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Some thoughts

29 January 2009

The 2007 Registrars' Conference was held at a game lodge in the North-West Province. The roars of the lion next to my chalet almost made me leave prematurely, however, my commitment to this article made me stay for the entire duration of the conference. I must confess that attending the conference helps a great deal in making commentary on conference resolutions. In this article, only four of the resolutions are discussed. The resolution is quoted in full, followed by a discussion thereof.

10/2007 RCR 15/2006 - Section 45, 45(bis), 45bis(IA) - Bonds over exclusive use areas

This resolution is inconclusive, as it does not deal with the substitution of bonds registered over exclusive use areas. Should bonds be cancelled option?

Resolution:
No, the bond does not have to be cancelled, however, as an alternative the exclusive use areas may be released from the operation of the existing bond and a new (collateral) bond be registered.


This resolution is complementary to RCR 15 of 2006, which did not deal with the issue of bonds over exclusive use areas (EUA) in the event of the dissolution of a joint estate. The wording of the resolution, however, raises questions relating to its application.

The first question is whether it should be obligatory to cede the entire EUA or whether it would be permissible to cede only the share of the former spouse. It must be borne in mind that the practice of the deeds office in these circumstances is to deal only with the share of the former spouse, thus leading to a situation whereby the receiving spouse becomes a registered owner/holder under two title deeds, i.e. one half share under the title deed registered in favour of the joint estate and the other half share under a new deed that brings about the dissolution of the joint estate. In circumstances where section 57 of the Deeds Registries Act is applicable, the new deed then gets endorsed with regard to the existing bond.

The second question relates to what would happen in relation to a bond that hypothecates only an EUA and not a unit as well. Only time will tell.

40/2007 Copy of Section 11(3)(b) - Schedule of Conditions

Should the office copy and client's copy of the section 11(3)(b) schedule of conditions be lost, under what authority can application be made for a copy thereof?

Resolution:
The principles contained in section 38 of Act No. 47 of 1937 can be used.


The question asked, though not part of the resolution as such, creates an impression that there exists what is referred to therein as a client's copy of a section 11(3)(b) schedule. This impression, however, could be misleading. The fact of the matter, however, is that there is no such a thing as a client's copy of a section 11 (3)(b) schedule. What happens in practice, or perhaps what should happen, is that the original schedule lodged with the opening of a sectional title register is filed in a sectional title file and microfilmed/scanned for archiving purposes.

In view of the fact that there is no such thing as a client's copy, it stands to reason that when the deeds office copy is lost it is the deeds registry that must take the necessary steps to obtain a replacement copy. At this stage it is of interest to examine the reason that would necessitate a replacement copy. In terms of sections 17(3)(c), 29(2), 49(4)(e) and regulations 14(5)(c), 17(2), 27(3) and 28(2) of the Sectional Titles Act, the registrar of deeds must effect endorsements of the section 11 (3)(b) schedule in giving effect to registration acts referred to in the said sections and regulations.

The next issue that merits interrogation is whether the replacement could be an accurate reproduction of the original. It must be categorically stated that, where the provisions of section 11(2) were invoked, it could be impossible to obtain an accurate version of the original.

42/2007 Right of Extension and Section 15B(3) Certificates

Is it the duty of the registrar of deeds to check the right of extension on transfer of a unit to determine if same has lapsed, and if so, how must the 15B(3) certificate be couched or must section 68(1) be complied with, where same has lapsed.

Resolution:
No, it is not the duty of the registrar of deeds to check the right of extension on transfer of a unit. It is the duty of the conveyancer to determine whether or not the right of extension has lapsed. If it has been determined that such right has lapsed, then a section 68(1) application by the body corporate must be lodged. The 158(3) certificate must reflect that a right of extension has been registered, but that such right has lapsed.


This resolution revolves around the question of how to deal with a right of extension that has lapsed when transferring a unit. The big question, however, is how it will work in practice? Where the relevant certificate, as they normally do even if the right has actually lapsed, states that the registration of a right of extension has been disclosed in the deed of alienation, should the examiner insist that the certificate must reflect that the right was registered and has lapsed as well as insist on a section 68(1) DRA application? If not, why not? Secondly, how does one ensure that conveyancers determine the lapsing of rights of extension and not resort to certifying as regards disclosure, more, especially in the light of the fact that the resolution emphatically dissociates the registrar of deeds from the duty of checking whether such right has lapsed or not? Thirdly, is it justifiable to prejudice an owner, and by extension the purchaser, by refusing the registration of transfer of a unit pending a 68(1) application that might take a lengthy period to register? In my view, it is not!

Issues relating to this resolution are a common occurrence in the deeds registry and one would wonder how I would deal with this matter in practice. I, however, prefer to deal first with how I have dealt with this issue in the past. Frankly, I used to investigate whether the registered right of extension had been fully exercised or whether the time period linked thereto had not expired. Once I had determined that a right of extension had lapsed, I would totally ignore what was contained in the conveyancer's certificate. Now, I will no longer bother myself with making any investigation, but will reject a certificate that states that no right of extension is registered.

The real problem, however, lies with the fact that the Sectional Titles Act delves on registration of the right and ignores the issue of operability of the right. Secondly, the Sectional Titles Act fails to deal with the issue of disposal where the right has either been fully exercised or where it has lapsed by effluxion of time. I humbly submit that the problem at hand can be solved by effecting appropriate amendments to the Sectional Titles Act.

43/2007 Reservation of Right of Extension- Section 25(1)
What procedure must be followed where it is ascertained subsequent to registration that the reservation of a right of extension does not disclose a period of time in which the right must be exercised?

Resolution:
A Notarial variation agreement entered into between the body corporate and the developer, with the written consent of all members of the body corporate as well as with the written consent of the mortgagee of each unit in the scheme, falling the agreement or the obtaining of all consents, an order of court must be obtained.

Should a body corporate not be in existence, a section 4(1)(b) application may be lodged where a right has been reserved, from time to time, but no specific period has been stipulated in the condition.

In dealing with this resolution, it is imperative to interrogate the probable cause. Could it be because the relevant section did not, at inception, require that a specified period of time should be disclosed or that the real reason is sloppy examination? The real reason, however, is sloppy examination, because the section did, at inception, require the disclosure of a specified period of time. In this regard see the original wording, before the 1991 amendment, scanned from the ninth issue of the 1986 Juridata, for ease of reference.

"25. (1) A developer may, subject to the provisions of section 5 (7), in his application for the registration of a sectional plan, reserve, in a condition imposed in terms of section 11(2), the right to erect and complete from time to time, but within a period stipulated in such condition, for his personal account-
(a) a further building or buildings; or
(b) a horizontal extension of an existing building; or
( C ) a vertical extension of an existing building, on a specified part of the common property, and to divide such building or buildings into a section or sections and common property and to confer the right of exclusive use over parts of such common property upon the owner or owners of one or more of such sections"

Having established that the real cause of the problem is nothing but sloppy examination, the next issue worthy of interrogation is the timing. In other words, at which stage will this resolution be given effect to? Will it be when a sectional plan of extension is to be registered or must the registrar of deeds conduct a general audit of all rights of extension or could it be at a level of transfer of a unit? It would, indeed, be interesting to see how the deeds office would go about in giving effect to this resolution.

George Tsotetsi
Office of the Chief Registrar of Deeds
Republished with permission from SA Deeds Journal



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