Tag Archives: property

OWNING PROPERTY WITHOUT A WILL

If you die without a will, an administrator will have to be appointed to administer your estate which will be distributed according to the laws of intestate succession. As such, your assets may not be distributed as you would have wished. It also means that the process will be delayed and that there will be additional expense and frustration which most people would not want to inflict on their loved ones during a time of loss.

Marriage and property

When drafting your will, it’s important to consider the nature of your relationship with your ‘significant other’. If you are married in community of property, you only own half of all assets registered in your name and that of your spouse. Your spouse therefore still remains a one half share owner of any fixed property you may want to bequeath to a third party which could potentially present difficulties.

If you are married in terms of the accrual regime, the calculation to determine which spouse has a claim against the other to equalise the growth of the respective estates only occurs at death. Your spouse may therefore have a substantial claim against your estate necessitating the sale of assets you had not intended to be sold.

Alongside your will, you should also prepare the following in relation to any immovable property you may own:

  1. State where your title deeds are kept and record any outstanding bonds and all insurance
  2. File up-to-date rates and taxes receipts
  3. Record details of the leases on any property you have
  4. State who collects your rent
  5. State who compiles your yearly accounts
  6. State where your water, lights and refuse deposit receipts are kept

If you die without a will

According to the according to Intestate Succession Act, 1987, your estate will be distributed as follows:

  1. Only spouse survives: Entire estate goes to spouse.
  2. Only descendants survive: Estate is divided between descendants.
  3. Spouse & descendants survive: The spouse gets R250 000 or a child’s share and the balance is divided equally between the spouse and descendants.
  4. Both parents survive: Total share is divided equally between both parents.
  5. One parent: Total Estate goes to the parent.
  6. One parent & descendants: Half the Estate goes to the parent; balance is divided equally amongst descendants.
  7. No spouse; No descendants; No parents; but descendants through mother & descendants through father: Estate divided into two parts: half to descendants through mother; half to descendants through father.
  8. No spouse; No descendants; No parents; No descendants through mother or father: Full Proceeds of the Estate has to be paid into the Guardians Fund in the event of no descendants whatsoever.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

GENERAL REMARKS ABOUT OWNERSHIP IN SOUTH AFRICA

By Hans Klopper

Independent Advisory (Pty) Limited

Transfer of ownership

The most comprehensive private right that a person can have in terms of South African law with regard to property is ownership.[1] We draw a distinction between original and derivative acquisition of ownership. Where ownership is acquired independently and not derived from the ownership of a predecessor it is viewed as original. Derivative acquisition of ownership occurs if ownership is derived from or depends on the ownership of the previous owner. In the case of movable assets, the most important element in the acquisition of ownership is delivery of the specific asset. In order to transfer ownership two main requirements must be satisfied.

First, there must be an agreement between the parties to transfer ownership and then there must be a form of conveyance of ownership. Consequently, failure to deliver the movable asset means that ownership does not transfer.

Furthermore, where movable assets are sold ownership does not pass, notwithstanding delivery, unless the purchase price is paid or security or credit for its payment is given. A sale of movables is usually a cash sale unless circumstances clearly indicate the existence of a credit sale such as, for example, a failure by the seller to reclaim the object, non-payment of the purchase price, failure to demand cash immediately on delivery, or where a cheque is post-dated. If a credit sale is intended or it is apparent that credit was extended to the buyer, ownership passes on delivery.

To summarise, therefore, ownership of movables is transferred by delivery and payment in a normal cash transaction and upon delivery in a credit transaction.

Unlike in some other jurisdictions, ownership in the case of movables therefore does not pass on the mere agreement between the parties.

In South African law, the agreement, such as for example a contract of purchase and sale giving rise to transfer, being the reason for the transfer, is strictly separate from the juristic act of transfer.

The underlying agreement relates only to personal rights and obligations and an additional legal transaction relates to the transfer of ownership. Consequently, there are two separate legal acts, each with its own requirements.

The question that arises is whether in terms of South African law the parties are entitled to agree on a time of transfer of ownership other than as is provided above.

Even though the agreement which gives rise to the personal obligation to transfer and the actual agreement to transfer ownership of the movable property[2] may take place simultaneously it is possible to distinguish between them.

In principle, two requirements[3] must be satisfied for the transfer ownership of movables: the parties must, in the first place, intend to transfer ownership, and, secondly, they must give effect to that conveyance by delivery of the asset.

The real agreement is distinguishable from the contractual agreement that gives rise to the obligation to transfer.[4] Two requirements for a valid to real agreement are as follows. The property must be capable of being held in private ownership, and the transferor must be capable of transferring ownership.

The parties to an agreement for the sale and transfer of movables may therefore enter into an agreement to sell movables, but may also agree to a delay in payment under which the seller agrees to provide credit for the payment of the purchase price and agrees that the transfer of ownership may follow later or at a specific date.

Insolvent persons cannot transfer ownership. Minors, insane persons and fiduciaries can transfer ownership only with the assistance of their guardians, curators and beneficiaries respectively.

The transferee must be capable of acquiring ownership. Infants and insane persons are legally incapable of having the intention to possess, and therefore need the assistance of their legal representatives to comply with the necessary registration formalities.

At the moment of transfer, the transferor must have the intention to transfer ownership and the transferee must have the intention to accept ownership. Where a contractual party takes the law into his or her own hands and takes possession of the object in the absence of an intention to transfer ownership on the part of the transferor, the usurper does not become owner, but a possessor in bad faith, open to a ‘mandament of spolie’ (a type of order for restitution) or other remedy.

This is an extract of an international publication, Globe Law and Business which was published in 2015

[1] C G van der Merwe (ed) “Ownership” in Francois Du Bois (general ed) Wille’s Principles of South African Law, ninth edition,

[2] Van der Merwe, Sakereg, p300.

[3] Wille ‘s Principles of South African Law, ninth edition, p520.

[4] Wille’s Principles of South African Law, ninth edition, p521.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E&OE)

HOW GENERAL IS THE GENERAL MORATORIUM IN BUSINESS RESCUE

By: Danielle Koen and Thabile Fuhrmann

Since the inception of Chapter 6 of the Companies Act 71 of 2008, many creditors have become loathe of the word moratorium albeit the cornerstone of business rescue procedures. Section 133(1) of the Companies Act heralds the automatic and inevitable consequence of the commencement of business rescue proceedings, the general moratorium. The section sets out, with a number of exceptions that, during business rescue proceedings, no legal proceeding, including enforcement action, against the company or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with in any forum.

What we have come to understand about Section 133(1) is that it acts as a general moratorium or stay on legal proceedings or executions against the company, its property and its assets and, on the exercise of the rights of creditors of the company. This general moratorium, in principle, restricts legal proceedings against the company since such proceedings may have a detrimental effect on the outcome of the business rescue process. The stringency of the protection afforded to the company is however not a blank restriction against proceedings and can be relaxed by inter alia, (a) the written consent of the business rescue practitioner and (b) leave of the court.

The ambit of what is meant by legal proceedings and enforcement action was initially an uncertainty. A practical interpretation of the section clearly intends that enforcement action relates to formal proceedings ancillary to legal proceedings, such as the execution of court orders by means of writs of execution or attachment. These steps against the company cannot be initiated, and if they have already commenced, are frozen until the written consent of the business rescue practitioner or leave of the court has been obtained. A clear understanding of ‘enforcement action’ or legal proceedings relates to that which must be commenced or proceeded with in a forum, i.e. a court or tribunal. If this is what is understood by ‘enforcement action’ what then is left of a creditors contractual rights and obligations in terms of an agreement concluded between it and the company in rescue?

In a recent decision of the Supreme Court of Appeal, Cloete Murray NO & another v FirstRand Bank Ltd (20104/2014) [2015] ZASCA 39, the issue to be decided by the court was, whether once business rescue proceedings have commenced, the creditor of a company under business rescue can unilaterally cancel an existing agreement that it had concluded with the company prior to it being placed under business rescue.

Briefly set out, on 22 July 2010, FirstRand Bank Ltd t/a Wesbank, concluded a written Master Instalment Sale Agreement (the MISA) with Skyline Crane Hire (Pty) Ltd, in terms of which Wesbank sold and delivered movable goods to Skyline, with Wesbank retaining ownership in the goods until the purchase price had been paid in full. Skyline was voluntarily placed under business rescue on 30 May 2012 and by that date had fallen into arrears with its monthly payments to Wesbank. On this same date, Wesbank sent a letter to Skyline cancelling the MISA as a result of Skyline’s failure to make payment and reserved its right to repossess the goods, value and sell same and credit the relevant accounts. In any event, Wesbank sought and obtained the written consent of the business rescue practitioner to cancel the MISA. The business rescue proceedings were eventually discontinued and Skyline was placed in liquidation.

The liquidators of Skyline, the appellants in this instance, were of the view that in terms of Section 133(1), the cancellation of an agreement constitutes ‘enforcement action’ which requires the consent of the business rescue practitioner or the court. The court disagreed and found that if this interpretation was favoured, it would fundamentally change our law of contract which provides for unilateral cancellation in the case of a breach of contract.

Business rescue is intended to provide a company in distress with the necessary breathing space to enable it to restructure its affairs by placing a moratorium on legal proceedings and enforcement action but is not intended to interfere with the contractual rights and obligations of the parties to an agreement. This lends itself then to the concept that the general moratorium is a temporary one in respect of a creditor bringing claims against the company, rather than a greater restriction on a creditors’ rights. The decision of the Supreme Court of Appeal has therefore confirmed that the general moratorium is not as generally wide or far reaching so as to equate a creditor’s contractual right of cancellation to that of enforcement action and, that these concepts are in fact mutually exclusive.

Danielle Koen and Thabile Fuhrmann are attorneys at Cliffedekkerhofmeyer Attorneys at their Johannesburg Office

www.cliffedekkerhofmeyr.com

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)