The suspension of Registrars Conference Resolutions 46, 47 and 62/2010 (see Chief Registrar's Circular 4/2011) by Chief Registrars Circular 4/2011 I think came as a shock and a surprise to many in the conveyancing fraternity. The resolutions seemed to have, at long last, put a long standing thorn in their side to rest. And now it seems it can be named Lazarus.
It appears that the problem NAMA has is the possible loss of revenue to Home Owners Associations (HOA's) due to forced sales and transfer of properties subject to the usual restriction on sale/transfer/alienation in favour of HOA's and the deeds offices not insisting on a formal consent being lodged with the transfer. I am not sure as to how the figure of R80 000 000 was arrived at, but if that figure is true, assuming that the calculations accepted that in such circumstances the HOA will receive nothing of the monies due to them, what leaps to mind is that NAMA and/or the HOA's must either be completely unaware of their duties in such instances or is trying to get Chief Registrar of Deeds to do their work for them.
What NAMA and HOA's (I will refer to NAMA which includes HOA's as well) must accept is that the condition can only be relied upon to ensure the collection of all monies owed by the owner of the land under normal circumstances. Letting an owner who does not pay his levies indefinitely to simply fall behind and not taking the necessary steps to recover the debt may also turn out to be a very costly exercise, but that is another argument. In case of a forced sale the rules change for everybody, including NAMA.
Let us use insolvency as an example. When the owner of land which is subject to such a condition is sequestrated, the property vests in the Master and upon appointment of a trustee, in the trustee (section 20(a) of the Insolvency Act 24/1936). The insolvent is therefor no longer owner of the land and NAMA cannot hold him personally liable for the debts any longer, but must look at the trustee and the other creditors in the insolvent estate if they wish to recover any of such monies.
Every creditor must lodge a claim with the trustee and prove such claim. Nama will simply be a creditor and will, like every other creditor, have to lodge a claim and prove it. Like other creditors, they will most probably end up getting X cents in the Rand in respect of the amount owed to them, or they may even end up contributing to the estate.
The trustee will not and cannot allow NAMA to simply collect whatever is owing to them from the insolvent. That will obviously be prejudicial to other creditors. Furthermore, if NAMA does not lodge a claim and prove it, they will not be entitled to anything (section 104 of Insolvency Act) unless a late claim is allowed by the Master. Point is that a claim must be lodged and proved. If NAMA is under the impression that the suspension of the RCR's is a magic wand that will give them carte blanche to collect the monies owing to them without being part of the legal process which gave rise to the forced sale they are making a grave mistake. If that were the case it will give them preference to every other creditor and clearly that is not permissible. It seems that that may have been the intention of the suspension. There is no choice for them but to become part of the process (insolvency/sale in execution/liquidation) or lose their claim to the monies owing to them. The trustee as owner of the property is the person to deal with the property in accordance with the instructions of the creditors and any attempt by NAMA to independently collect the monies owing to them will most certainly be resisted by the trustee.
The only effect of the suspension of the RCR's is that one must now (unnecessarily) lodge a consent in terms of the title condition, the machinations in respect of which is now outside the scope of the normal business process, leaving NAMA effectively powerless to not consent to the transfer. They would already have consented to the sale and transfer at the meeting of the creditors in any event, had they lodged and proved a claim. Conversely, if they did not lodge and prove a claim they cannot be in a position to frustrate the sequestration process by refusing to consent to the sale and transfer of the land. In such a case it seems that they will effectively lose their claim to the outstanding monies and their right to frustrate transfer in terms of the condition in respect of the particular transfer by their inaction. Question is, why then suspend the RCR's? They are perfectly in line with the legal situation in case of forced sales. Also, can the HOA in fact still sign such consent?
NAMA's way forward is firstly to not allow owners to fall in arrears with their levies, and secondly, in the case of a forced sale, to take the necessary steps in case of forced sales so as to minimize their losses. To bamboozle the powers that be with huge projected losses (which will only become reality if they themselves do not perform their duties properly) and, I suspect, threats of possible court action against Chief Registrar of Deeds, is not a solution to their problem. They will have to get to grips with the fact that they will suffer losses in the case of forced sales, in the same way that everybody in the business community has already accepted the fact that debtors go bankrupt. It's a fact of life and the extent of their losses is in their own hands to a large extent.
With respect, it seems to me that CRC4/2011 should be withdrawn.