Our panel has received a lengthy question from a reader regarding the sale of a property where the rights of several creditors come into question.
The reader landed in financial difficulty after trying to assist a family member with his debts and, in the process, fell behind with his own bond repayments. He also has various other creditors knocking on his door.
He decided to sell the house in order to pay his creditors. A buyer – who had no knowledge of the outstanding debts – appeared on the scene and an agreement of sale was entered into.
During the transfer process it however emerged that several creditors had obtained interdicts against the owner and the sale transaction had to be suspended to rectify the situation.
Lucille Geldenhuys
Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says even though there are other creditors threatening to take action against the reader, the bank, as first bondholder, is a so-called secured creditor. “In other words, the bond over the property secures the outstanding debt owed to the bank.”
This, says Geldenhuys, is in contrast to a preferent creditor (SARS being a good example) who does not hold security in respect of any outstanding monies owed to them, yet receives special treatment in terms of certain legislation – especially when it comes to the transfer of property.
In terms of Section 92(1) of the Deeds Registries Act 47 of 1937 a transfer of land shall not be registered unless accompanied by a receipt or certificate from a public revenue officer that confirms that taxes and duties on the property have been paid, according to Geldenhuys.
“It should further be noted that SARS has the power to declare the conveyancing attorney an agent for the purpose of collecting outstanding taxes in respect of a party to a conveyancing transaction and that certain obligations flow from such an appointment.”
Schalk van der Merwe - Rawson Properties
Referring to the above, Schalk van der Merwe from Rawson Properties Helderberg says the conveyancer has a positive duty to uphold the revenue legislation and to ensure that what is due to SARS, is paid.
The other aspect that needs to be explored is the protection by the Debt Council that the reader refers to in his letter, says Van der Merwe.
“The National Credit Act of 2005 provides for a debt counselling process for over-indebted consumers. Such persons can enter into this process voluntarily or be referred by the court or a credit provider such as the bank.”
Van der Merwe says consumers are deemed to be over-indebted when they cannot meet their monthly debt repayments from their available income. “Once a consumer is placed under debt review, credit providers may not take legal action.”
However, a debtor will not automatically be protected by the provisions of the act, says Van der Merwe. “The debtor may be found not to be over-indebted and will then not qualify for the debt review process.”
Van der Merwe says some form of referral is required before the process starts, even if it is by the debtor himself.
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