amendment in terms of section 4(1)(b), 17(4) and 93 of the Deeds Registries
Act, the Companies Act, the Close Corporation Act, court orders, or any other
Act
EX Expropriations
B/AL Application for the recordal of a contract in terms of the Alienation of Land Act
BC/AL Application for the cancellation of a contract in terms of the Alienation of Land
Act
ST Certificates of sectional title and all sectional title transfers
SB Sectional bonds
SS Sectional title plan on the opening of a sectional title scheme
TL Certificates of leasehold title, all leasehold transfers, transfers by endorsement,
and other leasehold titles
BL All bonds and charges over leasehold properties
BCL Bond cancellations over leasehold properties
TG Deeds of grant in terms of Proclamation 293 of 1962 and Proclamation 16 of
1992
BG Bonds in terms of Proclamation 293 of 1962 and Proclamation 16 of 1992
BCG Bond cancellatons in terms of Proclamation 293 of 1962 and Proclamation 16 of
1992
WOP Is placed above a bond endorsement onto a title deed, when the property held
by that title deed is mortgaged together with other properties under the same
bond
Interdicts

Interdict codes

When an interdict affects a specific property, it will be recorded against the property on the computer
and if an interdict affects a person only and not also a specific property, it will be recorded against the
name of such person on the computer

INTERDICT CODES
Codeseries NO / YEAR / CODE Type of interdict Noted against
I (quote) / Year / I General interdicts and court Property and person
orders
I (quote) / Year / C Caveats Property and person
I (quote) / Year / AT Attachments Property
I (quote) / Year / LG Surveyor-General interdicts Property
I (quote) / Year / R Rehabilitations Person
I (quote) / Year / CY Liquidation and judicial Person
management
I (quote) / Year / MN Master’s notices Property and person
EX (quote / Year Expropriations Property
S (quote) / Year Sequestrations Person

Sequestration and rehabilitation orders

When a Registrar of Deeds is notified by the Registrar of the High Court of any (provisional)
sequestion order or any amendment thereof, the interdict section must note the date and time when it
is received and allocated a sequestration to it. All such sequestrations must be noted on the computer
against the person and property.

An insolvent who is not rehabilitated by the court within a period of 10 years from the date of
sequestration of his/her estate, must be deemed to be rehabilitated after the expiry of that period,
unless a court directs otherwise

If an insolvent is rehabilitated by the court within the 10 year period after sequestration, the Registrar
of the High Court will likewise notify the Registrar of Deeds of the rehabilitation order. The Interdict
Section must allocate a number to the rehabilitation order and note it against the name of the
insolvent
Dealing with attachments

Attahment is a legal process entailing the seizure of an execution debtors property. In the case of
immovable property the relevant interdict is noted against the execution debtors immovable property
in the deeds registry to prevent any alienation of the affected property pending the interdict.

The Registrar of Deeds may not register any transactions pertaining to the attached property, contrary
to a recorded attachment interdict unless –

a) the attachement is withdrawn

b) it is the transfer of the property by the sheriff that attached the property

Uplifting an attachment

No transfer can be registered unless the attachement has been uplifted (other than a transfer by the
sheriff who attached the property)

You should obtain the following information from the attachment notice:

1. which sheriff attached the property;

2. who the plaintiff and the defendant are;
3. which property was attached; and
4. who the legal representatives (if possible to ascertain)

Then establish what amount must be paid in order to uplift the attachment. If the proceeds of the sale
are sufficient, provide an acceptable gaurantee or undertaking to enable the upliftment of the
attachment

Once the attachment has been uplifted, the transfer can be registered
 PART 3:

Chapter 1 – Value Added Tax

Transfer duty or VAT?

When is Transfer Duty OR VAT payable?

When immovable property (an erf, flat, residence, smallholding or farm) is sold, transfer duty or VAT is
always payable. The one or the other is always applicable. It is, however, not always easy to
determine when VAT or when transfer duty is payable on a transaction.

What is the status of the seller?

The first and most important key in determining whether a transaction is subject to VAT or transfer
duty, is by determining the status of the seller

1. Is the seller a VAT vendor for purposes of this transaction?

This question has two elements, namely:

a) is the seller a vendor, and

b) (is he a vendor) for the purposes of this transaction?

Is the seller –

a) a vendor
A person who earns income from selling goods or earns fees from services supplied where
such taxable supplies are in excess of R1 million in any consecutive 12 month period is liable
for compulsory VAT registration. The R1 million compulsory VAT registration threshold
applies to the total value of taxable supplies (turnover) and not to the net income (profit)
However, a person may choose voluntarily to register for VAT, if the taxable supplies made in
the past period of 12 months, exceed R50 000.
A vendor is a person liable to charge VAT on taxable supplies, whether the person has
actually applied for VAT registration or not.

b) for the purposes of this transaction? (in other words, is the transaction a taxable supply?)
The property must have been supplied in the course or furtherance of the sellers enterprise
(business). In other words, a vendors property that is to be sold must be linked to the
enterprise (business) in respect of which he is a vendor.

It is important to note that in transactions where VAT is payable, the Receiver of Revenue demands
the amount due from the seller, not from the purchaser.

In the case of transfer duty being payable, the purchaser (unless the parties specifically agree
otherwise) is liable to pay it to the Receiver of Revenue. This amount is usually paid over by the
purchaser to the conveyancer who then ensures that the transfer duty is paid to the Receiver of
Revenue. He then receives a transfer duty receipt as proof that transfer duty has been paid, or a
transfer duty exemption certificate if the transaction is exempt from transfer duty.
 2. Is the transaction VAT exempt?

Exempt supplies are supplies of goods or services where VAT is not chargeable at either the standard
rate or the zero rate and will not form part of the taxable turnover. A person who makes only exempt
supplies cannot register as a vendor or charge VAT on those supplies.

Section 12 of the VAT Act lists these exemptions:

i. a sale of a share, or a member’s interest in a company or Close Corporation that owns

immovable property
ii. the sale of shareblock shares which relate to residences
iii. the sale of any right of occupation
iv. the supply of land, together with any improvements of such land, where such land is situated
outside the Republic and such supply is made by way of sale or by way of letting
v. property that has previously been leased for residential purposes, and which property is now
being sold.

If a transaction is VAT exempt one has to revert to asking transfer duty questions

3. Is the transaction zero-rated?

Zero-rated means that VAT is payable on the transaction, but at the rate of 0%, and not at the
standard rate of 15%

What is the difference between zero rated and vat exempt?

a) If a transaction is VAT exempt, it falls outside the VAT net altogether. Accordingly transfer
duty is payable on the transaction. The position is therefore the same as if the seller were
never registered for VAT.
b) If a transaction is zero-rated, it falls within the VAT net and all the provisions relating to VAT
apply to the transaction, including the provision that the purchaser can still claim input tax
credits in respect of the property concerned. The rate is 0% instead of 15%.

Requirements for applying the zero-rate

a) the seller must be a VAT vendor

b) the purchaser must be a VAT vendor
c) the enterprise must be sold as a going concern
d) the parties must specifically agree in writing that the enterprise is being sold as a going
concern
e) the property must consist of an enterprise or a part of an enterprise, which is capable of
separate operation
f) the assets necessary for carrying on the income earning activity, must also be disposed of to
the purchaser

What must be agreed upon in writing?

ZERO-RATED CLAUSE
The parties must agree in writing that –
a) the enterprise is sold as a going concern
b) the concern will be an income-earning activity, on the date of transfer
c) the consideration for that supply includes VAT at the zero-rate
d) both the seller and purchaser are registered VAT vendors for the purposes of VAT

If the Receiver of Revenue rules that the transaction does not qualify for a zero-rating, the purchaser
will be responsible for the payment of VAT in addition to the purchase price
 Chapter 2: Transfer Duty
Definitions

Transfer duty means -

Transfer duty is a type of tax levied on the value of any property acquired by any person by way of a
transaction or in any other way under the Transfer Duty Act for the benefit of the National Revenue
Fund to the Receiver of Revenue. Section 2 of the Transfer Duty Act makes provision for the
imposition of transfer duty on –

1. the value of any property acquired by any person by way of a transaction or in any other
manner; or
2. the amount by which the value of any property is enchanced by the renunciation of an interest
in or restriction upon the use or disposal of such property

Date of acquisition means -

a) in the case of acquisition of property by way of a transaction, the date on which the transacion
was entered into, (irrespective of whether the transaction was conditional or not or was
entered into on behalf of a company already registered or to be registered); and
b) in the case of the acquisition of property other than by way of a transaction, the date upon
which the person who acquired the property became entitled thereto
The provisio to this definition determines that where property has been acquired by the
exercise of an “option to purchase” or a “right of pre-emption”, the date of acquisition shall be
the date upon which the option or the right of pre-emption was exercised.
c) In the case of a share block scheme being transformed into a sectional title scheme, the date
of the written request by the owner of shares to transfer the unit in his name

Property means –

1. land and any other fixtures thereon,

2. any real right in land, excluding rights under a mortgage bond or a lease
3. a share or interest in a residential property company
4. a contingent right to any residential property held by a trust

Transfer duty payable by the transferee

Transfer duty is payable by the person who acquires the property (transferee),

a) in the case of an acquisition,

by the person who acquired the property
b) in the case of a renunciation,
by the person in whose favour any interest in or restriction upon the use or disposal of
property has been renounced
When and to whom is transfer duty payable

1. Transfer duty must be paid within six months of the date of acquisition
2. The payment of any duty, penalty or interest, must be made by way of an electronic payment
3. The Commissioner, however, may allow reasonable extension of time for the payment of the
duty, without any interest, if he is satisfied that the delay in the determination of the value on
which the duty is payable cannot be ascribed to the person liable to pay the duty. For this
purpose –
a) application must be made in writing to the Commissioner for such extension of time,
within six months from the date of the acquisition
b) a deposit on the amount of the duty payable must be made to the Commissioner within
six months of the date of acquisition
4. The Commissioner may accept a deposit based on the consideration or the declared value if
the transaction is subject to a determination by the Commissioner of the value of the property,
provided that security for the payment of the balance of transfer duty which may still be
payable is provided to the Commissioner

Penalty or interest on late payment of transfer duty

If any duty remains unpaid after the date of expiration of the six month period from the date of
acquisition, interest shall become payable at the rate of 10% per annum on the amount of transfer
duty which remains unpaid

The penalty shall be calculated in respect of each completed month, in that period, from that date to
the date of payment

For the purposes of the calculation of the penalty, a deposit on account of transfer duty shall be
deemed to be a payment of the transfer duty.

Value of the property

The value on which duty shall be payable shall,

a) where consideration is payable by the person who acquired the property, the amount of that
consideration, and
b) where no consideration is payable, be the declared value of the property
c) where the Commissioner of SARS is of the opinion that the consideration payable or the
declared value is less than the fair value of the property then on such fair value
d) where the property is sold at public auction, the transfer duty payable is only calculated on the
purchase price even if it is below the fair value
Transfer duty payable on servitudes

Transfer duty is payable on –

a) the consideration payable for; or

b) the declared value (if no consideration is payable) of; or
c) the fair value of
the servitude, whichever is greater

as set out in the Estate Duty Act.

If no consideration is payable, transfer duty will be payable on the declared value of the servitude or
the fair value of the right granted, which ever is greater

A transfer duty receipt or exemption certificate must always be lodged in the deeds registry upon the
cancellation of a servitude. The only exception where it is not necessary to lodge a transfer duty
receipt or exemption certificate is where the servitude to be cancelled has served its time, for
example, the death of the usufructuary or by effluxion of time.

Nomination agreements

Section 16(1) of the Transfer Duty Act provides that where property is sold to someone acting as an
agent for someone else, the person acting as the agent must –

a) disclose to the seller, the name and the address of the principal on whose behalf he is acting;
and
b) provide the seller with a copy of the documents appointing him as agent

This must be done –

 on the same day as the day on which the contract of purchase and sale has been concluded;
or
 in the case of an auction, on the same day as the day on which the auctioneer accepted the
purchasers bid

Any person who has been appointed as an agent, but fails to furnish the documents and the name of
his principal on the same day, shall for the purpose of the payment of transfer duty, be presumed,
unless the contrary is proved, to have acquired the property himself or herself. Consequently, the
agent may be liable for transfer duty and the principal may also be liable for transfer duty on the
subsequent transfer

The purpose of the section is to prevent a property from being purchased in the name of a purchaser
who does not yet exist or has not yet been identified

The effect of the section as it now stands is that if a person cannot disclose the name of the nominee
on the same day, but does so later, the purchase will be regarded as two separate transactions for
the purposes of transfer duty purposes

Where the nominee does not accept the nomination as purchaser on the date of the original
transaction, the agent and the nominee will be deemed to be successive purchasers for transfer duty
purposes

Where an agent acts on behalf of a company, Close Corporation or trust in the conclusion of an
agreemnt, it will be regarded as one transaction for transfer duty purposes, provided –

a) the company is intended to be the ultimate transferee

 b) the contract has been or will be ratified by the company before registration of transfer, and
c) the provisions of section 16 have been complied with

A trust to be formed cannot be nominated as the purchaser in a nomination agreement, as the

trustees will not be in a position to accept such nomination on behalf of the trust

Total value (additional consideration)

For purposes of the payment of transfer duty, certain payments shall be added to the consideration
payable in respect of the consideration payable in respect of the acquistion of the property. They are:

a) any commission or fees paid or payable by the person who acquired the property;
If the property was however acquired by way of a sale in execution, the amount to be added
to the consideration shall not be so much of any commission or fees paid or payable by the
person who acquired the property, as exceeds 5% of the consideration payable for the
property

b) if the property is acquired by the exercise of an option to purchase or a right of pre-emption,

any consideration paid or payable by the person who has acquired the property to any person
in respect of the said option to purchase or right of pre-emption;
c) any consideration which the person who has acquired the property has paid or has agreed to
pay to any person whatsover, over and above the consideration payable to the person from
whom the property was acquired

Exemptions from transfer duty

1. where the immovable property has been acquired by government institutions

2. where the immovable property has been acquired by muncipalities and water service
providers

3. where the immovable property has been acquired by public benefit organisations
Two requirements must be met before this exemption can find application:
i. the entity acquiring the property must either be –
a) an approved public benefit organisation in terms of the Income Tax Act; or
b) an institution, board or body which is exempt from income tax in terms of the
Income Tax Act; and
ii. the whole or substantially the whole of the property must be used by such public
benefit organisation, institution, board or body for carrying on one or more approved
public benefit activities

The transfer duty exemption for a specific transaction and an application must be submitted
for each acquisition of property for which the exemption is required

4. where the immovable property has been acquired by public hospitals

5. heirs or legatees who acquire immovable property from a deceased person who died
intestate, testate or due to a redistribution of assets

6. where the immovable property has been acquired by a joint owner upon partition, provided
that no consideration was paid to equalise the partition
 7. when a joint owner acquires the sole ownership of a property; this exemption is only
applicable if a free co-owner of immovable property acquires the sole ownership over a
particular portion of the property held under co-ownership

8. where a surviving spouse or divorced spouse acquires ownership in the whole or any portion
of property registered in the name of his or her deceased or divorced spouse

9. where the immovable property has been acquired by a spouse in a marriage in community of
property in respect of the acquisition of an undivided half share in that property by operation
of law upon conclusion of such a marriage

10. where a person requires his ownership in property to be registered in his name in a deeds
registry where there has been an error in the registration of the acquisition of the property

11. where the immovable property has been acquired by the individual partners of a partnership
which is registered in the name of the partnership carried on by such partners

12. where property is restored by a trustee to an insolvent

13. where a surety pays the consideration for which he stood surety and seeks transfer of the
property in question into his own name
No duty shall be payable by such surety provided –
i. the duty has been paid in respect of such acquisition of the property under the
transaction; and
ii. no further consideration is payable by the surety to either party to the transaction

14. where a subsidiary company acquires immovable property from a foreign company

15. if any property has by expropriation been acquired by the State or any other institution of a
public character and such property is re-acquired by the person from whom the property was
expropriated

16. where the immovable property has been acquired by a person under any transaction on
which VAT is payable

Lodgement of transfer duty receipts or exemption certificates

According to section 92 of the Deeds Registries Act, a deed of grant or deed of transfer of land is
registrable only if it accompanied by a receipt or certificate from a competent public revenue officer to
the effect that taxes, duties and fees on the property concerned, payable to the Receiver of Revenue
have been paid.

If a transaction is exempt from the payment of transfer duty, a transfer duty exemption certificate must
still be lodged together with such transaction in the deeds office

If land or a real right in land has been settled upon or donated to an intended spouse in terms of an
ante-nuptial contract, no transfer or cession of such land or right by the donor to any person other
than the donee and no mortgage thereof by the donor

shall be executed, attested or registered by the Registrar of deeds unless the transfer duty
payable on the settlement or donation has been paid
Refund of transfer duty

A refund for transfer duty can be claimed on a transaction cancelled before registration. The following
steps must be taken:

a) an agreement of cancellation of the sale must be drawn and signed by both parties;
b) declarations of cancellation of sale must be signed by the seller and purchaser; and
c) the conveyancer who paid the transfer duty must complete the prescribed application form for
a refund of transfer duty
 Chapter 3: Alienation of land
Introduction

The formalities applicable to agreements of sale of land are regulated by the Alienation of Land Act. In
terms of the Act, certain formalities are prescribed for all agreements of sale of land, whereas
additional requirements are prescribed for contracts of sale on instalments.

Definitions

Alienate According to the Act, there are three ways of alienating land,
namely:
a) sell
b) exchange; and
c) donate
irrespective of whether such sale, exchange or donation is subject
to a suspensive or resolutive condition
Contract As defined in the Act means a sales contract for land on instalment
Deed of alienation Is an agreement in terms of which land is sold, donated or
exchanged
Intermediary Is a person who purchased a property in terms of a contract as
defined in the Alienation of Land Act, and before taking transfer,
has sold that property in terms of a contract to a third person
Registrable Means land which is capable of being registered under a separate
title deed in the deeds registry in that the laws relating to such
registration have been complied with
1. A sectional title unit would therefor be registrable as soon as-
a) the sectional title register of the scheme has been
opened; and
b) section 10 of the Sectional Titles Act has been complied
with

2. An erf in a township would be registrable as soon as –

a) the township register for that town has been opened and
the township has been proclaimed; and
b) all township establishment conditions have been complied
with

3. A portion of a piece of land that is being subdivided would be

registrable as soon as –
a) the diagram for the subdivision has been approved by the
Surveyor-General; and
b) all the subdivision conditions have been complied with
Formalities for all contracts of sale of land

The only formalities that which section 2 of the Act prescibes are –

1. that a deed of alienation must be in writing; and

2. signed by the parties or their agents acting on their written authority
3. if the purchaser has the right to revoke the offer or to terminate the deed of sale in terms of
section 29A of the Act (the cooling-off clause), this must be contained in the agreement

If the formalities prescribed in section 2(1) are not complied with, a deed of alienation of land
will be null and void

Exception regarding an agent

Section 2(2) prescribes that the requirement that an agent must have written authority to sign the
deed of alienation on behalf of one of the parties does not apply to a deed of alienation concluded by
an agent or trustee acting for a company yet to be formed. The Companies Act provides for this.

Sale of land by public auction

According to section 3(1) the formalities applicable to a deed of alienation of land in terms of section
2(1) are not applicable to the sale of land by public auction. There need not be a written contract of
sale, and the requirement of signature by both parties is not important. In these cases the sale
becomes perfecta at the fall of the hammer on the highest bid.

Section 3(2) stipulates that if land is sold by public auction and constitutes a contract, in other words
the purchase price is payable by the buyer in more than two instalments over a period exceeding one
year and the land is residential land or intended to be used mainly as such –

a) the provisions of Chapter 2 apply to that sale; and

b) the conditions of sale shall be read in public immediately before the auction; and
c) the seller shall after the auction furnish the purchaser with a copy of the contract, failing which
the purchaser may cancel the sale

Formalities for the sale of land on installments

The provisions of Chapter 2 shall apply to the sale of land in the following cases:

a) if the land is intended mainly for residential purposes;

b) if land is sold for an amount of money;
c) if the purchase price is payable in more than two instalments; and
d) if the purchase price is payable over a period exceeding one year
Recording of a contract – section 20

General

This section serves to protect the purchaser, as does the whole of Chapter 2. If Chapter 2 applies to a
contract, the contract may be recorded at the deeds registry.

A contract may only be recorded against land used or intended to be used mainly for residential
purposes.

Who must bring the application for the recording of the contract

THE SELLER THE PURCHASER

According to section 20(1)(a) a seller, whether he If the seller fails to record the contract within 90
is the owner of the land or not, shall cause the days, the purchaser may –
contract to be recorded by the Registrar of deeds a) cancel the contract within 14 days, i.e.
in the prescribed manner provided a prior after the period of 90 days; or
contract is in force in respect of the land has not b) at any time thereafter apply to the
been or is not required to be recorded in terms of Registrar concerned to record the contract
section 20. (if the purchaser prefers not to cancel the
If the seller does not record the contract at the contract)
deeds registry within 90 days from the date – The purchaser has no authority to apply for the
a) of the contract, if the land is registrable; or recording of the contract prior to the lapsing of
b) upon which the land becomes registrable; the 90 day period
or
c) upon which the land is registrable in the
name of the purchaser in terms of a
preceeding contract which was or was
required to be recorded in terms of section
20,
the purchaser shall be entitled to certain
remedies

The effect of recording a contract

It protects the purchaser in the following ways:

Mortgage bonds

The Registrar concerned may register a mortgage bond over land in respect of which a contract has
been recorded. In such an instance, the ranking clause of such bond must indicate that the said bond
ranks after the contract.

A mortgagee in whose favour a mortgage bond over the land concerned is registered subsequent to
such recording, is, however deemed to have consented irrevocably and unconditionlly to the
discharge of the mortgage bond or the release of the land from the mortgage bond, if the purchaser
should demand transfer

Transfers

The Registrar concerned shall not register a transfer of land in terms of which a contract has been
recorded, unless –

a) the transferee is the purchaser under the contract; or

b) the transferee is an intermediary in relation to the purchaser; or
c) such a recording has been cancelled
Preferent claim

The purchaser has a preferent claim in respect of the proceeds of the sale, if –

a) the land concerned is sold in execution

b) the owner of that land is an insolvent
NOTE: The purchasers preferent claim ranks in preference immediately after any claim of a
mortgagee whose mortgage bond over the land was registered prior to or on the date of the
recording of the contract

Death of the registered owner of the land

If the registered owner of the land against which the contract has been recorded dies, the land may
not be transferred to the heirs, subject to the contract, as it may only be transferred to the purchaser
as indicated in the contract that has been recorded. Either the estate will have to be kept open until
the last instalment has been paid, or the recording of the contract has been cancelled.

General provisions

No consideration – section 26

Section 26(1): No person shall by virtue of a deed of sale relating to an erf or unit receive any
consideration until –

a) such an erf or unit is registrable; and

b) if sold in terms of a contract, until the contract has been recorded.

Section 26(3) provides for an exception, a consideration may well be received:

a) if the purchaser entrust to a practitioner or an estate agent in his capacity as such with a
consideration to be kept in trust for the benefit of the purchaser in terms of a sale agreement;
or
b) the seller may furnish the purchaser with an unconditional and irrevocable gaurantee by a
banking institution or by a registered insurer in terms of which the amount of the deposit will
be repaid to the purchaser on a given date if the transfer has not been registered by then

Consequence of deeds of alienation where there was full performance – section 28(2)

Any alienation which does not comply with the provisions of section 2(1) shall in all respects be valid if
–

a) the purchaser had performed in full in terms of the deed of alienation or contract; and

b) the land has been transferred to the purchaser

Cooling-off right – section 29A

Transactions excluded – that is, transactions to which the cooling-off right does not apply:

a) where the purchase price of the land, or the price offered for it, exceeds R250,000
b) where a company, Close Corporation, or trust is the purchaser
c) where the purchaser has purchased the land at a public auction
d) where the purchaser and the seller have previously entered into a deed of sale in respect of
the same land on essentially the same terms
e) where the purchaser has reserved the right to nominate or appoint another person to take
over his/her right and obligations under the contract
f) where the purchaser is purchasing the land by the exercise of an option which was open for
exercise for a period of at least five days
 Chapter 4: Matrimonial Property
Persons married out of community of property

Any marital power which the husband had over the persons and property of his wife was abolished
when the Matrimonial Property Control Act was amended

Either spouse married out of community of property (with or without the accrual system) have full
contractual capacity to register immovable property in his/her name or to register mortgage bonds
over such property. The spouses act completely independent from each other.

Persons married in community of property

The general rule

Any spouse in a marriage in community of property may perform any juristic act with regard to the
joint estate without the consent of the other spouse. The general rule is subject to a number of
exceptions.

The exception to the general rule

The abovementioned right is subject to the provisions of section 15(2) which requires inter alia that
the written consent of the other spouse must be obtained when a spouse is dealing with immovable
property. It is also subject to section 15(3) which also requires the consent of the other spouse in
certain instances, although such consent does not need to be in writing.

Written consent of the other spouse

Section 15(2) lists a number of cases where one spouse may not act without the written consent of
the other. Of these exceptions, section 15(2)(a) and (b) are of special importance to conveyancing.
They contain the following provisions:

Section 15(2)(a) states that a spouse to a Section 15(2)(b) states that a spouse to a
marriage in community of property (husband or marriage in community of property (husband or
wife) shall not without the written consent of the wife) shall not enter into any contract for the –
other spouse –

i. alienate, i. alienation,
ii. mortgage ii. mortgaging
iii. burden with a servitude, or iii. burdening with a servitude, or
iv. confer any other real right iv. conferring any other real right
in any immovable property forming part in any immovable property forming part
of the joint estate of the joint estate

The following rules apply to both sections 15(2)(a) and (b), namely:
a) consent by the spouse shall be in writing – section 15(2);
b) consent shall be given seperately for each juristic act – section 15(5); and
c) such consents shall be attested by two competent witnesses – section 15(5)
The following rules only apply to powers of The following rules only apply to contracts in
attorney in terms of section 15(2)(a), namely: terms of section 15(2)(b), namely:
a) consent may not be given by way of a) the consent required may, except where it is
ratification required for the registraton of a deed, be
given by way of ratification within a
reasonable time after the act concerned
b) even where the above-mentioned acts are b) consent shall not be required where an
performed by a spouse in the ordinary course above-mentioned act is performed by the
of his profession, trade or business, consent spouse in the ordinary course of his
by the other spouse shall be required profession, trade or business
Remedy and sanctions

When a spouse enters into an above-mentioned transaction with a person without the required
consent, it is deemed that the transaction has been entered into with the consent required if that
person –

i. does not know; and

ii. cannot reasonably know
that the consent was required for such transaction

Lack of consent

The court may on the application of the other spouse give him leave to enter into the transaction
without the required consent if it is satisfied –

a) in the event of the consent being withheld, that such withholding is unreasonable; or
b) in any other event, that there is good reason to dispense with the consent
 Chapter 5: Intestate Succession
Basic principles

1. The spouse as the sole heir

If a deceased person is survived by a spouse, but not by any descendants, the spouse
inherits the entire intestate estate – section 1(1)(a) of the Intestate Succession Act
a) If the deceased and his or her spouse were married in community of property, the
spouse receives one half share by virtue of the marriage in community of property
and the other half by virtue of section 1(1)(a) of the Act
b) If the deceased and his spouse were married out of community of property, the
spouse inherits the entire estate by virtue of section 1(1)(a) of the Act

2. Descendants as sole heirs

If a deceased person leaves descendants, but no spouse, the descendants inherit the entire
intestate estate – section 1(1)(b) of the Intestate Succession Act
Descendants are therefore sole heirs. They inherit per stirpes through representation.
In the case where a child has predeceased the deceased, the descendants inherit per stirpes

3. Spouse and descendants as heirs

If a deceased person is survived by both a spouse and descendants,
the spouse inherits the greater of R250,000 or a child share of the of the intestate estate –
section 1(1)(c)(i) of the Intestate Succession Act and
the descendants will inherit the residue (if any) of the estate – section 1(1)(c)(ii) of the
Intestate Succession Act
a child share is determined by dividing the net monetary value of the estate by the number of
children (alive or deceased, survived by descendants) plus the number of spouses
Where the intestate estate of a deceased who is subject to customary is not sufficient to
provide each surviving spouse with R250,000 the estate shall be divided equally amongst the
spouses
NOTE on child share: the amount of the child share was increased from R125,000 to
R250,000 as from 24 November 2014. The new threshold will apply in respect of the intestate
estate of persons who died on or after 24 November 2014.

4. Parents as heirs
If a deceased person is not survived by a spouse or descendants, but is survived by both
parents, his parents inherit the intestate estate in equal shares – section 1(1)(d)(i) of the
Intestate Succession Act

5. Parents and descendants of parents as heirs

If a deceased person is not survived by a spouse or descendant –
a) but is survived by one of his parents, the surviving parent inherits half of the intestate
estate and the descendants of the deceased parent the other half – section 1(1)(d)(ii)
of the Intestate Succession Act
b) if there are no such descendants, the surviving parent inherits the entire intestate
estate – section 1(1)(d)(ii) of the Intestate Succession Act

6. Descendants of the deceased’s parent as heirs

a) If both the testators parents are deceased and the deceased does not leave a spouse
or children, the descenants of the predeceased parents (collateral relatives of the
testator, that is his or her brothers and sisters) inherit the entire intestate estate in a
particular proportion - section 1(1)(e)(i) of the Intestate Succession Act
7. Descendants of only one parent of the deceased
Where only one of the predeceased parents of the deceased person leaves descendants
(collateral relatives of the deceased), those descendants inherit the entire deceased estate -
section 1(1)(e)(ii) of the Intestate Succession Act

8. Other competent heirs

If a deceased person is not survived by a spouse, descendants, parents or descendants of
the parents, the other blood relatives of the deceased who are related to him nearest in
degree inherit the entire intestate estate - a) section 1(1)(f) of the Intestate Succession Act

9. Adopted children
An adopted child is deemed to be the legal child of the adoptive parent. An adopted child can
inherit from his adoptive parents and their blood relatives

10. Born out of wedlock

Having been born out of wedlock shall not affect the capacity of one blood relation to inherit
the intestate estate of another blood relation – section 1(2) of the Intestate Succession Act
This is the case notwithstanding the provisions of any law or the common law or customary
law but subject to the provisions of the Intestate Succession Act and section 40(3) and
297(1)(f) of the Children’s Act

11. Renunciation (if the surviving spouse is entitled to inherit)

If a descendant of a deceased, who, together with the surviving spouse of the deceased, is
entitled to benefit from an intestate estate, renounces his right to receive such a benefit, such
benefit shall vest in the surviving spouse – section 1(6) of the Intestate Succession Act

12. Disqualification or renunciaation (if there is no surviving spouse)

If a person is –
a) disqualified from being an heir of the intestate estate of the deceased; or
b) renounces his right to be an heir of the intestate estate of the deceased
any benefit which he would have received
a) if he had not been so disqualified; or
b) if he had not so renounced his right
shall desolve
a) as if he was not so disqualified; or
b) as if he had died immediately before the death of the deceased
- section 1(7) of the Intestate Succession Act
 Chapter 6: Subdivision of Agricultural Land Act
Background

The purpose of this Act is to control the subdivision and the use of agricultural land. The legislator’s
purpose is to avoid the subdivision of agricultural land into small uneconomical units.

Where –

a) any agricultrural land is subdivided, or

b) transferred and thereby effectively increasing the number of registered owners of the
agricultrural land in undivided shares, or
c) a servitude (other than the exceptions listed in section 6A) is to be registered over any
agricultrural land,
either one of the following documents must be lodged in the deeds registry together with the
transaction:
1. a consent by the Minister of Agriculture in terms of the Subdivision of Agricultural Land
Act; or
2. a letter by the Department of Agriculture to the effect that the land in question is not
agricultural land as defined in the Subdivision of Agricultural Land Act

Actions which are excluded from the application of the Act

The provisions of this Act shall not apply in respect of –

1. any subdivision of land for the purposes of transferring a portion thereof to the State or a
statutory body
2. the transfer of an undivided share in land to the State or a statutory body
3. the sale of any right to any portion of agricultural land to the State or a statutory body
4. any subdivision of, or the transfer of any undivided share in, any land in accordance with a
testamentary disposition or intestate succession, if the testator died before the
commencement of this Act
5. the transfer of an undivided share in any land in accordance with a contract entered into prior
to the commencement of this Act
6. any subdivision of land which a surveyor has submitted the relevant subdivisional diagram to
and has obtained approval from the Surveyor-General concerned prior to the commencement
of this Act
7. the registration of a long-term lease in respect of a portion of agricultural land, concluded in
writing prior to the commencement of this Act
Prohibition of certain actions regarding agricultural land

Unless the Minister has consented in writing –

1. agricultrual land shall not be subdivided

2. no undivided share in agricultural land not already held by any person, shall be transferred to
any person
3. no part of an undivided share in agricultural land shall be transferred to any person, if such
part is not already held by any person
4. no lease agreement in respect of a portion of agricultural land shall be entered into –
a) for a period of 10 years or longer;
b) for the period of the natural life of the lessee or any other person mentioned in the lease;
or
c) for a period which is renewable from time to time at the will of the lessee, either by the
continuation of the original lease or by entering into a new lease, indefinitely or for periods
which together amount to not less than 10 years
5. a) a portion of agricultural land may not be sold or even advertised to be sold. This is
the case whether the portion is surveyed or not. It even appllies to the sale of a
portion of agricultural land where the sale is subject to a suspensive condition that the
Minister of Agriculture will grant his his consent to the subdivision of such land; and

b) no right to a portion of agricultural land shall be –

i. sold; or
ii. granted for a period of
- more than 10 years, or
- for the natural life of any person, or
- the same person for a period aggregating more than 10 years, or
iii. advertised for sale or with a view to any such granting

Succession

If the consent of the Minister cannot be obtained as mentioned above and if the heirs cannot reach
any other agreement, for example, a redistribution agreement in terms of which the land is allocated
to only one heir, the executor of the estate must realise the land (or undivided share concerned, as
the case may be) and divide the nett proceeds thereof between the heirs.

As an alternative, the heirs can establish a company (or any other legal entity) and purchase the land
from the estate in the name of such company
Servitudes

The rule:

A servitude in respect of agricultural land shall not be registered without the written consent of the
Minister – section 6A

The exceptions:

However, section 6A allows for some exceptions. According to this section, the following servitude
may be registered over agricultural land without the Ministers written consent:

a) a right of way, aqueduct, pipe line or conducting of electricity with a width not exceeding 15
meters;
b) a servitude which is complementary to the above mentioned servitude and which has a
servitude area not exceeding 225 square meters which adjoins the area of the last mentioned
servitude; and
c) a usufruct over the whole of agricultural land in favour of one person or in favour of such
person and his spouse or the survivor of them if they are married in community of property

From the wording of section 6A it is also clear that if a servitude of usufruct or usus is
registered over a portion of the agricultural land, the Ministers consent shall have to be
obtained

If a habitatio is registered in respect of a house on such agricultural land, the Ministers

consent shall also have to be obtained unless the habitatio is granted for a period of 10 years
or less in favour of one person
 Chapter 7: Customary marriages
Definitions

Customary law means the custom and usage traditionally observed among the indigenous African
peoples of South Africa and which forms part of the culture of those people.

Recognition of customary marriages

The following marriages are recognised by the Recognition of Customary Marriages Act, namely:

a) a marriage which is valid marriage according to customary law and which exists at the
commencement of the Act;
b) a customary marriage entered into after the commencement of the Act and which complies
with all the requirements of the Act;
c) all valid customary marriages entered into before the commencement of the Act, if a person is
a spouse in more than one customary marriage; and
d) all marriages entered into after the commencement of the Act, which comply with the
provisions of the Act, if a person is a spouse in more than one customary marriage

Requirements for validity of customary marriages entered into after the commencement of the Act

a) the prospective spouses must both be above the age of 18 years;

b) the prospective spouses must both consent to be married to each other under customary law;
c) the prospective spouses may not already be a party to a civil marriage
d) the marriage must be negotiated and entered into or celebrated in accordance with customary
law; and

Further customary marriages after the commencement of the Act

A spouse who is a spouse in a customary marriage and wishes to enter into a further customary
marriage with another woman after the commencement of the Act must make an application to the
court to approve a written contract which will regulate the future matrimonial property system of his
marriage

All persons having a sufficient interest in the matter and in particular the applicants existing spouse or
spouses and his prospective spouse, must be joined in the proceedings instituted in terms of section
7(6)

If the court changes the matrimonial property system in terms of section 7(4), or approves the written
contract in terms of section 7(6), the Registrar or clerk of the court must furnish each spouse with the
court order and certified copy of such contract and must send the court order and a certified copy of
the contract to all Deeds Registries situated in the jurisdictional area of the court

The court order and the contract must then be recorded as an interdict against the names of the
spouses in question in respect of all registered properties.
Updating of deeds office records regarding the new status

A party may use the provisions of section 17 of the Deeds Registries Act to effect the change in status
or to update any deed registered. The application in terms of section 17(4) must be accompanied by –

i. the title deed to be updated

ii. proof of change of status
iii. court order, where no registration certificate is available
iv. all interdependent deeds

Where the court has, however, granted an order as contemplated in section 7(4) or 7(6) of the
Recognition of Customary Marriages Act, it shall not be necessary to lodge an application for the
endorsement of the relevant title deeds regarding the change in status.

The second provisio to section 17(4) of the Deeds Registries Act provides that the Registrar shall, on
submission of the relevant title deed and court order, make the endorsement or note regarding the
changed status

The following must be lodged to prove the existance of a customary marriage that was concluded in
terms of the Recognition of Customary Marriages Act –

1. a certificate from the Department of Home Affairs that the marriage is registered; or
2. a court order
 Chapter 8: Civil Union
Definitions

Civil union means the voluntary union of two persons who are both 18 years of age or older, which is
solemnised and registered by way of either a marriage or a civil partnership, in accordance with
procedures prescribed in this Act, to the exclusion, of all other

Civil union partner means a spouse in a marriage or a partner in a civil partnership, concluded in
terms of the Act

Requirements for solemnisation and registration of a civil union

1. a person may only be a spouse or partner in one marriage or in one civil partnership,
2. a person in a civil union may not conclude a marriage under the Marriage Act or the
Recognition of Customary Marriages Act
3. a prospective civil union partner who has previously been married must present a certified
copy of the divorce order or death certificate of the former spouse or partner, to the marriage
officer as proof that the previous marriage or civil union has been terminated
4. a civil union may only be registered by prospective civil union partners who would, not be
prohibited by law from concluding a marriage under the Marriages Act or Recognition of
Customary Marriages Act, apart from the fact that they are of the same sex,
 Chatper 9: Companies
A distinction must be made between a foreign and an external company

 a foreign company is an entity incorporated in another country (outside South Africa). This is
irrespective of whether it is a profit or non-profit company or whether it carries on business or
non-profit activities within South Africa

 where a foreign company carries on business or non-profit activities within South Africa, it
qualifies as an external company that must be registered in terms of the Act

According to Chief Registrars Circular 28/2013, it is uncertain, in terms of section 23(2) read together
with section 23(2A), whether a foreign company can acquire immovable property or be a mortgagee
without being registered as an external company

A Registrars Conference Resolution (RCR47/2011) however provides that a foreign company can
acquire property or act as mortgagee, provided the conveyancer provides the Registrar of Deeds with
documnetary evidence (for example an auditors certificate or affidavit from a director of such a foreign
company) to the effect that the company need not register as an external company in terms of section
23(2) of the Companies Act

Company suffixes (types of companies)

“Incorporated” It indicates that the company is a personal liability company

or “Inc”
“Proprietary It indicates that the company is a private company
Limited” or
“(Pty) Ltd”
“Limited” or It indicates that the company is a public company
“Ltd”
“SOC Ltd” It indicates that the company is a state-owned company
“NPC” It indicates that the company is a non-profit company
Pre-incorporation contracts

Section 1 of the Companies Act defines a pre-incorporation contract as a written agreement entered
into before the incorporation of a company by a person who purports to act in the name of, or on
behalf of, the proposed company, with the intention or understanding that the proposed company will
be incorporated and thereafter be bound by the agreement.

The board of directors may –

 completely;
 partially; or
 conditionally
ratify or reject the contract within three months after the company was incorporated

If the board fails to do either, the company will be regarded as having ratified the agreement

To the extent that the agreement is ratified or regarded as ratified, it will bind the company as if it had
been a party to the agreement when it was made.

A person who enters into a pre-incorporation contract is held jointly and severally liable with any other
such person(s) for liabilities emanating from such contract if –

a) incorporation does not take place; or

b) once the process of incorporation has been completed, the company rejects any part of the
agreement

Capacity of a company to act

The Turquand Rule

The Turquand rule was an exception to the Doctrine of Constructive Notice. It was originally designed
to mitigate the severe effects of the Doctrine of Constructive Notice. In tems of this rule bona fide third
parties contracting with the company are entitled to assume that all the companies internal formalities
required for a valid contract have been complied with. Such party does not have a duty to enquire
whether the company has complied with its internal formalities and procedural requirements

Section 20(7) of the Companies Act provides that a bona fide third party may presume that the
company has complied with all formalities and procedural requrements of –

 the Act;
 its memorandum of incorporation;
 its rules
in making a decision in the exercise of its powers

However, this arrangement does not apply when the person –

 knew or should reasonably have known

of the companies failure to comply with the requirements. Directors, prescribed officers or
shareholders of a company may not rely on this provision when dealing with the company

As can be gathered from the above, section 20(7) resembles the common law Turquand Rule
Financial assistance to directors and to holding companies and other related companies

Section 45(2) allows the board of directors of a company to authorise direct or indirect financial
assistance.

In addition to complying with any requirements contained in the companies MOI’s, the board may also
only authorise financial assistance if –

a) the particular provision of financial assistance is in accordance with either –

i. an employee share scheme that complies with section 97; or
ii. a special resolution of shareholders adopted within the previous two years approving
assistance for the specific recipient, or a category potential recipients in which the
specific recipient falls; and
b) the board is satisfied that –
i. immediately after providing the financial assistance, the company would satisfy the
solvency and liquidity test
ii. the terms under which the financial assistance is proposed to be given are fair and
reasonable to the company

A resolution by the board in contravention of –

a) section 45; or
b) any provision, condition or requirement contained in the MOI,
is void

Financial assistance to purchase shares of a company or a related or inter-related company

Sectio 44(2) provides that the board of a company may authorise the company to give financial
assistance to a person for the purposes of, or in connection with, the subscription of any option, or
any securities, issued or to be issued by the company (or a related company or inter-related
company) or for the purchase of any securities of the company (or a related company or inter-related
company) provided that –

a) such assistance is not prohibited by the MOI; and

b) the statutory requirements are met, despite any contrary provision of the company’s
memorandum

In addition to complying with any requirements or conditions contained in the companies MOI’s, the
board may also only authorise financial assistance if –

a) the particular provision of financial assistance is in accordance with either –

1. an employee share scheme that complies with section 97; or

2. a special resolution of shareholders adopted within the previous two years approving
assistance for the specific recipient, or a category potential recipients in which the specific
recipient falls; and

b) the board is satisfied that –

1. immediately after providing the financial assistance, the company would satisfy the
solvency and liquidity test

2. the terms under which the financial assistance is proposed to be given are fair and
reasonable to the company
A resolution by the board or agreement in contravention of –

a) section 44; or
b) any provision, condition or requirement contained in the MOI,
IS VOID

Disposal of greater part of assets or undertaking of the company

The disposal of all or the greater part of its assets or undertaking by a company constitutes a
fundamental transaction

In terms of section 112(2) and (3), a company may only dispose of all or the greater part of its assets
or undertaking if the following requirements are met –

a) the specific disposal must be approved by special resolution of the shareholders of the
disposing company
b) the notice of the shareholders meetings to consider the resolution –
i. must be delivered within the prescribed time and in the prescribed manner to each
shareholder of the company, subject to section 62
ii. must be accompanied by a written summary of the precise terms of the transaction or
series of transactions, to be considered at the meeting
c) the company must have satisfied all the other requirements set out in section 115(2)

The above requirements do not apply to the disposal of or sale of all or the greater part of the assets
or undertaking of a company where the transaction is –

a) as a result of a business rescue plan;

b) between a holding company and its wholly-owned subsidiary;
c) between two or more wholly-owned subsidiaries of the same holding company; or
d) between a wholly-owned subsidiary on the one hand, and its holding company and one or
more wholly owned subsidiaries of that holding company, on the other hand

Practice regarding business rescue proceedings

There are two methods whereby business rescue proceedings may be initiated against a company.
They are -

i) Commencement by resolution of the board

In terms of section 129(1) of the Companies Act, the board of directors of a company may
resolve that the company begin voluntary business rescue proceedings and place the
company under supervision if the board has reasonable grounds to believe that –
a) the company is financially distressed; and
b) there appears to be a reasonable prospect of rescuing the company

The boards resolution has no force or effect until it has been filled with the Commissioner

ii) Commencemement by court order

If a company has not adopted a resolution to commence business rescue proceedings,
an affected person may apply to court for an order to commence business rescue
proceedings and place the company under supervision.
Notice must be given to affected persons who may oppose the application
The court will make an order placing the company under supervision and commencing
business rescue proceedings if it is satisfied that –
a) the company is financially distressed; and
b) there appears to be a reasonable prospect of rescuing the company
 Chapter 10: Insolvency Act
Prohibition of a sale in execution

After the publication of a notice of surrender in the Government Gazette it shall not be lawful to sell
any property of the estate in question, which has been attached under writ of execution or other
process, unless the person charged with the execution of the writ or other process could not have
known of the publication

The sheriff shall be obliged to revoke the sale in execution if the judgement debtor is declared
insolvent

Effect of sequestration on the insolvents property

The effect of the sequestration of the estate of an insolvent shall be –

a) to divest the insolvent of his estate and to vest it in the Master until a trustee has been
appointed, and, upon the appointment of a trustee, vest in the trustee;
b) to stay, until the appointment of a trustee, any civil proceedings instituted by or against the
insolvent;
c) to stay any execution, unless the court otherwise directs
d) to empower the insolvent, if in prison for debt, to apply to the court for his release

Property acquired before or during the sequestration of a persons estate falls within the insolvent
estate and vests in the Master of the High Court and thereafter in the trustee on his/her appointment,
subject to section 25(1)

In Fourie NO v Fourie, the Supreme Court of Appeal ruled that upon publication of the notice of
sequestration of the estate, which estate includes property under attachment or the proceeds thereof
which are in the hands of the sheriff, such property/proceeds first vest in the Master and thereafter the
trustees upon their appointment. It includes immovable property sold in execution but not yet
transferred at the date of sequestration. The Deeds Registry will neglect its duty if it does not stop the
transfer.

Effect of sequestration on the property of the spouse of the insolvent

If the separate estate of one of two spouses is sequestrated, the property of the spouse whose estate
has not been sequestrated shall vest in the Master until a trustee has been appointed. Upon the
appointment of a trustee, shall vest in the trustee who shall deal with such property as if it were
property of the sequestrated estate.

The trustee shall, not except with leave of the court, realise property of the solvent until six weeks
have lapsed after he sent has sent a notice of his intention to do so to that spouse. Such notice must
also be published in the Government Gazette and in a newspaper

The solvent spouse may by means of an affidavit and supporting documents apply to the trustee to
release any property vested in the trustee. If the trustee does not release the property, the solvent
spouse may, by means of a notice of motion, apply to the court for the release of such property

If property which is registered in the name of the solvent spouse has not at the time of registration of
the bond, been released by the trustee of the estate of the insolvent estate, the mortgagee cannot
acquire a secured or preferent right and, as far as the insolvents trustee is concerned, the registration
of the bond is a nullity.
Rights and obligations of the insolvent during sequestration

Transactions concluded with the trustees consent do not form part of the insolvent estate. Property
may be acquired by the insolvent after the sequestration of his estate and the appointment of a
trustee. An insolvent may purchase immovable property and even obtain a loan from a bank to
finance the transaction after his sequestration.

When the insolvent wishes to alienate such property, this will only be permitted by the Registrar of
Deeds if a consent by the trustee is lodged together with the transfer or the registration of a mortgage
bond. The consent must state that –

a) the trustee consents to the acquisition and the passing of the bond;
b) the property does not form part of the insolvent estate; and
c) the insolvent may deal with the property in future without his consent

The trustee must send a copy of this consent to the Master

Estate to remain vested in the trustee until composition or rehabilitation

The estate of an insolvent shall be re-invested with his estate –

a) on composition (that has been accepted by his creditors) in terms of section 119 of the
Insolvency Act; or
b) on his rehabilitation in terms of section 127 or 127A of the Insolvency Act; or
c) an insolvent is automatically rehabilitated after a period of 10 years since his sequestrated if
he has not been rehabilitated by the court before such time

Uncompleted acquisition of immovable property before sequestration

If an insolvent before the sequestration of his estate, entered into a contract for the acquisition of
immovable property which was not transferred to him, the trustee of his insolvent estate may enforce
or abandon the contract. If the trustee decides to enforce the contract, the property falls into the
estate of the insolvent and if he decides to abandon the contract, the property reverts back to the
seller.

The other party to the contract (the seller) may call upon the trustee by notice in writing to elect
whether he will enforce or abandon the contract. If the trustee has after the expiration of six weeks as
from the date of receipt of the notice, failed to make his election as aforesaid and inform the seller
thereof, the seller may apply to court by notice of motion for the cancellation of the contract and for an
order directing the trustee to restore to the seller the possession of any immovable property under the
control of the trustee, of which the trustee or the insolvent gained possession or control of by virtue of
the contract.

The other party (seller) shall also have a right to establish a non-preferent claim for compensation
against the insolvent estate for any loss suffered by him as a result of the non-fulfilment of the
contract

Sale of immovable property authorised by the Master

At any time before the second meeting of creditors, the trustee shall, if satisfied or of the opinion that
any immovable property of the estate must be sold, recommend to the Master in writing accordingly,
stating his reasons for such a recommendation

If the property is sold subject to a right of preference, the Master may not authorise the sale unless
the person who has the right of preference has given his consent or he has been gauranteed against
any loss
Certain mortgage bonds are invalid

A mortgage bond passed for the purpose of securing the payment of a debt not previously secured,
which was incurred more than two months prior to the lodging of the bond with the Registrar of Deeds
concerned for registration, shall not confer on the mortgagee (or creditor) any preference if the estate
of the mortgagor (debtor) is sequestrated within a period of six months after such lodging. This
SECTION 88 provision does not apply to a kustingsbrief.

The effect of the section is not to set aside the mortgage bond, but merely not to recognise any
preference conferred by the bond if the estate of the mortgagor is sequestrated within six months of
the lodging of the bond

Rehabilitation by effluxion of time

No act of registration is required in the Deeds Registry to indicate that the property has been re-
invested in the insolvent

Any insolvent not rehabilitated by the court within a period of ten years from the date of sequestration
of his estate, shall be deemed to be rehabilitation after the expiry of that period unless a court, upon
application by an interested person after notice to the insolvent, orders otherwise prior to the
expiration of the said ten year period

If a court issues an order upon application of an interested party, the Registrar shall transmit a copy of
the order to the Registrar of deeds

Upon receipt of the order by the Registrar of deeds he must enter a caveat against the transfer of all
immovable property and the cancellation or cession of any bond registered in the name of or
belonging to the insolvent

The caveat will remain in force until the date upon which the insolvent is rehabilitated

Company under liquidation

A property registered in the name of a company which company is placed in liquidation before it can
be sold by a sheriff by public auction, must be transferred by the liquidator of that company
 Chapter 11: Control over trust property
Definition

Trust document/ trust instrument is a written agreement, a testamentary writing or a court order
according to which a trust was created. In terms of section 2 of the Trust Property Control Act, a
document which represents a reduction to writing of an oral agreement by which a trust is created or
varied is deemed to be a trust instrument.

Establishment of a trust

The following formalities are presscribed by the Trust Property Control Act:

1. the trust must be created by means of a written agreement or testamentary writing

2. the trustee must lodge the trust instrument with the Master before he assumes control of the
trust property
3. the trustee must furnish the Master with an address for the service of notices upon him and
must inform him per registered post of his new address within 14 days of any change of
address
4. the trustee must furnish security for the due and faithful performance of his duties as trustee,
unless he has been exempted from doing so in the trust instrument
5. the trust must be registered with the Master who will allocate a number thereto. The Master
must issue letter of authority to and in favour of the trustees. The trustees may only act on
behalf of the trust once the letter of authority has been issued

Authorisation of trustee and security

Any person whose appointment as trustee comes into force after 31 March 1989, may only act in his
or her capacity as trustee if he or she has been authorised thereto in writing by the Master

The Master shall not grant authority to such trustee to act as such unless –

a) that trustee has furnished security to the Master for the due and faithful performance of his
duties as trustee; or
b) he has been exempted from the furnishing of security by a court order or by the Master or in
terms of a trust instrument
Actions by or on behalf of a trust that is still to be formed

A person may not enter into a purchase agreement on behalf of a trust that has not yet been
established. Any such action is void ab initio and it can not be ratified by the trustees, the Master or
even the court.

a) If the trustee, in his personal capacity before his appointment as trustee buys the property
and re-sells it to the trust , double transfer duty will be payable
b) If the trustee, in his personal capacity before his appointment as trustee signs the purchase
agreement as purchaser on behalf of a nominee, which nominee must be appointed within the
predetermined period, and the trustee then nominates the trust as purchaser after its
registration, double transfer duty is also payable

There are two possible ways overcoming this problem, namely:

1. Stipulatio alteri
A person can sign the purchase agreement on behalf of a third party namely, the trust. After
the trust has been formed and the trustees appointed, the trust can accept the benefit.

2. Tripartite agreements
A person can sign the purchase agreement in his capacity as purchaser and compel the seller
to enter into a tripartite agreement later on in which the sale between that person and the
seller is cancelled and the seller sells the property to a trust (subject to the same terms and
conditions) once the trust has been formed
 Chapter 12: Financial Intelligence Centre Act (FICA)
Identification of clients and others persons

An attorney may not establish a business relationship or conclude a single transaction with a client
unless such attorney has –

a) established and verified the identity of the client;

b) if the client is acting as an agent on behalf of another person, establish and verify –
i. the identity of the other person; and
ii. the clients authority to establish the business relationship or to conclude a single
transaction on behalf of that other person; and
c) if another person is acting as an agent on behalf of the client, to establish and verify –
i. the identity of the other person; and
ii. the other persons authority to act on behalf of the client

Duty to keep records

Records to be kept are:

a) the identity of the client and any agent acting on behalf of the client;
b) the manner in which the identity was established;
c) the nature of the business relationship or transaction;
d) in the case of a transaction –
i. the amount involved; and
ii. the parties to that transaction
e) all accounts that are involved in –
i. transactions concluded in the course of that business relationship; and
ii. that single transaction
f) all documents or copies of documents obtained by the attorney in order to verify any other
persons identity

Period for which the records must be kept –

An attorney must keep the records mentioned above for a period of at least five years from –

a) the date on which the business relationship with the client has been terminated, in the case of
a business relationship; and
b) the date on which the transaction has been concluded, in the case of a transaction; and
c) the date on which a report was submitted to the FICA Centre in the case of a transaction or
activity (suspicious or unusual transaction) that gave rise to a report to the Centre
 Chapter 13: Consumer Protection Act
The Act requires the agreements to be in understandable language and it is prohibited to contract out
the protection afforded to consumers by the Act. In addition, it is prohibited to contract on unfair terms
or in an unfair manner.

Plain and understandable language

The CPA requires that consumer agreements must be in plain and understand language, so that an
ordinary customer with average literacy skills and minimal experience as a customer of the relevant
goods can understand the content, signifcance and import of the provisions.

Accordding to section 22(2), the following factors should be taken into account when an effort is made
to make a document ‘plain language’ compliant:

1. the class of person for whom the document is intended;

2. the context, comprehensiveness and consistency of the document;
3. the manner, form and style in which the representation/document is done;
4. the sentence structure and vocabulary used; and
5. the use of aids such as illustrations, examples and headings

Compliance with section 22 is one of the factors (amongst others) that a court is obliged to take into
account when assessing a complaint that an agreement was entered into in an unfair manner or
unfair terms

Unfair, unreasonable or unjust contract terms

The CPA provides in various ways for control of the content of agreements.

Unreasonable terms

Section 48(1) creates a general unfairness standard and provides that –

A supplier may not –

a) offer to supply, supply, or enter into an agreement to supply, any goods –

i. at a price that is unfair, unreasonable or unjust; or
ii. on terms that are unfair, unreasonable or unjust;
b) market (promote or supply) any goods, or negotiate, enter into or administer a transaction or
an agreement for the supply of any, in a manner that is unfair, unreasonable or unjust; or
c) require a consumer, or other person to whom any goods are supplied at the discretion of the
customer –
i. to waive any rights;
ii. assume any obligation; or
iii. waive any liability of the supplier
on terms that are unfair, unreasonable or unjust, or impose any such terms as a
condition of entering into a transaction

According to section 48(2) an agreement, terms, condition or notice shall be unfair, unreasonable or
unjust if –

1. it is excessively one-sided and not in favour of the consumer;

2. it is so adverse to the consumer as to be inequitable;
3. the consumer transacted to his detriment in relying on a false or misleading statement; or
4. the notice requirements of section 49 were not complied with
 Chapter 14: National Credit Act
Exclusions

The following agreements are (amongst others) excluded from the scope of the NCA:

1. credit agreements where the consumer is a juristic person whose asset value or annual
turnover together with the combined asset value or turnover of all related juristic persons
equals or exceeds R1 million at the time the agreement is entered into;
2. credit agreements where the consumer is the state or an organ of state
3. a large agreement described in section 9(4), where the consumer is a juristic person with an
asset value or annual turnover below the R1 million threshold;
4. credit agreements in terms of which the credit provider is the Reserve Bank of South Africa;
5. credit agreements in respect of which the credit provider is located outside the Republic,
approved by the Minister on application by the consumer in the prescribed manner and form;
6. credit agreements that are not at arm’s length

Regulation 32 provides that the following common law rights or remedies that are available to a
consumer may not be waived in a credit agreement –

 exceptio errore calculi;

 exceptio non numerate pecuniae;
 exceptio non causa debiti

The waiver of the legal exceptions will not be binding on the debtor and will be regarded as an
unlawfull provision
 Chapter 15: Immigration Act
Definitions

Foreigner is a person who is not a citizen in terms of the South African Citizenship Act

Illegal foreigner is a foreigner who is in the Republic in contravention of the Immigration Act

Chapter 16: Births and Deaths Registration Act

Assumption of another surname

Section 26 of the Births and Deaths Registration Act

Subject to the provisions of this Act or any other law, no person shall assume or describe himself or
herself by or pass under any surname other than that under which he or she has been described as in
the population register, unless the Director-General has authorised him or her to assume that other
surname. The subsection shall not apply when –

a) a woman after her marriage assumes the surname of the man with whom she concluded such
marriage or after having assumed his surname, reassumes a surname which she bore at any
prior time
b) a married or divorced woman or widower who reassumes a surname which she bore at any
prior time; and
c) a woman, whether married or divorced, or widower who adds to the surname which she bore
at any prior time, any surname which she assumed after the marriage.
 Chapter 17: Close Corporations Act
Requirements for membership

As a general rule, only natural persons may be members of a corporation. No juristic person or
trustee of an inter vivos trust in that capacity, shall directly or indirectly hold a members interest in a
corporation

There is, however, an exception to this general rule where a natural or juristic person in the capacity
of a trustee of an inter vivos trust may be a member of a corporation

Financial assistance by the corporation in respect of a members interest

A Close Corporation may give financial assistance (whether directly or otherwise and whether by
means of a loan, guarantee, the provision of security or otherwise) for the purpose of, or in connection
with, any acquisition of a members interest in that corporation by an person, only –

a) with the previously obtained written consent of every member of the corporation for the
specific assistance;
b) if, after such assistance is given, the corporations assets, fairly valued, exceed all its liablities;
c) if the corporation is able to pay its debts as they become due in the ordinary course of its
business; and
d) if such assistance will in the particular circumstances not in fact render the corporation unable
to pay its debts as they become due in the ordinary course of its business

Acquisition or disposal of immovable property

Unless stipulated otherwise in the memorandum of assosiation, every member of the corporation shall
be entitled to participate in the carrying on of the business of the corporation and has equal rights in
regard to the management of the corporation and in regard to the power to represent the corporation
in the carrying on of its business. Decisions shall be taken by majority vote at a meeting of the
members of the corporation

Unless stipulated otherwise in the memorandum of assosiation, consent in writing shall be required by
all members holding a members interest of 75% or more in the corporation, in respect of the following-

a) a change in the principal business carried on by the corporation;

b) a disposal of the whole, or substantially the whole, undertaking of the corporation;
c) a disposal of all, or the greater portion of, the assets of the corporation; and
d) any acquisition or disposal of immovable property of the corporation

Loan to members

A Close Corporation may only with the –

 express;
 written; and
 prior obtained consent of all its members

grant a loan, directly or indirectly, to –

 any of its members; or

 any other corporation in which one or more of its members together hold more than a 50%
interest in; or
 any company or other juristic person controlled by one or more members of the corporation
Provision for security

A Close Corporation may only with the –

 express;
 written; and
 prior obtained consent of all its members
provide security, directly or indirectly, to another person (i.e. stand surety for such person)
for the fulfilment of obligations of any of its members (or any other corporation or company
or legal person, as mentioned above)

A loan or the provision of security by the Close Corporation in breach of these requirements is invalid

Note that previously obtained consent is required by all members.

Thus ratification and later consent shall not be sufficient to make the loan valid.
 Chapter 18: Capital Gains Tax
What is Capital Gains Tax?

Capital Gains Tax “CGT” is a tax imposed on the capital gains for a tax year of assessment in respect
of an asset disposed of, included in the tax payers taxable income for the year of assessment which is
then in question

CGT only affects those who are resident or partially resident in South Africa.

Foreign persons fall into the CGT net where they have immovable property in South Africa, including
interests or rights in immovable property

Capital gains is equal to the difference between the proceeds (in other words the amount for which
the property has been bought for) and the base costs (the amount that has been paid for the
purchase of the property)

What is the rate of Capital Gains Tax?

In the case of a natural persons or special trust the rate will be 40% of the net capital gains for that
year of assessment

In any other case, 80% of the net capital gain for that year of assessment

Annual exclusions

The annual exclusion of a natural person or special trust is R400,000 per year of assessment and not
for each capital gain transaction

Where the person dies during the year of assessment, the annual exclusion for the year will be
R300,000

Close Corporations, companies and trusts do not qualify for any exclusions

When is Capital Gains Tax payable?

The CGT will be added to the persons income tax during the financial year in which the gain took
place

Definition of primary residence?

Primary residence means a residence –

a) in which a natural person or special trust holds an interest; and

b) which that person or a beneficiary of that trust or a spouse of that person or beneficiary –
i. ordinarily resides in or resided in as his or her main residence; and
ii. uses or used mainly for domestic purposes

This means that a company, Close Corporation or trust (other than a special trust) owning a property
used as a primary residence by a shareholder, member or beneficiary would not qualify for a
contemplated exclusion of a capital gains made upon disposal of such primary residence for CGT
purposes
 Chapter 19: Share Block Control Act
Restrictions on the operation of a share block scheme

No share block scheme may be operated in respect of:

a) agricultural land as defined in section 1 of the Subdivision of Agricultural Land Act; and
b) other immovable property on which a building is erected in conflict with an approved or a
proposed town planning scheme

Main object of share block company and use agreement

The main object and business of a share block company must be to operate a share block scheme in
respect of immovable property owned or leased by it

The articles/use agreement of a share block company is an agreement between the memebers of a
share block company and the Company, that a member shall be entitled to the use of a specified part
of the immovable property owned or leased by the Company which operates the share block scheme,
on terms and conditions contained in the use agreement

Provisions as to the name of a share block company

The expression “share block” should be included or should form part of the name of a share block
company. No share block may be operated unless these expressions form part of its name

Further, a share block company may not carry on business under any other name than the name
under which it is offically incorporated or registered

Loan obligation of a share block company

A share block company may not increase its loan obligation or encumber any of its assets (by, for
example, registering a mortgage bond against the immovable property) unless the increase or
encumberance has been approved by a resolution of at least 75%, in number, of the members of the
company, excluding the share developer, having the right to vote at the relevant meeting and holding
an aggregate of at least 75% of the total number of votes of all those members (excluding the votes
held by the share block developer)
 Chapter 20: Formalities in respect of Lease Land Act
Formalities in respect of leases of land

General rule

No lease of land shall be invalid merely by reason of the fact that such lease is not in writing. This rule
is, however, subject to the following exception:

Exception

No long lease of land entered into after 1 January 1970 shall be valid against a creditor or successor
under onerous title of the lessor for a period longer than 10 years after having been entered into,
unless –

a) it has been registered against the title deeds of the leased land; or
b) the aforesaid creditor knew of the lease at the time of giving of the credit by which he
obtained a real right in respect thereof; or
c) the aforesaid successor in title knew of the lease at the time of the entry into the transaction
by which he obtained the leased land or a portion thereof

A long lease is described in section 1(2) as a lease of land –

a) entered into for a period of not less than 10 years; or

b) entered into for the natural life of the lessee or any other person mentioned in the lease; or
c) which is renewable from time to time at the will of the lessee indefinitely or for periods which
together with the first period of the lease amount in all to not less than 10 years.
 Chapter 21: Donations Tax
Levy of Donations Tax

Subject to the exceptions listed in section 56, there shall be a tax (herein after referred to as
donations tax) paid for the benefit of the Receiver of Revenue, on the value of any property disposed
of under any donation by any resident.

Exemptions

1. Donations tax shall not be payable in respect of the value of any property which is disposed of
under a donation –
a) to or for the benefit of the spouse of the donor under a duly registered ante-nuptial or post
nuptial contract or under a notarial contract;
b) to or for the benefit of the spouse of the donor who is not seperated from him under a
judicial order or notarial deed of seperation;
c) as a donatio mortis causa;
d) in terms of which the donee will not obtain any benefit thereunder until the death of the
donor;
e) which is cancelled within six months from the date upon which it took effect;
f) made by or to the or for the benefit of any traditional council, traditional community or any
tribe;
g) if such property consists of any right in property situated outside the Republic;
h) any sphere of government;
i) as a voluntary award;
j) if such property is disposed of under and in pursuance of a trust;

2. Donations tax shall not be payable in respect of –

a) so much of the sum of the value of all casual gifts made by a donor other than natural
person during any year of assessment as does not exceed R10,000;
b) so much of the sum of the value of all property disposed of under donations by a donor
who is a natural person as does not during any year of assessment exceed R100,000
c) so much of any bona fide contribution made by the donor towards the maintenance of any
person as the Commissioner considers to be reasonable

Persons liable for donations tax

The person liable for donations tax shall be donator: Provided that if the donor fails to pay the tax
within the prescribed period, the donor and the donee shall be jointly and severally liable for the tax

Payment and assessment of the tax

Donations tax shall be paid to the Commissioner at the end of the month during which the donation
takes effect or such longer period as the Commissioner may allow

Rate of donation tax

The rate of the donations tax chargeable under section 54 in respect of the value of any property
disposed of under a donation shall be 20% of such value. The value of donations exceeding R30
million in a year of assessment, is taxed at a rate of 25%
 Chapter 22: Limitation on the duration of fedeicommissa
Limit on the duration of a fedeicommissum

Any fedeicommissum created after 1 October 1965 under a will or other instrument in respect of
immovable property in favour of more than two successive fedeicommissaries shall, notwithstanding
the terms of such a will or instrument, be limited to two successive fedeicommissaries

If any fedeicommissum was created before 1 October 1965 under a will or other instrument in respect
of immovable property in favour of two or more successive fedeicommissaries, such
fedeicommissum-

a) will be limited to two successive fedeicommissaries, if at 1 October 1965 no fedeicommissary

has taken place; or
b) will be limited to one further fedeicommissary if at 1 October 1965 one fedeicommissary
substitution has already taken place; or
c) will be terminated at 1 October 1965 if at 1 October 1965 two or more fedeicommissary
substitutions have already taken place

Chapter 23: Housing Development Schemes for Retired Persons

Act
Defintions

Retired persons means a person who is 50 years of age or older

Restriction on the receipt of consideration

No developer may by virtue of a contract receive any consideration or any part thereof, unless –

a) an architect or a quantity surveyor has issued a certificate that the housing development
concerned –
 has been substantially erected in accordnace with the offically approved building
plans and town-planning scheme and applicable local authority by-laws; and
 is sufficiently completed for the purposes of utilization of the housing interest
concerned;
b) a copy of that certificate and a copy of the contract have been furnished to the purchaser
concerned
c) in the case where a housing interest includes the right of occupation, an attorney has issued a
certificate that the title deeds of the land to which the right of occupation relates, has been
endorsed as contemplated in section 4C and a copy of that certificate has been furnished to
the purchaser.

Chapter 24: Property Time-Sharing Control Act

The juristic person in a time-share development

The time-share equivalent of the body corporate in a sectional title development is –

a) a body corporate; where the time-share is a sectional title development; and

b) a share block company; where the time-share is a share block development
 Chapter 25: The Children’s Act
Parental rights and responsibilities

Section 18(1)

A person may have either full or specific parental responsibilities and rights in respect of a child

Section 18(2)

The parental rights and responsibilities that a person may have, in respect of a child, may include –

a) to care for the child;

b) to maintain contact with the child;
c) to act as guardian of the child; and
d) to contribute to the maintanance of the child

Section 18(3)

Subject to subsections (4) and (5), a parent or other person who acts as guardian of a child must –

a) administer and safeguard the childs property and property rights;

b) assist or represent the child in administrative, contractual and other legal matters; or
c) give or refuse any consent required by law in respect of the child, including –
i. consent to the childs marriage;
ii. consent to the childs adoption;
iii. consent to the childs departure or removal from the Repubic;
iv. consent to the childs application for a passport; and
v. consent to the alienation or encumbrance of any immovable property of the child

Section 18(4)

Whenever more than one person has guardianship of a child, each one of them is competent, subject
to subsection (5), any law or any order of a competent court to the contrary, to exercise independently
and without the consent of the other.

Section 18(5)

Unless a competent court orders otherwise, the consent of all the parents that have guardianship of a
child is necessary in respect of matters set out in subsection (3)(c)
 Chapter 26: Building restrictions next to roads
(No previous questions asked on the Advertising on Roads and Ribbon Development Act)

Chapter 27: The Estate Agency Affairs Act

(No previous questions asked on the Estate Agency Affairs Act)

Chapter 28: Land Survey

(No previous questions asked on the Land Survey Act)

Chapter 29: Spartial Planning and Land Use Management Act

(No previous questions asked on the Spartial Planning and Land Use Management Act)

Chapter 30: Community Schemes

(No previous questions asked on the Community Schemes Ombud Service Act)
 Chapter 31: Housing Consumers Protection Measures Act
Definition

Business of a home builder means –

a) to construct or to undertake to construct a home or to cause a home to be constructed for any

reason;
b) to construct a home for purposes of sale, leasing, renting out the home;
c) to sell or to otherwise dispose of a home contemplated in paragraph (a) or (b) as a principal;
d) to conduct any other activitiy that may be prescribed by the Minister for the purpose of the
definition,

Application of the Act

The Act applies to any home builder

The Act does, however, not apply to a person who uses his or her own labour to build a home for his
or her own occupation if the home is part of an approved PHP Project

Registration of home builders

No person shall –

a) carry on the business of a home builder; or

b) receive any consideration in terms of an agreement with a housing consumer in respect of the
sale or construction of a home,
unless that person is a registered home builder

Not only the home builder that does the actual construction work must be registered but also the
home builder that enters into an agreement with other home builders to construct homes

If a home builder is thus not registered and carries on the business of a home builder or receives
consideration, he shall be guilty of an offence and punishable with a fine and/or imprisonment
Conclusion of agreements and implied terms

A home builder shall ensure that the agreement concluded between the home builder and the housing
consumer for the construction or sale of a home by that home builder complies with the following
requirements –

1. The agreement must

a) be in writing and signed by both parties;
b) set out the material terms, including the financial obligations of the housing consumer
2. Attached to the written agreement as annexures must be –
a) the specifications pertaining to materials to be used in the construction of the home; and
b) the plans reflecting the dimensions and measurements of the home, as approved by the
local government body
3. provision may be made in the agreement for amendments to the plans as required by the
local government body

The agreement between a home builder and a housing consumer for the construction or sale of a
home shall be deemed to include warranties enforceable by the housing consumer against the home
builder in any court, that –

a) the home, depending on whether it has been constructed or is to be constructed –

i. is or shall be constructed in workmanlike manner;
ii. is or shall be fit for habitation; and
iii. is or shall be constructed in accordance with –
aa) the NHBRC Technical Requirements to the extent applicable to the home at the
date of enrolment of the home with the Council; and
bb) the terms, plans and specifications of the agreement concluded with the housing
consumer as contemplated in subsection (1);
b) the home builder shall –
i. subject to the limitations and exclusions that may have be prescribed by the Minister,
at the cost of the home builder and upon demand by the housing consumer, rectify
major structural defects in the home caused by the non-compliance with the NHBRC
Technical Requirements and occuring within a period which shall be set out in the
agreement and which shall be not less than 5 years as from the occupation date;
ii. rectify non-compliance with or deviation from the terms, plans and specification of the
agreement or any deficiency related to design, workmanship or material within a
period which shall be set out in the agreement and which shall not be less than three
months as from the occupation date; and
iii. repair roof leaks attributable to workmanship, design or materials occuring within a
period which shall be set out in the agreement and which shall not be less than 12
months as from the occupation date
Obligation of mortgagees and conveyancers

No financial institution shall lend to a housing consumer against the security of a mortgage bond
registered in respect of a home, with a view to enabling the housing consumer to purchase the home
from a home builder, unless that institution is satisfied that –

i) the home builder is registered in terms of the Act;

ii) the home is or shall be enrolled with the Council; and
iii) the prescribed fees have been or shall be paid

A conveyancer attending to the registration of a mortgage bond in favour of a bank or financial

institution must make sure that –

i. the home builder is registered in terms of the Act;

ii. the home is or shall be enrolled with the Council; and
iii. the prescribed fees have been or shall be paid