FILTERS:

Who is responsible?

1 December 2005

Since the inception of section 15A of the Deeds Registries Act 47 of 1937 (hereinafter referred to as "the Act") read in conjunction with regulation 44A of the Act, confusion or misconceptions have reigned as to who carries what responsibility, and to what extent does such responsibility extend, for the correctness of facts contained in deeds and documents.

In terms of section 3(1)(b) of the Act, the Registrar of Deeds has a duty to examine all deeds or other documents lodged for execution or registration and reject same if it does not conform to the laws, practices and procedures. However, in 1984 (see section 6 of the Deeds Registries Amendment Act 27 of 1982) section 15A was enacted which placed certain responsibilities on the preparer of deeds and documents. The responsibilities assumed by the preparer are set out in regulation 44A of the Act. Unfortunately, this regulation is couched in such a manner that it is open to different interpretations on which the Conference of Registrars, on numerous occasions, has had to rule.

In this article it is not intended to provide guidance on the interpretation of the regulation, but to scrutinize the different interpretations given to the regulation and to urge the legislator, when reviewing this regulation, to clarify the regulation so as to demystify the uncertainty.

The concern which immediately comes to mind is: "who will ultimately be held responsible, given the provisions of section 3(1)(b) and 15A, should a deed be registered and such act of registration leads to a court action from which a claim for damages emanates?" It is submitted that the only responsibility which the preparer of a deed or document assumes is that which is clear and unambiguous in the provisions of regulation 44A of the Act.

I will now endeavour to analyze the provisions of regulation 44A of the Act and to provide the different interpretations thereof which might be in conflict with the existing rulings or circulars issued by Deeds Registries or the office of the Chief Registrar of Deeds.

The introductory words of regulation 44A provide that the person signing the preparation certificate accepts to "the extent provided for in this regulation," responsibility for the correctness of the facts stated in the deeds and documents or which are relevant in connection with the registration or filing thereof, namely:

Identical copies
In those Deeds Registries where deeds and documents are still lodged in duplicate, due to such office not being mechanized, i.e. on the micro-filming system, the preparer assumes responsibility that all copies of deeds or documents are identical at date of lodgement (regulation 44A(a)).

This sub regulation is clear and unambiguous and should any fault be found in the contents of the duplicate original, the preparer will accept full responsibility. However, examiners still compare the copies and raise queries should the copies not be identical.

Correctness of Conditions
The preparer of a deed of transfer or certificate of title to land assumes responsibility that all the applicable conditions of title have been correctly carried forward into the new deed of transfer from the title. Similarly, such preparer also assumes responsibility that the applicable conditions endorsed against the title deed are carried forward into the new deed of transfer. Lastly the preparer assumes responsibility that any proclaimed township conditions, for first time transfers from a township title, have been correctly incorporated in the new deed of transfer (see regulation 44A(b)).

Holistically seen, the preparer takes full responsibility for the conditional clause of a deed of transfer, but alas this is not so in practice. The Registrar of Deeds, in terms of section 3(1)(b) of the Act, still checks the conditional clause of a deed of transfer for the following:

> that any restrictive conditions have been complied with;

> that conditions which may have lapsed or complied with be removed from the conditional clause (see clause 3 of CRC 8 of 1983);

> that all the relevant township conditions, as contained in the proclamation of the township, have been carried forward;

> that conditions are correctly "plotted" and the necessary qualification of the conditions are correctly effected (see RCR 26 of 1987).

It is clear from the above that the responsibility of the preparer and the Registrar of Deeds overlaps and one wonders in whom does the responsibility really vest.

It must be stressed that this duplication of responsibilities does, however, contribute to the secure registration system that South Africa has, but the question that must be asked is: "When the paw-paw hits the fan who will ultimately be held liable for any damages which may emanate from a title which has a lacuna in its conditional clause?"

Correctness of facts
The preparer of a deed of transfer, certificate of title conferring title to immovable property or mortgage bond assumes responsibility that the particulars for which the preparer of the power of attorney assumes responsibility, have been correctly carried forward from the special power of attorney into the deed of transfer, certificate of title or mortgage bond (regulation 44A(e)).

Again, seen holistically, a Registrar of Deeds need not inter alia examine the preamble and vesting clause of the deed of transfer, certificate of title or mortgage bond, as the preparer who prepared the deed of transfer, certificate of title or bond has already assumed responsibility that it is identical to that contained in the power of attorney. The Registrar of Deeds should thus only examine the particulars contained in the power of attorney to determine if they conform to the practice and procedures.

Once again, this is not the case. Registrars of Deeds still check the aforesaid clauses in the deed of transfer and query any discrepancies that might prima facie be incorrect. As referred to supra, this does contribute to security of title, but who will ultimately assume the responsibility "should the paw-paw hit the fan."

Correctness of names, identity numbers and status
The preparer of a power of attorney, consent or application assumes responsibility for the correctness of the full names, identity number/date of birth and marital status of a natural person, and in the case of any other person or trust, that its name and registered number, if any, are correctly reflected in that deed or document (regulation 44A(d)(i)(aa)).

This responsibility goes without saying for parties in deeds and documents where such parties are not already recorded in the registers of the Deeds Registry. However, should the transferor, cedent, mortgagor, etc. be acting, the Registrar of Deeds will check whether the names, identity numbers, and status correspond with the Deeds Registry records. Should it differ, proof will be required and the registered deeds will either have to be amended, in terms of section 4(1)(b) of the Act, or proof provided as to the change. Alternatively, the new deeds and document will need to be amended.

It is also abundantly clear from this sub-regulation that the preparer does not assume responsibility for the locus standi of the natural person. However, does the Registrar of Deeds assume such responsibility? If it is not evident from the deeds office records that the person acting does not have locus standi, no query in this regard will be raised. Surely this responsibility should be placed solely on the shoulders of the preparer, and regulation 44A suitably adapted. The Registrar of Deeds has no method of policing this other than raising a question on each act of registration as to whether the acting party has locus standi

Similarly, at present the Registrar of Deeds assumes responsibility for the contractual capacity of parties, but should this not also be the responsibility of the conveyancer?

Proof of appointment and powers to Act
The preparer of a power of attorney, consent or application assumes responsibility in terms of regulation 44A(c) of the Act for the following:

> that the person acting as a principal or representative, excluding a principal in terms of a power of attorney, has been appointed in such capacity (see CRC 8 of 1983 read with RCR 19 of 1994).

> that the person acting as representative is acting in accordance with the powers granted to him/her;

> that any security required has been furnished.

There are two schools of thought on the interpretation of this sub-regulation. Firstly, the regulation is interpreted that the Registrar of Deeds does not assume liability for the appointment of any person acting in a representative capacity and further that such person has the full powers to deal with the property concerned. This has been confirmed in certain of the rulings taken by the Conference of Registrars, but is not consistently applied.

The second school of thought interprets the sub-regulation that the preparer merely assumes responsibility that the person is appointed in that capacity and is acting within the powers set out in the document evidencing such appointment. Should this be the correct interpretation of the sub-regulation, then it is evident that most, if not all, the conference resolutions taken on this matter were incorrectly decided and that the Registrar of Deeds will once again have to request all documentation to prove the powers of:

- trustees of insolvent estates;
- liquidators of companies and Close Corporations;
- representatives acting in terms of section 18(3) of the Administration of Estates Act 66 of 1965;

just to mention a few.

Should, however, the wider interpretation be given to this sub-regulation, as held by the first school of thought, then the provisions of section 42(1) and 42(2) of the Administration of Estates Act 66 of 1965 seem superfluous, as the conveyancer has already assumed such responsibility.

However, should the more narrow interpretation be afforded this sub-regulation, then one wonders who will bear the brunt "should the paw-paw hit the fan".

Proof of signing documents in a representative capacity
The preparer of a power of attorney, consent or application assumes responsibility that, except for persons appointed in terms of a power of attorney, the necessary authority has been obtained for the signing thereof in a representative capacity on behalf of a company, close corporation, church, association, society, trust or other body of persons or an institution whether created by statute or otherwise (see regulation 44A(d)(ii)(aa)).

The effect of this sub-regulation is that the Registrar of Deeds no longer has to determine whether the necessary resolution has been obtained for a person acting on behalf of the institutions as aforementioned. However, reference thereto must be provided in the preamble of the power of attorney, consent or application (see CRC 8 of 1983).

In terms of RCR 7 of 2005 it is still the responsibility of a Registrar of Deeds to check general powers of attorney. The preamble of a power of attorney, consent or application, where a company or Close Corporation is dealing, must disclose whether the authorization is in terms of a resolution or power of attorney, without providing full particulars of the resolution.

Widely interpreted, one would immediately think that this sub-regulation includes that the person acting in such representative capacity has locus standi, but Registrars of Deeds are of the opinion that it is still the responsibility of the Registrar to ascertain whether the representative is acting on behalf of the correct institution (see RCR 23 of 2005). How, unless informed thereof, this can be monitored and governed is a question begging an answer. The question which can again be asked, ad nauseam, "who carries the responsibility?"

Authorization of transaction
The preparer of a power of attorney, consent and application, in terms of regulation 44A(d)(ii)(bb), assumes responsibility that the transaction, as disclosed in such power of attorney, consent or application, is authorized by and in accordance with the constitution, regulations, or founding statement or trust instrument of a trust, as the case may be, of any church, association, close corporation, society, trust or other body of persons, other than a company, excluding a share block company, being a party to such document.

From this sub-regulation it is clear that the conveyancer must determine that the transaction is authorized. Should this not also include the responsibility to ascertain the locus standi of such organisation?

Summary
From what has been said above, and the quoted Conference Resolutions, it is quite evident that the whole of regulation 44A must once again be reviewed to eradicate any uncertainty.

Your thoughts and comments hereon will be appreciated.

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