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Registering agricultural land - III

9 April 2009

The reason why it is not possible to transfer agricultural land to a partnership is because a partnership is not a juristic person in that it does not have a legal identity separate from its members, and therefore does not have perpetual succession.

A partnership is an association of natural persons, and on the death of one of the partners, the partnership comes to an end. Partnership assets then vest in the erstwhile partners in their personal capacities in the proportions of their partnership, unlike a company or a CC where when one of the shareholders or members dies, the company or CC continues to exist and the assets of the company or CC remain vested in the company or CC.

Juristic persons such statutory bodies, non-profit organisations, clubs and religious and educational institutions also have perpetual succession, that is a legal identity separate from their members, and as the members come and go, these juristic persons continue to exist.

In my opinion, this is not the case with trusts, whether inter vivos or testamentary, as the assets of the trust vest in the trustees for the benefit of the beneficiaries. I feel that if the relevant trust deed has only one beneficiary, and does not give the trustees power to add to the number of beneficiaries, then perhaps a transfer of agricultural land to such a trust would not be in contravention of the Subdivision of Agricultural Land Act.

What I cannot understand is why it is possible to transfer agricultural property to a couple married in community of property. Although a couple married in community have a joint estate (i.e. legally one estate with two managers, so to speak) the joint estate is divided on dissolution of the marriage by death or divorce. And as death dissolves all marriages just as it does partnerships, and every one dies sooner or later, a transfer of agricultural land to a couple married in community will eventually inevitably result in a contravention of the prohibition contained in the Subdivision of Agricultural Land Act.

As they say in the classics - go figure!



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