The issue of property attached by a creditor is at the centre of this week’s reader question, posed to our panel of experts by an estate agent.
He wants to know whether a property owner, whose property has been attached by a creditor due to unpaid debt, is still able to sign a sale mandate with an estate agent.
Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says when a person registers a mortgage bond as security to the financial institution granting the home loan, the latter becomes a creditor with a preferential claim against the person’s estate.
“This means the property will act as security for the repayment of the loan as well as any other costs incurred by it, excluding other creditors, up to the maximum amount covered by the bond.”
Geldenhuys says if a person fails to repay a home loan, the financial institution will eventually initiate steps to foreclose on the property. “They will obtain a judgement against the owner, attach the property and sell it on a public auction.”
Once a bondholder or other creditor obtains a judgement against a property owner, and a writ of execution has been issued by the court authorising the attachment of the property, an attachment interdict is noted by the deeds office, according to Geldenhuys.
“This effectively prevents any further dealings with the property at the deeds office until it is sold by the creditor, or until the creditor uplifts the attachment.
“However, once the property has been attached, it does not mean that the owner may no longer sell it,” says Geldenhuys. “The owner may still give a mandate to an estate agent or may attempt to sell the property privately before it goes on auction.”
Schalk van der Merwe from Rawson Properties Helderberg says it is most certainly necessary for the owner to advise the agent that there is an attachment against the property. “The creditor responsible for the attachment will only agree to uplift it if satisfactory arrangements have been made to settle the outstanding debt from the proceeds of the sale.”
Van der Merwe says if these are not sufficient to settle the creditor’s claim, there may be a substantial delay in transferring the property to the buyer while the owner negotiates with the bank or creditor in respect of the shortfall. “There are also no guarantees that the bank or creditor will agree to a payment arrangement.”
This will cause the owner to be in breach of the sale agreement as he/she will not be able to pass transfer to the buyer, according to Van der Merwe.
“By informing the agent beforehand of a possible delay that may be caused by the attachment and the resulting negotiations, the agent can in turn inform the potential buyer. This will allow the buyer to make an informed decision with regard to purchasing the property.”
Van der Merwe says the owner must also protect himself in the sale agreement by inserting a suspensive condition that the contract will only be binding if the creditor, who attached the property, consents to the transaction.”
Send your property related questions to coetzee[at]fullstopcom.com.
[ad#Google Adsense 234×60]
