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Estate problem

25 May 2017

We are sitting with the following problem which nobody can assist us with viz:

A person has died and bequeathed his estate to his heir who has renounced/repudiated the inheritance. All intestate heirs have similarly renounced/repudiated their inheritance.  In addition the executor cannot sell the land as there are no willing buyers due to a squatter problem and the Council also not interested.

The estate must now be wound up, but the problem is - how must the land be addressed in the Liquidation and Distribution account?

Allen West
Property Law Specialist
MacRobert Incorporated

Reader Comments: 20
Ken Mustard 25/05/2017:

I suggest that the executor resigns as executor and walks away from it.

T Msani 25/05/2017:

I suggest that the property must be transferred to the State like bonavacantia.

Susan Cohen 25/05/2017:

Would this not be regarded as bona vacantia? The asset would revert to and vest in the State. One could reflect the Asset in the L and D at a R nil value and award it back to the State. Vesting would take place automatically.

KJ Lanser 25/05/2017:

Maybe ask master for extension ito Reg5 for lodgement of account - request indefinite extension under the circumstances.

John Christie 25/05/2017:

Relying solely on my university education, and entirely off the cuff, I agree that the land will vest in the State - but I cannot accept that the property can be valued at nil rand in the L and D account. If that were so, then how can it be shown as an asset? Just as there can be never be a donation of anything of nil value, so there can be nothing disclosed in the estate accounts at nil value.

Robert 25/05/2017:

This is not bona vacantia. It is res derelicta - abandoned goods. It still has to be reflected at market value. But as for a beneficiary I would merely indicate that as ABANDONED GOODS and let the master direct the executor how to change it!

Allen West 26/05/2017:

It is submitted that the land can only become bona vacantia and vest in the State if same is abandoned. Our law does not allow for the abandonment of land. One will have to approach the Court for relief, however, if the estate is an impoverished one, this could also be a problem. I submit that one cannot give an asset no value and you cannot transfer it to the State without an order of court.

Mick Scheckter 26/05/2017:

I think that the correct answer to the problem is that the Liquidation and Distribution Account should reflect that the property is made over to the Guardian's Fund on the basis that there is no heir or the heir is unknown. Once it has lain in the Guardian's Fund for 30 years, it will be declared bona vacantia, and only then will it pass to the State.

Jan Boshoff 29/05/2017:

The Administration of Estates Act does not make provision for transfer of land to the Guardian's Fund. Only money may be deposited or a bond in favor of the Master registered. I believe that the municipality may still claim rates and taxes on the property and could ultimately end up with the land. I would use the municipal value, award the land to unknown heirs and ask for permission to advertise the account. No-one can with absolute certainty say that there are no intestate heirs.

One day, when some situation arises that warrants the property to be dealt with, the executor will be approached. He may then deal with the matter, award the proceeds of the sale/expropriation/ to unknown heirs and deposit same into the Guardian's Fund.

Dominique 30/05/2017:

What about approaching the squatters and asking them if one of them (or a group of them) is willing and able to purchase the land, even if it is for a silly amount, such as R10,000?

JOHN MCNAUGHT DAVIS 30/05/2017:

Meyerowitz in his 2010 edition at 19.9 says : 'Where there is a total failure of blood relations, the estate is forfeit to the fiscus, ie the State.' (Ex Parte Leeuw 22 SC 340 ; Voet 38.17.27) End of story? The land cannot be valueless. The squatters occupying the land could, in theory, each chip in say R1.00 per head and buy it out of the estate and take transfer?

Allen West 31/05/2017:

The squatters are not interested as they are aware that if they take transfer they will be liable for the rates etc.

Marie Pentz 01/06/2017:

This article is very interesting. I am doing many valuations of immovable properties for estates and I do agree that in this case it cannot have a nil value.

Frank Muggleston 01/06/2017:

If an asset has no value, then this does not mean that the asset ceases to exist. In the circumstances outlined above, the asset has no commercial value and a nil value would in my view be correct. Certainly, the Master in Cape Town has accepted this in the past, rightly or wrongly. But if the Master rejects a nil value, then from a practical point of view, a valuation of R1.00 will achieve the same result.

With reference to the distribution account, I would support the view that the asset should be awarded to undetermined heirs on the basis that it is virtually impossible that the deceased had no blood relatives at all. If no-one claims the property it will vest in the State after 30 years.

Suresh Parshotam 02/06/2017:

I believe that the municipality should be approached to exempt the property from rates until the informal settlement is eradicated and that the property should remain owned by the estate until then. When the settlement is removed the property should then be sold or transferred to the beneficiary concerned.

Jan Boshoff 05/06/2017:

On what grounds will the municipality exempt the property from rates? It will have to be in the municipal rates policy before this can be done and to have 'squatters' on the land nullifying its value in the municipality will be in transgression of a number of constitutional imperatives such as dignity, equality etc.

Thobelani Msani 09/06/2017:

I agree with Mr Davis above. About the value I think it is logical that no asset can have no value. If something has no value it is not an asset in as much as there can be no liability that is valueless and I submit that the Master at Cape Town was mistaken.

Willem v Rensburg 09/06/2017:

I presume that the municipal rates and taxes are in arrears and that the amount is substantial. Whether it is substantial or not I suggest that the Exeuctor sells the land to the local municipality and that the outstanding rates and taxes are subtracted as part/full payment of the purchase price.

Robert 16/06/2017:

Please keep us updated as to the final outcome.

Piet Fourie 19/06/2017:

I have the exact problem with a few more complications. The heirs don't live in SA; the estate own half of the property and the other half belongs to a person living in the UK who is not responding at all. Due to arrear rates and squatter occupation nobody wants to buy the half share. The master will now accept an renunciation on oath by the heirs who will then withdraw their nomination for me as executor.

Thereafter he will allow me to resign as executor. I have a separate fee arrangement with the heirs. Perhaps one day the municipality will sell it for arrear rates or the health department will demolish it. There is no money to establish what should happen to the property or to answer the question of vesting. The practical way is just to get out. In retrospection I should never have gotten "in", but the problems are not always clear when you report the estate.

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