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Deceased developer – response II

10 March 2011

Mr. Nqhome differs from me on the matter in Deceased developer - a response. Let me reply to his letter in the same order that he set it matters out in his letter:

  1. Yes, the question should obviously be answered in administration of deceased estates as well. In a case such as this the liquidation and distribution account will reflect the property as an asset in the estate of the deceased as envisioned in regulation 5(1)(c)(i) of the regulations to the Administration of Estates Act 66/1965(AEA). Furthermore the account must set out how the estate will be divested of the immovable as required by regulation 5(1)(c)(v) of AEA. The executor must give effect to contracts entered into by the deceased. There is no way that that duty can be passed on or delegated to the heirs in the estate. They have no claim to the units that were sold and have no locus standi in respect of such sold units. The executor will have no right or duty to transfer sold units to the heirs. Expecting the executor to do so is simply ridiculous, with respect.

    The question at conference did indeed not mention that any units were sold, but keep in mind that the resolutions end up effectively having the effect of legislation. It seems, with respect, that the resolution was made not taking all possibilities into account. Our firm has a sectional title scheme at this very moment where the developer died prior to opening of the scheme as envisaged in the resolution, with some units having being sold already. Most certainly our deeds will be rejected on the basis of that resolution when we lodge them. To say that "…as a general answer to a general question…" assumes that as a general rule schemes are opened at the deeds office and units only sold afterwards. That is simply not the reality of the matter. In the most cases where sectional schemes/registers are opened at the deeds office, at least some unit had already been sold and are transferred simultaneously.

    The resolution is only acceptable when the land was bequeathed to the heirs, no units were sold and the register has not been opened yet. Again, if the deceased bequeathed specific units to each of the heirs, it will also be the duty of the executor to apply for the opening of the sectional title register so as to enable him to pass transfer of each heir's unit(s) to him or her. Again, the land cannot be transferred to all the heirs for them to sort things out between themselves.

    The cases where the resolution can be accepted as that "…as a general answer to a general question, ….cannot be faulted…" appear to be rather thin on the ground.

    With deepest respect, to argue that the matter is not within the ambit of conveyancing is naïve.

  2. Registered ownership does not of necessity reflect who the real owner is, nor who the person is who may deal with immovable property. The definition of developer includes the registered owner/developer's successor in title. That is exactly what the executor is. Also, the definition of owner includes in respect of immovable property "…the executor of an owner who has died…". The executor steps into the shoes of the developer. How can there be any argument that the executor has no locus standi in such a matter? That will create an untenable position, should that be the case. That the developer is not yet shown in the registers of the deeds office as registered owner of the units per se is really immaterial. In the case of a township register it will similarly be the duty of the executor to transfer erven indicated on such general plan which were sold by the developer prior to his death.

  3. There can be no argument that the executor will be acting within the scope of his authority should he apply for the opening of a sectional title register, as set out in no. 1 above. The application for the opening of a sectional title register does not involve any contractual act by the executor, but is an administrative act that will place him in a position to execute his obligations as executor regarding the contracts entered into by the deceased developer. That there are limitations to what an executor may or may not do is not in dispute, but let us separate entering into contracts on behalf of the estate from an enabling administrative action such as this. Once appointed an executor is entitled to administer all the assets of the estate. (see Meyerowitz Administration of Estates 6th ed at 8.14) It is the task of an executor to liquidate and distribute the estate of a deceased, including assets in respect of which he may be a developer in terms of the Sectional Title Act. Section 1 of AEA defines immovable property as "…any land and every real right in land or minerals…which is registrable in any office in the Republic used for the registration of title to land or…". Again Meyerowitz says at 6.3: "The inventory to be made and lodged must be of all the property known by the person making the inventory….to have belonged, at the time of death - (i) to the deceased…."The inventory must include a special list of all immovable property registered in the deceased's name or in which he had an interest at the date of his death (section 9(3) of AEA). Surely the property on which the scheme will be established must be included thus? This read with regulation 5(1)(c)(v) makes it quite clear that is the executor's duty to also apply for the opening of the register.

  4. Quite correct - it is the land which will be included in the inventory, but the executor will have to comply with reg 5(1)(c)(v) and he, not the heirs, will transfer the units to the purchasers as per the liquidation distribution agreement. The scheme should be opened vesting the units in the name of the deceased (now deceased), as envisaged by reg 54(2) of the Deeds Registries Act.
With respect, there can be no other way of dealing with such matters.

Dudley Lee
28/2/2011


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