Property Transactions and the Deeds Registry Act, South Africa.

By S Mnisi 010 592 2321
According to the five-level “risk-adjusted strategy” the country will slowly ease lockdown restrictions as of 1 May. Level four means that “some activity can be allowed to resume subject to extreme precautions required to limit community transmission and outbreaks”. 1
 
Level 4 now adds Deeds operations and the Deeds Office is expected to open as of 1 May, which falls under essential government and administration services. 2
 
The transfer of property is when the ownership of a property is moved from one person to another person, upon sale of the property or the death of the owner of the property and leaves the property to another person. 3
 
Ownership is a right that cannot be seen, nonetheless the “evidence of ownership can be found in something called a deed of transfer” and this deed must be registered at the deeds office for it to be valid. The sale of property agreement must be in writing and signed by the parties, an oral sale of property agreement is not binding.
 
Registration system: The Deeds Registries Act governs all acts of conveyance of land in the Republic including the registration of transfers thereof, the registration of mortgages there over and the registration of servitudes and other transactions applying thereto. 4
 
The transfer of immovable property from one owner to another is called conveyancing also known as a property transfer. The appointments of attorneys are to handle “the existing bond cancellation, the new bond registration and the property transfer itself” occurs after the sale agreement has been signed and the bond approved. 5
 
Until the Electronic Deeds Registration Systems Act becomes fully operational deeds are registered manually. The proposed e-DRS will enter the “usual conveyancing process from the moment the documents are submitted to the deeds office for examination, up to registration and then recording in their system and by way of microfilming.” 6
 
The Act will allow deeds to be electronically executed or registered, and such deeds “shall be deemed to have been executed or registered in the presence of the Registrar by the owner or by a conveyancer authorised by power of attorney to act on behalf of the owner.” 7
 
In terms of section 3 of the Electronic Deeds Registration Act 19 of 2019 a deed or document generated, registered and executed electronically, scanned or otherwise incorporated in the e-DRS by electronic means will for all purposes be deemed the only original and valid record. 8
 
In Legator McKenna Inc. and Another v Shea and Others 2010 (1) SA 35 (SCA) the Applicant was appointed as the curator bonis of the Respondent, after the Respondent was severely injured in a car accident. 9
 
The Applicant after his appointment considered an offer to purchase the respondent’s property, but did so before being issued with letters of curatorship. The Applicant inserted the words “subject to the consent of the Master” into the offer to purchase and accepted, thereafter the property was then transferred from the Respondent’s name into the purchaser’s name. The Respondent recovered from her injuries and was declared capable of managing her own affairs, she therefore wished to re-claim her property, on the basis that the sale which occurred was invalid due to it being concluded before the issuing of the letters of curatorship in terms of Section 72(1) (d) of the Administration of Estates Act 66 of 1965. 10
 
The Supreme Court of Appeal considered the abstract and causal theories of transfer, and concluded that the “abstract theory is applicable to both movable and immovable property, and that there are two requirements for ownership to be validly transferred”, namely: 11
 
a) There must be delivery;
 
b) There must be a real agreement.
 
The Supreme Court of Appeal held that;

“the applicant had not entered into a valid agreement with the purchasers as he made the sale of the property subject to a suspensive condition that the sale was subject to the master’s approval, the applicant failed to make a condition of sale, and further that the purchasers did not expressly accept such offer”. The court further held that where both parties to an invalid agreement have performed in full, neither party can recover performance where the lawful purpose has been achieved. Therefore, the “Respondent could not claim for transfer of the property, as all that the parties intended, to the sale of the property, had been achieved. The transfer to the purchasers was regarded as valid, and the Applicant’s appeal was upheld.” 12

In Amardian and Others v Registrar of Deeds and Others [2018] ZACC, the court held that prior to the agreement being recorded with the Registrar of Deeds, no instalments will be due and payable to the seller. 13

“The correct approach to follow is that a debt becomes due and payable automatically upon the conclusion of the agreement, however where there is a statutory requirement that an agreement must be recorded, payments become due and payable upon the agreement being recorded.” 14

The purchaser is not liable to pay for a debt which he or she was not aware was due and payable. Further, in the event that the purchaser makes irregular payments in terms of the agreement, the seller will only be entitled to exercise the remedy of cancellation once the agreement has been recorded with the Registrar of Deeds.
 
The Constitutional Court stated the following principles regarding instalment agreements 15: a) The seller has an obligation to record the agreement with the Registrar of Deeds within the period stipulated by the Act.
 
b) The instalments only become due and payable upon the purchaser gaining knowledge that the agreement has been recorded with the Registrar of Deeds.
 
c) If the agreement has been recorded late by the seller, the seller cannot retroactively claim payment of the instalments.
 
It is unlawful for the seller to exercise the remedy of cancellation when the purchaser has fallen into arrears under an agreement which was not recorded with the Registrar of Deeds.
 
In Quartermark Investments (Ply) Ltd v Mkhwnanazi and another 2014 SA 96 (SCA) the court held “that ownership will not pass despite registration of transfer, where the underlying transaction was tainted by fraud, or where the essential requirements of the real agreement viz and intention on the part of the transferor to transfer ownership of the property, and on the part of the transferee to become the owner thereof, were not met.” 16

Foot notes

  1. Property24 “Deeds office to operate on Alert Level 4, as SA eases out of hard lockdown” 2020.

2. Property24 “Deeds office to operate on Alert Level 4, as SA eases out of hard lockdown” 2020. 3. Van Hoogstraten F “Real Estate Transactions in the Republic of South Africa”. 4. Van Hoogstraten F “Real Estate Transactions in the Republic of South Africa”.5. Writer S “Here’s how the transfer of property process works in South Africa” 2018.6. Botha M “Electronic Deeds Registration Systems Act” 2020. 7. Botha M “Electronic Deeds Registration Systems Act” 2020. 8. Section 3 of the Electronic Deeds Registration Act. 9. Legator McKenna Inc. and Another v Shea and Others 2010 (1) SA 35 (SCA).10. Legator McKenna Inc. and Another v Shea and Others 2010 (1) SA 35 (SCA). 11. Legator McKenna Inc. and Another v Shea and Others 2010 (1) SA 35 (SCA). 12. Legator McKenna Inc. and Another v Shea and Others 2010 (1) SA 35 (SCA). 13. Amardian and Others v Registrar of Deeds and Others [2018] ZACC. 14. Amardian and Others v Registrar of Deeds and Others [2018] ZACC.15. Amardian and Others v Registrar of Deeds and Others [2018] ZACC. 16. Quartermark Investments (Ply) Ltd v Mkhwnanazi and another 2014 SA 96 (SCA).

Disclaimer: this article does not constitute, nor should it be construed as, the giving of legal advice and it is recommended that one of our attorneys are approached to obtain separate and proper advice: 010 592 2321

 

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