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Involved intricacies

25 August 2011

INTRODUCTION
The application of section 4(1)(b) of the Deeds Registries Act 47 of 1937 provides headaches for practitioners and examiners alike. At present there is no uniform practice in the application of the section and is left mostly to the discretion of the Registrar (see RCR 11 of 2001). Unfortunately, the Registrars do not exercise this discretion, but it is delegated to the approximately 200 examiners, who each hold their own view on the application thereof. As far back as 1953, Conference held that only patent clerical errors should be the subject of an amendment in terms of section 4(1)(b) (see RCR 4 of 1953).

In this note it is envisaged to provide guidelines as to the application of section 4(1)(b) and as far as possible to substantiate it with authority.

WHO MAY APPLY
The Act does not provide for the lodgement of an application or an affidavit to effect the amendment of an error in registration. However, it has become established practice that an application in the form of an affidavit is lodged. In terms of section 4(1)(b)(i) all interested parties must consent to the amendment. Where the application is in the form of an affidavit, an agent cannot bring the application on behalf of his/her principal. The owner or holder of the right must make the affidavit him/herself. Should a conveyancer, acting in terms of a power of attorney, bring the application the affidavit must be dispensed with. However, documentary evidence must be provided to the Registrar to substantiate the correctness of the facts being rectified (see RCR 20 of 2010). Similarly, a representative of the owner, such as an executor, trustee, curator, etc., cannot make the affidavit in such representative capacity. The application can be brought by such representative, but not under oath. Where the registered owner is insolvent, and his/her trustee applies to rectify an error to personal particulars, the insolvent must be joined as an applicant, or must grant consent to the amendment.  Alternatively, proof must be provided as to the correct state of affairs, for example a certified copy of the identity document must be lodged. So too, when an executor applies for the amendment of the personal particulars of a deceased, no affidavit in this regard is acceptable from the executor, but proof must be lodged as to the correct state of affairs (see RCR 20 of 2010).

In summary, it can be said that the application for an error in registration can be brought by the conveyancer, duly authorized by a power of attorney. However, should the rectification be with regard to personal particulars, documentary proof of the true state of affairs will have to accompany the application, for example if it relates to personal particulars such as names, identity numbers, status, etc., or the consent of the owner lodged (see RCR 20 of 2010).

 

WHAT CAN BE RECTIFIED
Section 4(1)(b) allows for the rectification of an error in registration in any deed or document registered or filed in a deeds registry pertaining to:

  •   the name or the description of any person;
  •   the name or description of any property;
  •   conditions affecting such property.

Multiple errors may be amended in one application, albeit different errors in different titles (RCR 18 of 2008).

 

ERRORS IN NAMES OF PERSONS AND JURISTIC ENTITIES
With regard to the rectification of the description of any person, Chief Registrars Circular 3 of 1994 provides as follows:

2.3         Section 4 (1) (b) of the said Act provides for the rectification of an error in the name or the “description” of any person, provided certain conditions are met.  The marital state, whether the marriage was concluded in or out of community or property and even the names of the spouse are all part of a person’s description (see section 17 (2) (a), (b) and (c)), therefore section 4 (1) (b) of the Act can be applied to rectify an error in such a description.  Similarly, in the case of person described as unmarried but, in actual fact is a widow/divorcee etc, this can also be amended to rectify the position.

3.           Whenever section 4 (1) (b) of the Act is to be considered as above, the principles laid down in Ex Parte Menzies et Uxor1993 (3) SA 799, must be kept in mind.  Apart from these considerations, it must also be established whether such an amendment would not result in a contravention of any other law, e.g. the Subdivision of Agricultural Land Act, 1970 (Act No. 70/1970) and the Advertising on Roads and Ribbon Development Act, 1940 (Act No. 21/1940).

 4.           If the deed to be amended is mortgaged by a registered mortgage bond, such amendment must not invalidate the bond.  To comply with, e.g. the provisions of section 15 of the Matrimonial Property Act, 1984 (Act No. 88/84) and to renounce the legal exception “de duobus vel pluribus reis debendi”, it is recommended that a “substituting” bond be registered in lieu of the existing bond, which is to be cancelled simultaneously.

 

The provisions of section 4(1)(b) of the Act can thus only be applied if it would not have the effect of transferring any real right (section 4(1)(b)(iv) of the Act).  The sworn affidavit must make clear mention of this fact. If it does not, a certificate to that effect must be requested from the relevant conveyancer (see RCR 39 of 1958).

 

Chief Registrars Circular 2 of 2010 provides clear guidelines as to the application of section 4(1)(b) and reads inter alia as follows:

1. BACKGROUND
It has come to light that section 4(1)(b) of the Deeds Registries Act (‘the Act’) has been abused by unscrupulous elements as a means of depriving registered owners of property of their registered rights of ownership. This illegal practice severely compromises the integrity of the deeds registration system, casts a dark shadow over the Chief Directorate: Deeds Registration and diminishes the confidence of the public in the deeds registration system. This circular is, therefore, intended to educate and sensitise both examiners and conveyancers of the requirements and limitations of the use of section 4(1)(b), as well as to map out the manner in which the section should be applied in order to curb the abuse referred to above.

 

2.THE BEARER OF RESPONSIBILITY
Section 4 of the Deeds Registries Act endows the Registrar of Deeds with limited powers to rectify errors in registered deeds. With that power comes the responsibility of ensuring that any rectification is in accordance with the section and does not, specifically, have the effect of transferring real rights. The notion that the responsibility of ensuring that no real rights are transferred is borne by the preparing conveyancer in terms of regulation 44A is fallacious because a conveyancer accepts responsibility only for the matters specifically mentioned in the regulation and which do not include the fact that a 4(1)(b) application will not have the effect of transferring real rights. Furthermore sections 3(1)(b) and 15A(3) of the Act put the matter beyond doubt.

 

3. NATURAL PERSONS
The description of a natural person comprises of three elements, namely;

  •  the full name of the person, i.e. first name/s and surname;
  • the identity number (or date of birth); and
  • the marital status.

While the possible permutations for amending errors of registration by means of section 4(1)(b) are numerous, the examples of errors listed below are clearly not permissible in terms of section 4(1)(b).

(It must be borne in mind that the provisions of section 4(1)(b) can be used only to correct errors which occurred on registration of the deed.

Where the description of natural persons has changed after registration of the deed due to reasons other than errors in registration, then the provisions of section 93 or section 17(4) of the Act may well be applicable.

Example 1: Changes in the name/s of the natural person

 

A person is described in a registered deed as:

                            Michael Fanta

                            Identity No. 300101 5555 088

                            Unmarried:

 

 

An application for the amendment of the personal details of the registered owner to:

                            Michael Coke

                            Identity No. 300101 5555 088

                            Unmarried

 

OR from:

 

                            Michael Fanta

                            Identity No. 300101 5555 088

                            Unmarried

 

              to

 

                            David Fanta

                            Identity No. 300101 5555 088

                            Unmarried

 

can clearly not be dealt with in terms of section 4(1)(b) of the Act unless there was an error in the name of the person concerned on the date of registration of the deed.

 

Where the name of the person concerned was changed as set out in the examples above after registration of the deed, then clearly the provisions of section 93 of the Act must be used in order to effect the change of name as the deed was correct on the date of registration and in these circumstances the provisions of section 4(1)(b) are clearly not applicable.

 

Example 2: Change in identity number or date of birth of a natural person.

 

A person is described in a registered deed as:

 

                            Michael Fanta

                            Identity No. 300101 5555 088, unmarried

 

An application to change the identity number of the person concerned as follows (the same principles apply to the amendment of a date of birth):

 

                            Michael Fanta

                            Identity No. 550730 6497 088, unmarried.

 

It is clearly not permissible to amend such a deed in terms of section 4(1)(b) of the Act unless it can be proved to the satisfaction of the Registrar of Deeds that this is one and the same person, that there was a genuine error in the identity number of the person concerned on date of registration of the deed and that no attempt is being made to simply vest the property into the name of a person having the same names but with a different identity number or birth date.

 

Unless there was such a genuine error, such a rectification would have the effect of vesting the property in the name of an entirely different person and would therefore amount to a transfer of rights as prohibited by section 4(1)(b) of the Act and cannot be permitted.

 

Each such application lodged for registration will have to be considered by the Registrar of Deeds concerned who has the discretion to call for such proof of the relevant facts as the Registrar deems reasonable and necessary in order to establish that such an application will not result in a transfer of rights and that there will be no contravention of the provisions of section 4(1)(b) of the Act.

 

4. ERRORS IN REGISTRATION NOT COVERED BY SECTION 4(1)(b) OF THE ACT:

Where errors in registration have occurred and which cannot be rectified as provided for in section 4(1)(b), then other means of rectification will need to be considered such as a rectification transfer, an application to Court or the like.

 

JURISTIC PERSONS
The description of a juristic person comprises of two elements, namely, the name and the registration number. The possible permutations are numerous, but the examples listed below are definitely not covered by section 4(1)(b).

Example 1: Change of name and registration number of a close corporation/company:

 

A juristic person is described in a registered deed as

 

              Fanta 11 CC

              Registration No. 2006 / 003001 / 23

 

              An application in terms of section 4(1)(b) for a change of the name to

 

              Fanta 18 CC

              Registration No. 2006 / 007291 / 23.

 

can clearly not be permitted in terms of section 4(1)(b) as, on the face it, there are two different close corporations involved here and if so, the rectification would have the effect of a transfer of rights, and such an application would be in clear contravention of section 4(1)(b) of the Act and is not registerable.

 

Example 2: Change of name of close corporation or company -  after registration of the registered deed:

 

A juristic person is described in a registered deed as:

 

              Fanta CC

              Registration No. 2006 / 003001 / 23

 

              and an application is made to the Registrar of Deeds for a change to

 

              Coke CC

              Registration No. 2006 / 003001 / 23.

 

It is clear that in these circumstances a change of name has taken place, that is the same juristic person, and the matter should be dealt with in terms of the procedure applicable for changes of names of juristic persons in the normal way – accompanied by proof of the change of name from the Registrar of Close Corporations. In such a case the provisions of section 4(1)(b) are clearly not applicable.

 

Example 3: Change of name of close corporation or company – prior to registration of the registered deed:

Where the change of name of the juristic person occurred prior to the registration of the deed to be amended, then there has been an obvious error in registration and the provisions of section 4(1)(b) can clearly be used to correct the error – provided that the appropriate proof of the alleged facts is submitted to the Registrar together with the application.

 

5.SECTION 4(1)(a): PROOF OF ALLEGED FACTS:
It is imperative that the provisions of section 4(1)(a) should be considered whenever an application in terms of section 4(1)(b) is made because the responsibility for ensuring the correct application of section 4(1)(b) rests with the Registrar of Deeds, and not with the conveyancer as alluded to above. It is also imperative that the proof which is called for in terms of section 4(1)(a) should be carefully and meticulously scrutinised to ensure that it supports the facts alleged in the section 4(1)(b) application as it is pointless to call for proof and then not scrutinize such proof. It has happened in a case that proof was called for but not properly scrutinized resulting in the scenario sketched below.

A juristic person was described in the registered deed as ABC 1 CC Registration No. 2010 / 007575 / 23. An application in terms of section 4(1)(b) was lodged for the amendment of the description of the juristic person in the deed to be read ABC 9 CC Registration No. 2010 / 007899 / 23. Proof of registration of the relevant close corporation was requested, and proof of registration of ABC 9 Registration No. 2010 / 007899 / 23 was duly lodged and accepted. It then transpired that the two close corporations referred to above were two distinct entities in law and that the registration of the application in terms of section 4(1)(b) to ‘amend’ the name of the registered owner therefore clearly constituted a transfer of rights in contravention of section 4(1)(b).

 

Contravention of Legislation
Should the status of a person be amended which would result in the increase of shareholders, the provisions of the Subdivision of Agricultural Land Act 70 of 1970, the Agricultural Holdings Act of 1919 and the Advertising on Roads and Ribbons Development Act 21 of 1940 must be borne in mind as the provisions of these Acts might be contravened.  In the same vein, the title conditions might also prohibit the increase in shareholders without the necessary consent.

Errors in Property Description
Minor errors in the property description can be rectified.  However, should the erf number be rectified to disclose another erf, the application must be considered with caution as same might have the effect of transferring a real right.  It would be wise to call or lodge the original deed of sale to prove that the amendment to the erf number is not tantamount to the transferring of a right (see RCR 8 of 2003).

Errors Invalidating Mortgage Bond
Where the rectification of the description of parties have an effect of increasing the mortgagors or where the initial registration necessitated the compliance of section 15(2)(a) of the Matrimonial Property Act 88 of 1984 or the waiver of the legal exception de duobus vel pluribus reis debendi, the rectification will not be permitted.  The bond will have to be cancelled and a new or substituted bond be registered.

Where a cost clause of a mortgage bond was initially omitted or reflects the incorrect amount, such error in registration cannot be effected by an application in terms of section 4(1)(b) or a variation in terms of section 3(1)(s).  The bond will also have to be cancelled and a new bond registered.  This applies mutatis mutandis to the amount of the bond (see RCR 9 of 2003).

Errors in Township Condition
Incorrect township conditions can be substituted with the correct conditions, provided proof in this regard can be provided (see Ex parte Kacholi Anjuman Islam 1945 (2) PHK 123 as confirmed by RCR 37 of 1949.

Errors in Purchase Price
Although there is no provision in the Act for the amendment of an erroneous purchase price in a deed, a registrar of deeds may affix a suitable endorsement to the deed if sufficient proof has been submitted by him/her (RCR 4 of 1956 as confirmed by RCR 7 of 2003).  However, should the amendment have the effect of an increase in the payment of transfer duty, a receipt in this regard must also be lodged.

 

PROOF TO ACCOMPANY APPLICATION
Section 4(1)(b)(i) and (ii) specifically provide that every person appearing from the deed or other document who has an interest in the rectification must consent thereto in writing.  However, where any person refuses to consent thereto the rectification may be made on the authority of an order of court. In terms of RCR 32 of 2010 a bondholder’s consent is required even if the amendment to the title will not have a negative effect on the bondholders security. Conference held that the bondholder will always have an interest in the rectification of the title deed.

The consents of co-transferees, co-mortgagors and co-mortgagees need, however, not be lodged to the amendment of a name of a transferee, mortgagor or mortgagee, respectively (RCR 3 of 1940). If the mortgagor’s name is however amended, naturally all the mortgagees must consent to the amendment of the title deed and bond.

Where an error is common to two or more deeds, the registrar of deeds has the inherent right to insist on the amendment of all the existing deeds before registration of later deeds (section 4(1)(b)(iii) of the Act and RCR 67 of 1964).  It is also required in practice that the applicant must state in his/her application and/or sworn affidavit that there are not further deeds requiring amendment.  If he/she has failed to do so, the conveyancer may certify accordingly.

If the error has bearing on a party to a registered antenuptial contract and the parties contend that the contract has been lost, the deeds office copy of the contract must be amended and a caveat noted so that the client’s copy can also be amended on lodgement in the office.  Thus, a certified copy of the lost contract must not be insisted upon (RCR 52 of 1952).

No amendment will be necessary to rectify an error in a “dead” deed, and it is also not practice to amend the name of a person who has no right or interest therein, for example a transferor in a deed of transfer or cedent in a notarial cession.

Bonds which are being cancelled are also not amended, except if the error has bearing on the description of the mortgagee.

Should the rectification be of a lengthy nature, RCR 19 of 2007 recommends a schedule. The schedule of the anticipated rectification must be lodged with the application in one cover (RCR 15 of 2010).

 

DISCRETION OF REGISTRAR
In terms of RCR 6.23 of 1999, RCR 2.1 of 2001 and RCR 17 of 2005, the conference resolved that the discretion afforded to a registrar in terms of this section is an issue which will remain as it is.

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