“The only man who sticks closer to you in adversity than a friend is a creditor.” (Evan Esar)
Body corporates face a familiar problem. Owners fall into arrears. Levies go unpaid. Legal costs mount. The temptation is to reach for the most forceful remedy available.
Sequestration may seem like that remedy. If an owner will not pay, why not have them declared insolvent?
A recent Gauteng High Court judgment offers a clear warning. A body corporate sought the sequestration of a unit owner for levy arrears exceeding R1.4 million. With such a substantial debt, the body corporate’s frustration was understandable. But the application failed.
The court held that the body corporate had not met the statutory requirements under the Insolvency Act. In particular, it had not shown that sequestration would be to the advantage of creditors. The court also noted that the body corporate had other execution remedies available and emphasised that sequestration proceedings are not intended to function as a debt-collection mechanism.
What is sequestration?
Sequestration is a court-ordered insolvency process under the Insolvency Act. It applies where a debtor can no longer meet their financial obligations. The court places the debtor’s estate under the control of a trustee, who sells the debtor’s assets and distributes the proceeds among creditors.
The test for sequestration
To succeed, the applicant must establish three things:
The debtor has committed an act of insolvency, or is actually insolvent.
There is reason to believe sequestration will be to the advantage of creditors.
The applicant has a liquidated claim against the debtor.
The second requirement is where many applications come unstuck.
Where sequestration applications unravel
Sequestration is not designed to punish debtors or pressure them into payment. It’s a collective remedy, intended to ensure the orderly distribution of a debtor’s assets among all creditors.
The applicant must prove that there’s a good chance that creditors will receive a meaningful dividend. If the debtor has no realisable assets, or if the costs of sequestration would consume whatever value exists, the application will fail. The court will not grant sequestration simply because a debt is owed.
Sequestration is not leverage
In practice, some creditors use sequestration applications as a form of pressure. Their reasoning is simple: the threat of insolvency may prompt the debtor to settle. But our courts have made clear that this is not appropriate.
In this case, the court emphasised that insolvency proceedings are not a private debt-collection mechanism. They carry serious consequences: loss of control over assets, restrictions on legal capacity, and reputational harm. These consequences are justified only where the statutory purpose is served.
Where the true aim is to recover a debt rather than administer an insolvent estate, the court will refuse the application.
What body corporates should consider
Before pursuing sequestration, a body corporate should ask practical questions.
Does the owner have realisable assets? If the only asset is the unit itself, and it is bonded, there may be little left after the bondholder is paid.
Would the costs of sequestration exceed the likely recovery?
Has the body corporate exhausted more conventional remedies? A judgment, followed by execution against property, may be more direct and effective.
If the answers suggest that sequestration will not benefit creditors, the application is unlikely to succeed.
Other options
Body corporates have several remedies for levy recovery: obtaining a judgment and executing against the property, applying for an attachment of emoluments, or seeking a sale in execution.
Each has its own requirements, but they are all designed for debt recovery (unlike sequestration).
Where this leaves body corporates
Sequestration is a remedy of last resort, not a debt-collection tool. The Insolvency Act sets strict requirements, and courts will hold applicants to them. If you are unsure which remedy is appropriate, we can help.
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
“We are also proposing additional tax measures to ease the financial burden on households and businesses, by adjusting personal income tax brackets and rebates fully in line with inflation.” (Minister of Finance Enoch Godongwana)
How much will I save if I sell my house?
A big highlight for property sellers and buyers is that, having remained unchanged since 2012, the primary residence exclusion for Capital Gains Tax has been increased from R2 million to R3 million. In addition, the annual CGT exclusion has been increased for individuals by 25% from R40,000 to R50,000, and for deceased estates by 47% from R300,000 to R440,000.
The big win is that when you sell your primary residence (the home you live in), the first R3 million capital gain is now excluded from CGT.
Have a look at the illustrative savings calculation below:
Primary residence CGT exclusion: R2m vs R3m
Transfer duty threshold unchanged
Unchanged from last year, you pay no transfer duty if the property you are buying sells for at (or below) the set threshold of R1,210,000.
Individual taxpayers:Your tax rates (and the associated rebates and medical tax credits) are increased in line with inflation. That’s welcome relief after last year’s unchanged tax tables which resulted in “fiscal drag” (also referred to as “bracket creep”) for anyone receiving a salary increase that pushed them into a higher tax bracket.
Trusts: Special trusts are by and large taxed as individuals, but other trusts are taxed at a flat rate of 45% – also unchanged from last year.
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
“Fraud unravels property transactions even where innocent third parties are involved.” (Extract from judgment)
Congratulations, you’re the proud new owner of your dream home! Your name’s on the title deeds, and your ownership is registered in the Deeds Office. That’s conclusive proof that the house is yours, right? Regrettably, this isn’t always the case…
Although registration is usually proof of ownership, there are exceptions. One exception is fraud. And a recent High Court case is a sharp reminder to every party to a property sale and transfer (seller, buyer, estate agent, conveyancer and bonding bank) that any sale and transfer tainted by fraud will almost certainly unravel.
As we shall see, a crooked “conveyancer” was at the heart of this particular saga, so perhaps the most important lesson here is one for sellers. Choose your conveyancer with care!
A crooked “conveyancer” defrauds both seller and buyer
Many of the facts in this convoluted story were in dispute, but the Court’s decision rested on these findings:
The owner, since 2011, of a house in Bloemfontein lived there with her elderly mother. She signed an agreement in 2020 to sell it for R300k to a trust. The sole trustee’s wife was an attorney, but not a qualified conveyancer. Nevertheless, she was appointed in the sale agreement as the “conveyancer” to attend to the transfer.
Shortly after signing the deed of sale, the owner changed her mind and said she was cancelling the sale. Although her “cancellation” seems to have been accepted by the trust, it was invalid for lack of being recorded in writing and signed. What her attempt at cancellation did prove was that she no longer had any intention of passing transfer to the trust. Moreover, the whole sale agreement fell through when the trust failed to get a bond as required by the bond clause. In the end, the owner received not a cent of the R300k, and presumably she spent the next three years happily confident that the sale had fallen away.
Imagine her shock when in 2023 she received an eviction application from a couple who had, without her knowledge, bought the house from the trust for R480k. Only then did she find out that the trustee and his attorney wife had secretly transferred her house, in consecutive transfers on the same day in 2022, firstly from her to the trust, and then from the trust to the couple. The couple were of course now convinced that the house belonged to them.
Off went our original owner to the High Court, which held that there was no doubt that the husband-and-wife team of trustee and attorney had acted in cahoots to defraud both the original owner and the eventual buyers. It accordingly declared both sales and transfers to be invalid and ordered the house to be re-transferred to the original owner.
Fraud unravels all
At the heart of the Court’s decision lies the old Roman concept of fraus omnia vitiat or “fraud unravels all”. There are some exceptions to the application of this principle in our modern law, but the general rule remains that where a property sale is tainted by fraud, any purported sale or transfer of ownership resulting from it is null and void.
Moreover, one can never pass on to another person more rights than one has. Since the sale to the trust was void, all subsequent sales must also be void regardless of registration of transfer. In any case, the second sale agreement had lapsed, again because of non-fulfilment of a bond clause.
For all those and a variety of other reasons, the original owner had never lost her ownership despite the transfers being registered in the Deeds Office.
The couple who bought the house for R480k must now presumably carry on paying their home loan instalments despite having no asset to show for it, and will be wondering whether they can recover their losses from anyone.
Everyone’s at risk, innocent or not
As the Court put it: “Fraud unravels property transactions even where innocent third parties are involved.”
Innocent or not, the seller might have lost her house had she been found to have enabled the fraud.
The buyers, despite being innocent of any fraud, did lose their house. They also have to pay legal costs (the Court criticised their delay in pursuing transfer and in finding out about the occupants) and have no guarantee of getting their money back from anyone.
Even the estate agents and the bank might have found themselves accused of negligence, perhaps for failing to inspect the house and asking the occupants about the basis for their occupancy. Had they done that, they would have uncovered the fraud.
Bottom line is this: Sellers, don’t take chances when choosing your conveyancer!
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
“All you need is love… and a good lawyer.” (Anonymous)
February, with its Valentine’s Day chocolates, roses and declarations of undying love, should be a month for romance, not legal niceties. But in the real world, love and the law are inextricably linked because any relationship’s structure and consequences are inevitably governed by legal principles. Losing sight of that can expose you to unnecessary angst, dispute, and litigation.
A recent High Court fight between an estranged couple over their jointly-purchased dream house illustrates this neatly.
Broken dreams, and a fall out over the house
A couple’s four-year romantic relationship saw them living together first in her mother’s house and then in his apartment. They then decided to buy a house together with the idea of making their relationship more permanent.
Unfortunately, that dream came to nought – their relationship ended a month after the property purchase, leaving only one of them to live in the house and to pay all the ongoing costs while they decided what to do next.
In due course they fell out over how to end the co-ownership and how to adjust their respective claims for past and future property costs.
Their dispute reached the High Court, which ordered firstly that the co-ownership be terminated. This was necessary, because no co-owner can be forced against their will to remain a co-owner where the relationship between the co-owners has deteriorated to such an extent that it can’t continue.
Then, using an old Roman law remedy still in use today (the “actio communi dividundo”) the Court dealt with both the division of the property, and the adjustment of the various financial claims between the parties. As is usually the case, these were complex and intertwined after years of cohabitation.
Importantly, the Court noted a modern move away from the traditional principle that the property should necessarily be sold by public auction to the highest bidder, towards a much more flexible approach based on the Court having a wide discretion to ensure a fair and practical outcome in each case.
Thus, having considered all the circumstances, wishes and claims of both parties, the Court ordered that the ex-partner living in the house has a first option (valid for 60 days) to buy the other’s half share at valuation. If he doesn’t, he must offer it for sale on the open market at a fair and reasonable market-related price. If there’s still been no sale after 6 months, the Sheriff of the High Court becomes a “receiver and liquidator” and has 4 months to auction the house. The bond, costs and parties’ related financial claims will be settled from the proceeds as directed by the Court.
“Co-ownership is the mother of dispute” – But it needn’t be
“Co-ownership is the mother of dispute” (“communio est mater rixarum”) is another old Roman law concept mentioned by the Court. It confirms that joint ownership has always, since ancient times, inherently provided fertile ground for instability and dispute.
But that needn’t be so. An upfront agreement between joint owners, whether their arrangement is grounded in a commercial or a personal relationship, can hugely reduce the risks of later uncertainty, disagreement and litigation.
Put as much detail into your agreement as you can, including a detailed process of how to end your co-ownership if required. Litigation – with its delay, expense, and uncertain outcomes – should never be embarked on lightly. As the Court wryly quoted from a previous decision, “a court cannot perform miracles”. It will of course do its best to craft the fairest possible outcome for both parties, but avoiding the dispute altogether is always a better option for everyone involved.
P.S. Don’t forget your cohabitation agreement
As a final thought, if you are living with your life partner, you should have a full cohabitation agreement to cover not only your co-ownership arrangement, but also all the other financial and personal aspects of your relationship that would normally be governed by our marriage laws.
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
“Wouldn’t it be nice to get on with me neighbours?” (from “Lazy Sunday” by Small Faces)
Maintaining friendly relations with the neighbours, or at least an “I’ll ignore you if you ignore me” sort of neutrality, has probably been a primary aim of homeowners since the dawn of history. No doubt even our cave dwelling ancestors were as keen to get on with the Joneses next door as they were to keep up with them. But as we all know, it’s not always easy.
A recent High Court fight over parking rights is unfortunately pretty much par for the course when it comes to neighbourly relations deteriorating into open conflict, both inside and out of the courtroom.
“You can’t park here!” “Yes, we can!”
The setting for this fight: Higgovale, a small and affluent suburb on the slopes of Table Mountain in Cape Town. In one corner: a couple with the right to access their garage using a servitude road. In the other corner: the neighbours, alleged to have impeded the couple’s garage access by parking in the road.
At the heart of the dispute: the road servitude. Servitudes involve a balancing act between the right of the “dominant owner” to exercise the servitude and the right of the “servient owner” to have the servitude exercised in such a way as to impose the “lightest burden” on their property. The tensions inherent in such a relationship can easily escalate into conflict – exactly what happened here.
The garage-owning couple’s initial stance was to ask the Court for a blanket interdict against all parking by the neighbours in the road, but they later softened that to ask only for an order against their garage access being obstructed.
The Court had no hesitation in ordering that the neighbours “are interdicted and restrained from parking vehicles on the servitude area at … Higgovale, in such a manner as to unreasonably obstruct the applicants from entering and exiting their property and exercising their right of way.”
In doing so, the Court took the parties to task for failing to settle their dispute out of court, and urged them “to engage with each other in a manner that promotes the spirit of ubuntu, and the constitutional vision of a caring society based on good neighbourliness and shared concern” (emphasis supplied), and to consider demarcating parking bays in the road as a short-term solution.
The parties now have to pay their own costs (except for the costs of one interim application), and they’re effectively back to square one: having to engage with each other to try to find a fair solution.
What’s a “reasonable neighbour”?
Per the Court (emphasis supplied): “While the common law requires that neighbours act reasonably, the Constitution shows what a reasonable neighbour looks like. She is not only concerned with advancing her own private interests but cares also for the needs of her neighbours. She seeks mutually beneficial solutions. The mindset of the reasonable neighbour is one of collaboration, not competition. She sees herself not as an isolated individual, but a partner in an interdependent community of persons, all of whom are to be respected and valued.”
First prize: Settle!
Courts want us to settle these sorts of disputes in that collaborative spirit, without recourse to law. But if a friendly discussion over a cup of coffee doesn’t resolve the situation, more robust action might be unavoidable – we’re here to help if you need us.
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
“With a verbal agreement you have nothing but air.” (Author and entrepreneur Robert Ringer)
2026 opens with positive signals for our property market after last year’s encouraging GDP forecasts, a credit-rating upgrade, and a series of interest rate cuts boosting access to bond finance.
All the signs point to a promising year for buyers, sellers, and homeowners. But a recent Supreme Court of Appeal (SCA) judgment is a sharp reminder that getting the legalities wrong, and in particular trying to rely on verbal promises, could mean a very rocky start to your new year. It’s also a reminder that while co-ownership can be a practical way to access and share property, it must be properly structured. When relationships sour, the fallout – as this case aptly shows – can be severe.
One husband discovered all that the hard way, so let’s learn from his mistakes.
“You can’t evict me, I own half the house!”
The central feature of this unhappy tale is unfortunately an all too common one – a personal relationship gone horribly wrong.
A couple married in 2009 and jointly bought a house in 2015. When the husband hit financial trouble in 2017, and creditors threatened to attach his half share, the couple agreed that the wife would buy him out for R1.2 million. A written Deed of Sale was signed, the transfer went through, and she became the registered sole owner. Unsurprisingly, given the purpose of the sale and transfer, she never actually paid him the R1.2 million purchase price.
When the marriage hit the rocks in 2019, she moved out and he stayed on. They divorced but he refused to vacate, arguing that the Deed of Transfer did not reflect their “true intention”. This, he claimed, was for him to remain a co-owner “until it was less risky”, after which she would give him back his half share.
The dispute landed in the SCA, where the ex-wife insisted that the intention was always that the property would be hers alone.
The SCA held that ownership is a question of law, not a factual dispute to be resolved by choosing between different versions of a story. The Court found that the ex-wife remained the sole owner, and its reasons for doing so provide a clear checklist of principles that every buyer, seller, and property owner should keep in mind.
What the ex-husband got wrong, and how to get it right
Let’s discuss the legal principles that sank the ex-husband’s case:
Don’t rely on a verbal agreement: Although our law makes most verbal contracts binding, there are exceptions. One is that any agreement to sell, exchange, donate, or transfer land (or a right to claim transfer) must be in writing and signed to be valid. That includes any “side deals” intended to vary the terms of the sale agreement. So, even if the Court had accepted the ex-husband’s version, a verbal promise to “give back” a half share would have been void and unenforceable.
Make sure your sale agreement is crystal clear: The Court also found the alleged verbal agreement to be “fatally vague” – a poignant reminder to always record agreements with enough detail to avoid them being struck down as “void for vagueness”.
A non-variation clause is essential: Contracts should state that they may not be changed unless the variation is in writing and signed. This is a great way to protect against uncertainty and dispute. The Deed of Sale here contained such a clause, which made the husband’s purported verbal amendment ineffective. There’s a lesson for us all here: never accept verbal assurances or promises from the other party, always insist on them being properly incorporated into the sale agreement in writing.
The value of a “whole agreement” clause: This clause confirms that the written contract reflects the entire agreement. With it in place, no outside evidence can contradict or add to the document – yet another reason the ex-husband found no joy at the SCA. Make sure that your written sale agreement is comprehensive, with nothing important omitted!
On transfer, “intention to pass ownership” is binding and motivation is irrelevant: The couple in this case transferred ownership intentionally and deliberately, and their personal motives for doing so were irrelevant. Equally irrelevant was the fact that the wife never actually paid the husband the purchase price – all that counted was the intentional transfer of ownership.
Complying with all legal formalities is important whether you are a buyer, a seller or an owner. As always, sign nothing without our advice!
Disclaimer: The information provided herein should not be used or relied on as 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 us for specific and detailed advice.
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