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Testamentary conditions

30 November 2006

A practical problem that begs an answer is whether the title afforded the heir, who entered into a redistribution agreement in respect of immovable property, must be made subject, as a whole, to the testamentary conditions imposed by the testator.

By way of example: should A die and leave his farm to his three sons B, C and D, subject to the condition that the inheritance shall be excluded from the community of property, etc., and B, C and C enter into a redistribution agreement whereby C becomes owner of the farm, the question to be answered is whether all the land to which C will be entitled must be made subject to the condition of the will.

One must revert to the common law to seek an answer. In terms of the case Klerk NO v Registrar of Deeds 1950 (1) SA 626 T, it was held that in each redistribution agreement there must be a sale, donation or exchange. Furthermore, in terms of the case of Lubbe v Commissioner for Inland Revenue 1962 (2) SA 503 (O), it was held that to determine whether a valid and binding redistribution agreement was entered into, the following question must be posed:

"If the redistribution agreement is ignored, will there, irrespective of the movable assets which are possibly introduced, be an allocation of the relevant assets being distributed in the agreement to the contracting party?"

If the question is answered in the affirmative, a valid and binding redistribution agreement is forthcoming and can include a sale, donation or exchange.

It is thus clear that a redistribution agreement is another transaction, and were it not for the provisions of Section 14(1)(b)(iii) of the Deeds Registries Act 47 of 1937, the property would have had to be transferred to the initial heirs, and thereafter to the person entitled to it in terms of the redistribution agreement. Given this, it is opined that the shares of the heirs who "sold, donated or exchanged" their inheritance are to be transferred free from the testamentary condition. Thus, in the scenario above, only one third share of the farm will be exempt from the community of property, etc.

If the opinion expressed is correct, the following further practical problem arises: In the aforementioned scenario, should C be married in community of property, the property would be vest two thirds in the joint estate and one third would be excluded from the joint estate, viz;

1.

C _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

and

W _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

married in community of property

2/3 share

2.
C _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Married in community of property to W

1/3 share

The above vesting will be a contravention of Section 3 (c) of the Subdivision of Agricultural Land Act 70 of 1970, and unless the Minister affords his/her consent, this vesting cannot take place.

The whole purpose for which the redistribution has been entered has been defeated by the vesting, but that is how the law is!

Your comments or views on the above will be appreciated - Editor of SA Deeds Journal

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