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Immovable property and divorce - 1

18 November 2004

"Marriage is like a consumable: issued with an expiry date"

One of the key characteristics of the concept of marriage is that it has a limited lifespan. Sooner or later every marriage is bound to be terminated - either by a court order or by the passing away of one of the spouses.

The termination of a marriage in community of property necessarily causes the dissolution of the community of property in the joint estate that existed between the spouses during the marriage.1 In esse the dissolution of the community of property causes the estate to be divided between the parties, affording each her/his separate estate. Therefore it stands to reason that such division of the joint estate would also affect immovable property that formed part of the joint estate.

It is, however, not the intention of this article to bore the reader with a reinvention of the computer. Therefore, no discussion will be entertained here on the general principles pertaining to the different matrimonial property regimes governing marriages; the effect of termination of marriage; and the related registration procedures of immovable property and the rights thereto. However, practical experience has proven that operating this type of computer is quite often rather confusing to both conveyancers and examiners. Frequently the correct registration procedure giving effect to the legal consequences emanating from a divorce of a marriage in community of property is not as simple as merely switching on a computer.

For this reason it was deemed fit to share certain practical scenarios with the reader, as well as the recommended registration procedure to be followed.

PROBLEM 1
A and B where married in community of property. Immovable property, property 1 was registered in favour of the joint estate, hypothecated under a mortgage bond. From the court order of divorced it appears that the said property accrues to the separate estates of both A and B in half undivided shares, to be held in free co-ownership. Subsequent to their divorce, one of the former spouses, B, alienates her/his half share to the former spouse A. The said registered bond is not cancelled. A, the former spouse acquiring B's half share will be liable for the whole of the debt secured under the bond. The title deed of the property and the mortgage bond still reflect A and B, married in community of property to each other, as registered owner and mortgagor.

Question
Which registration procedure should be followed to give effect to the transactions?

Solution 1
The provisions of section 45bis(1A)(a) of the Deeds Registries Act 47 of 1937 (hereinafter referred to as "the Act") should be applied. An application by both A and B should be lodged, together with the divorce court order and settlement agreement or authorisation. Although the court order already effected the dissolution of the marriage and consequently the division of the joint estate, vesting each former spouse with a separate estate, the procedure provided for in section 45bis(1A)(a) of the Act is applied to update the facts reflected in the title deed of the property.2 It is imperative to bear in mind that the procedure does not constitute the transfer of ownership in the property.

The provisions of section 45bis(2)(b)(iii) of the Act should be applied in respect of the mortgage bond encumbering the property. Both A and B should jointly and severally assume liability for all the indebtedness and renounce the exception de duobus vel pluribus res debendi. The bondholder should in writing consent thereto. The form prescribed by section 45bis(2)(b)(iii) of the Act should be adhered to.3 The bond, together with the said documentation signed by the mortgagors and the bondholder, should be lodged.

A conventional deed of transfer, together with all the appropriate accompanying documentation, should be lodged for the transfer of the half share from B to A. 4

The mortgage bond must be disposed of in respect of B as debtor in B's share in the property. Prior to deciding on the correct procedure to follow in this regard, the conveyancer concerned should indisputably determine from the bondholder the extent of the security required under the bond. Should the bondholder be satisfied with only a half share of the property serving as security under the bond, the procedure to follow would differ from where the bondholder requires the whole of the property as security for the debt still owed.

In the instance where only half the share of the property is required as security, a written consent by the bondholder to the release of both the person of B and B's half share (to be transferred to A) to the property, needs to be lodged as provided for by section 55(1) (a) and (b) of the Act. A, as co-mortgagor, must also, in writing, consent to the release of B's half share of the property, and the person of B from the working of the bond.

In the instance where the whole of the property is required as security, A will have to substitute B as mortgagor in respect of B's half share. Section 57 of the Act provides for the substitution of debtor under a registered mortgage bond. Although section 57 of the act provides for this substitution, in certain instances, where a mortgagor transfers to another the whole of land hypothecated under a mortgage bond, such procedure is also allowed where a joint owner transfers her/his share in the hypothecated land to another joint owner.5

In the above scenario it is crucial to bear in mind that, prior to registration of the transaction between A and B, the registration procedure with regard to the dissolution of the joint estate (including the mortgage bond) must be followed.

Alternative solution
It is established practice to afford former spouses to a marriage in community of property the opportunity to "alter" the effect of the divorce court order (or settlement agreement), provided transfer duty is paid, if payable.6 In the same vein, it could be argued that the following alternative and more cost effective procedure to the above-stated scenario should be registrable:-

Instead of complying with section 45bis(1A) of the Act, the title deed of the property and an application in terms of section 45bis(1)(a) of the Act, signed by both A and B could be lodged. In the application the parties could state that, despite the provisions of the divorce court order (or settlement agreement), they have agreed to A acquiring the whole of the property. A transfer duty receipt for the acquisition of B's half share by A should also be lodged. In such an instance no application in terms of section 45bis(2)(a) of the Act should be followed. A written consent signed by A and the bondholder to the release of the estate of B from liability under the bond and to the substitution of A as the sole debtor in respect thereof, will be lodged together with the bond.7 The effect is that neither section 45bis(2)(b)(iii) of the Act, nor section 57 of the Act needs to be applied in respect of the bond.

The fact that the proposed alternative solution would result in a less expensive registration procedure than the first solution is obvious.

Notes:
1Furthermore, such community of property may also be dissolved by applying the provisions of section 20 or section 21 of the Matrimonial Property Act 88 of 1984. However, a discussion of said provisions does not fall within the ambit of this article.
2Lubbe v O'Dwyer 1942 WLD 135
3Prescribed Form BBB
4Prescribed Form E should be followed for the deed of transfer
5In this regard see Registrars' Conference Resolution 7 of 1994
6For instance: the court order vests A with the whole of the property, however, subsequent to the issuing of the divorce court order, A (and B) decide(s) to sell the property to a third party - transfer of such property to the third party will be allowed, without A and B first complying with the provisions of section 45bis(1)(a) of the Act, provided both former spouses (or their duly authorised agents) sign the special power of attorney to pass transfer and a transfer duty receipt for A's acquisition of B's half share of the property is lodged simultaneously with the transfer to the third party.
7Section 45bis(2)(a) of the Act provides that the provisions of section 45(2) of the Act is mutatis mutandis applicable.


Republished with permission

Reader Comments: 4
mondli Thusini 28/08/2012:

I have a poser relating to division of the property in the joint estate. Say for e.g. parties get divorced and they had built a mansion in the tribal land for R1 million. Prior to divorce one party leaves common home.   The court orders division of the joint estate. Can the house be an asset in the Joint estate considering the fact that there is no title deed but only permission to occupy the said property issued by a Traditional Council.

Nyameko Magongo 06/03/2014:

Decree of Divorce of 1991 orders the division of the joint estate. At the time - prior to the new South Africa of 1994 the parties occupied a government house which they have been paying rent for since they married at around 1975. The same house (as part of the new government settlement to those who have paying rent for government houses in the township and rural areas) was transferred by title deed only to one of the parties in and around year 2000. Is this house recognized as part of the joint estate as per Decree of Divorce issued in 1991? Thus allowing both parties to claim joint ownership title to this house - and thus be compelled to dissolve same as per court order.

Patsy van Vuuren 16/03/2014:

Parties were married in community and bought a property in 1982. They were divorced in 1990 but the Deed of Settlement was silent regarding the property. The description on the title deed was "the husband's name, date of birth and white group and did not mention marriage in community, etc. as it was not done in those days. The husband sold the house in 2011 without knowledge of ex-wife and stated on the documents that he was unmarried and owned 100% share. Is she entitled to half of the purchase price as she rightfully owned a half-share?

Judy 17/12/2014:

Parties divorced with property purchased in community of property. A retained use of property and part of the decree was that the property be transferred out of the name of B. Transfer has has not occurred. A has subsequently remarried and retains use of property that is still in both the names of A&B. Does B have the right to ensure that benefit of property is not given to new spouse, but rather to children of A & B?

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