Department of Private Law

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Browsing Department of Private Law by Author "Brits, Reghard"

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    Purging mortgage default : comments on the right to reinstate credit agreements in terms of the National Credit Act
    (Juta Law Publishing, 2013-01) Brits, Reghard
    Section 129(3) and (4) of the National Credit Act provides debtors who are in default with their credit agreements with the right to reinstate such agreements by paying the actual amounts that are overdue as well as permitted default charges and enforcement costs. Particularly in the mortgage foreclosure context, this mechanism provides relief for credit consumers and it might just be the last opportunity for mortgage debtors to save their homes. Mortgagees are traditionally entitled to refuse the late payment of home loan instalments and therefore to continue with foreclosure, the result being sale in execution of the home. However, the Act has changed this state of affairs and now allows debtors to prevent and even reverse the creditor's election to foreclose by complying with the requirements for reinstatement. Therefore, the operation of acceleration clauses is now qualified by the principles of reinstatement. It is possible to reinstate the mortgage agreement after judgment has been granted, and even after the property has been declared specially executable and attached. However, from the point that the property is sold at the auction, reinstatement is no longer possible. The result of reinstatement is that the attached property is released from the execution process and returned to the debtor. The credit agreement will continue to operate as it did prior to default.
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    The statutory security right in section 118(3) of the Local Government: Municipal Systems Act 32 of 2000 - does it survive transfer of the land?
    (Juta Law Publishing, 2014-01) Brits, Reghard
    The Supreme Court of Appeal's decision in City of Tshwane Metropolitan Municipality v Mathabathe 2013 4 SA 319 (SCA) may have some implications for the interpretation of section 118(3) of the Local Government: Municipal Systems Act 32 of 2000. This subsection provides that municipal debts constitute a "charge" upon the immovable property to which the debts relate. In other words, municipalities are afforded a type of statutory real security right that secures payment of the debt. A potential problem with the decision is that one could read it to mean that the municipality's security right is enforceable against successors in title, hence that it continues to exist even after the property has been transferred to a new owner. This prospect is controversial because it could have the effect that a later owner is held liable for the municipal debts incurred by a previous owner. Just as problematic, the municipality's charge would enjoy preference above the claims of mortgagees. This contribution discusses the case and briefly considers whether the supposed interpretation is sustainable. A suggestion is made regarding the way in which section 118(3) should be interpreted so that it makes practical sense, has fair consequences and is in line with section 25(1) of the Constitution of the Republic of South Africa, 1996. The conclusion is that the municipality's charge is not enforceable against successors in title, but that it must be enforced before or at transfer of the property.