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Conference resolutions

31 August 2006

Some of the resolutions of the Registrars' Conference of 2005 are discussed in this article, and the attention of readers is drawn to a Chief Registrar's Circular that deals with the coming-into-effect of Registrars' Conference resolutions. Each resolution will be quoted in full and then followed by a discussion. The views expressed herein are personal and should not whatsoever be ascribed to the Office of the Chief Registrar of Deeds.

2/2005 (RCR 8/1951) - Section 57 of Act No. 37 of 1947 - Substitution of surviving spouse
Does section 57 of Act No. 47 of 1937 apply where spouses were married in community of property?

Resolution:
A surviving spouse may be substituted under section 57 of Act No. 47 of 1937 as debtor when he/she acquires property from the estate of his/her deceased spouse, whether he/she was married out of community, or in respect of marriages in community of property where the share of the deceased spouse is transferred by a formal deed of transfer. (RCR 8/1951 has been withdrawn).

This resolution came about as a result of a practice of combining a section 45 of the Deeds Registries Act (DRA) application with a section 57 (DRA) application. Its effect is, therefore, to put an end to such practice. That a section 57 (DRA) application cannot, and should not, be made in conjunction with a section 45 (DRA) application can be gleaned from subsection 2(a) of section 57 (DRA). The said subsection reads as follows:

"In registering the transfer in terms of subsection (1)
the registrar shall-
(a) endorse upon the deed of transfer that the land
has been transferred subject to the bond;"

15/2005 (RCR22/1987 and RCR21/2004) - Divorce Orders
Where the status of parties married out of community of property or whose marriage is governed by the laws of a foreign country have changed due to divorce, the divorce court order must be lodged to determine whether the rights of third parties are being affected.
However, if the spouse has died, must the death notice/certificate be lodged to prove that the spouse has died and that divorce did not occur?

Resolution:
No. A certificate from the conveyancer will suffice.

This resolution is an amplification of RCR 21/2004, and thus the two resolutions must be read in conjunction with one another. Thus, if a party who was married out of community of property or whose marriage was governed by the laws of a foreign country is later described as unmarried, an examiner would not know whether the relevant marriage was dissolved by divorce or by the death of the former spouse. A note along the lines of the note below would thus be appropriate in this instance:

"If the relevant marriage was dissolved by death, then certify accordingly; if, however, it was dissolved by divorce, then lodge the relevant Court Order and consider the matter as having been rejected. In this regard see RCR 21/ 2004 read with RCR 15/2005"

16/2005 Sections 3(1)(v) and 93
Where an owner of immovable property undergoes a sex change and changes his/her names subsequent thereto and a new identity number is afforded such owner, how must the new identity number be recorded against the title deeds of the immovable property concerned?

Resolution:
Section 93(1) of Act No. 47 of 1937 cannot be invoked. The provisions of section 3(1)(v) of Act No. 47 of 1937 must be invoked and documentary evidence as to the new identity must be lodged together with the application.

This resolution has been included solely for the purposes of commending Conference for being proactive and being receptive to the new practices that have taken root in the country.

19/2005 Section 57
Is the consent of the co-mortgagor necessary with substitution in terms of section 57 of Act No. 47 of 1937?

Resolution:
Yes, the consent is necessary and all the relevant legal exceptions must be renounced.

Section 57 (DRA) has consistently been applied by the deeds registries in circumstances where a bond has been passed by more than one mortgagor. In this regard see RCR 7/1994. RCR19/2005 moves from the premise that the said application is correct. The correctness of this application is, however, questionable. If the legislature intended that the section should so apply, it would have expressly dealt with the position of co-mortgagors. There is nothing in the section that indicates that it is also applicable in circumstances where a bond has been passed by more than one mortgagor. It is submitted that where a co-mortgagor transfers her/his share in the relevant property, the appropriate procedure is to release the said co-mortgagor as contemplated in section 55 (DRA) and not to invoke the provisions of section 57 (DRA) as postulated in RCR 7/1994.

The argument here is: what is the value of substituting a person who is already a mortgagor as a mortgagor? Furthermore, in terms of RCR 7/1994, section 57 can be applied in instances where a person has transferred a share to another. The question then is:
can this really be referred to as substitution of a debtor or an addition of a co-debtor? My understanding of the word 'substitute' is that, in substitution, one takes the place of the other and the other disappears from the picture altogether.

It must also be noted that section 3(1)(g) (DRA) does make a distinction between a joint debtor and a debtor. In so far as a joint debtor is concerned, it deals with the aspect of release and in so far as a debtor is concerned, it deals with the aspect of substitution. It is important to note that this section makes no mention of the substitution of a joint debtor. It is submitted that if the legislature intended that a joint debtor should be substituted, then it would have expressly stated so in section 3(1)(g).

Those who, however, take the view that the legislature intended section 57 (DRA) to find application in the instances referred to above are requested to prove the same.

29/2005 Divesting in deceased estates
Must the deceased estate or the executor of such estate be divested in the divesting clause of estate transfers?

Resolution:
The deceased estate must be divested in terms of regulation 50(2)(c) of Act No. 47 of 1937.

The correctness of the use of regulation 50(2)(c) of Act No. 47 of 1937 as a justification for the resolution is questionable. The said regulation deals with joint estates in particular and not estates in general. Form E (DRA), however, provides a basis that covers all estates. In terms of this form, the transferor must be divested. The question that arises is that of who the transferor is in an estate? In view of the fact that an executor is, in terms of the decision in Grobbelaar vs Grobbelaar 1959 (4) SA 719 (A) at 724, only "a representative", it is clear that an executor can never be the transferor. It is therefore clear that the estate will always be the transferor and it is the one that must be divested in its capacity as transferor as postulated in Form E.

33/2005 Long leases
A long lease was duly executed by a lessor and lessee and attested by a notary. Before registration of the lease took place, ownership of the property changed. Can the lease still be registered against the title deed of the new owner?

Resolution:
Yes it can be registered. Section 77 of Act No. 47 of 1937 stipulates that any lease intended or required to be registered in a deeds registry shall be executed by the lessor and the lessee and shall be attested by a Notary Public.

The section refers to "lessor", not "owner". The maxim "Huur gaat voor koop" applies. It will, however, be necessary to lodge the new owner's consent that he/she knew of the lease should the lease be for a period of longer than 10 years (see Section 1 (2) of the Formalities in Respect of Leases of Land Act No. 18 of 1969)).

It is clear from the resolution that the co-operation of the registered owner of the immovable property concerned is unnecessary for the registration of a short-term lease. It must, however, be borne in mind that, in terms of regulation 63(2) (DRA), the title deed of the immovable property concerned must accompany the relevant notarial deed. In most cases the said title deed would be in the possession of the registered owner. What would then happen if the said registered owner refused to hand it over for the purposes of the registration of the lease concerned? It is suggested that in such cases it would suffice if the notary concerned certified that she/he had been unable to obtain the title deed concerned, and the normal procedures that are applicable where no title deed has been lodged should be followed.

44/2005 Cession of section 25 real right and substitution
The developer reserved the real right to extension of the sectional title scheme as provided for in section 25(1) of Act No. 95 of 1986. Subsequent to registration of the reservation and issuing of the certificate of real right of extension of the scheme, the developer passed a sectional mortgage bond over the right. If the developer now intends to cede the whole of the said right, may a substitution of debtor be registered simultaneously with the intended cession in respect of the said sectional mortgage bond?

Resolution:
The substitution is not registerable because section 57 of Act No. 47 of 1937 is only applicable to the substitution of a bond over land.

Substitution of a debtor in terms of section 57 (DRA) is, indeed, a cost effective procedure. Conference has on two occasions resolved on the applicability of the said procedure in respect of circumstances relating to the substitution of a joint debtor as well. In this regard see RCR 7/1994 and RCR 19/2005. (See also the discussion of RCR 19/2005 above.) It is indeed true that section 57 of Act No. 47 of 1937 refers only to the substitution in respect of a bond over land and that a right of extension is not land, but a right in immovable property (see section 25(4) Act 95 of 1986).

The resolution is technically correct, but it is not diametrically in line with what happens in practice. In practice, substitutions in respect of bonds over leaseholds, which are not land but immovable property, are registered. Again, substitutions in respect of sectional bonds over units together with exclusive use areas are also registered, yet exclusive use areas are rights to immovable property and not land.

47/2005 Section 25 (10) (dA) (iii) - lapsing of right of extension
This section stipulates, if applicable, that the bondholder's consent must inter alia state that the bond is attached to the certificate of real right in respect of the remainder of the right reserved in terms of section 25 (1) of Act No. 95 of 1986. Is it the responsibility of the deeds registries to check whether the right of extension has lapsed as all the phases envisaged have been completed, and to ask for the cancellation of the Right of Extension?

Resolution:
Yes, it is the responsibility of the registrar of deeds to check the Certificate of Real Right of Extension and to compare it with the section 25(2)(a) plans to determine whether a right of extension has been exhausted or not. The registrar of deeds must insist on the cancellation of the right of extension where such right has been exhausted.

The principle, i.e. the determination of the lapsing or otherwise of a right of extension as postulated in the resolution, is a sound one. Indeed, why should a bondholder's consent relate to a right of extension that has lapsed? It must be noted that a right of extension can lapse only in two instances, namely by the effluxion of time or the registration of all the sections to which it relates.

However, comparing the Certificate of Real Right of Extension with the section 25(2)(a) plans, as suggested in the resolution, is not the appropriate manner of determining the relevant fact. The certificate and the plans do not contain the same information, and comparing the two is not necessary. For example, the certificate invariably relates to the time within which the relevant extension must be completed and not to the number of the sections when phased development is completed. On the other hand, the plans would normally indicate the number of sections when phased development is completed, and would not indicate the time period within which phased development must be completed. Thus the purpose of checking these documents cannot be for the sake of comparison. Each document would thus be checked for what it is worth and not for comparison purposes. In short, the manner in which the resolution is couched does not reflect what the conference really intended. It must also be noted that it is not always possible to determine the number of all the sections from a section 25(2)(a) plan. A schedule referred to in section 25(2)(c) would be helpful in determining whether or not a right of extension has lapsed. Experience has taught me, however, that the said section is not strictly enforced in a certain deeds registry.

Whether or not my interpretation of the resolution, in general, and the word 'compare', in particular, is too narrow, is for the reader to decide.

Lastly the attention of readers is drawn to Chief Registrar's Circular 16/2005, which states that Conference Resolutions will be effective from 2 January of the year following the year of Conference.

This circular is intended to create certainty on when Conference Resolutions become operative, and will afford all parties concerned ample time to acquaint themselves with the resolutions before they become operative.

Republished with permission from SA Deeds Journal

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