TRANSFER OF PROPERTY | PRESCRIPTION: Who commands the stronger right towards the immovable property?

Commercial
Clement Dankuru - June 2, 2022

Introduction

The Prescription Act 68 of 1969 (the Prescription Act) provides different periods for different claims, except where an Act of Parliament provides otherwise. The period of prescription of any debt not listed in section 11 (d) of the Prescription Act shall be three years. 

Scenario

 In 1998 a seller sold the property to Buyer A for a sum of money. This transaction was reduced to writing by way of an agreement complete with terms.

Despite meeting the purchase price, Buyer A neglected to take occupation of the property or transfer it into their own name. In 2020, the seller entered into another written agreement with Buyer B to purchase the same immovable property for a sum of money. Buyer B indicated his intent by meeting the purchase price and paying the rates and taxes at the Johannesburg Municipality on the property. Buyer B immediately took possession of the property in terms of the written agreement. Buyer B started building on the premises with the full knowledge and consent of the Seller. He had erected one complete room and nine structures.

Buyer B intends to transfer the property into his own name but is abruptly served with an interim order from Buyer A, stopping him from erecting any further structures or transferring the property into his name until the return date

What does the law say?

In Lorentz v Melle 1978 (3) SA 1044 (T) the court took the opportunity to make a distinction between a personal right and a real right in property. It was stated that a personal right, gives its holder the capacity to claim something from another person, while a person legally entitled to control or make use of the immovable property is said to have a real right to that property. The distinction between these two rights finds importance when we accept the legal principle set by the courts, providing that ‘in the event of a sale of immovable property a real right is only obtained upon registration.’ The purchaser only acquires a personal right. The rules of common law provide that a real right is a right enforceable against the whole world; that is, against the owner of the property and all other persons who have claims to property by virtue of a contract with the owner.

Therefore, prior to occupation or transfer, the holder of the personal right (which Buyer A purports to be) has no direct control over the house itself. Thus, it is often argued that buyer A has no interest in the land but may have a claim against the seller.

In the case of, the Road Accident Fund v Mdeyibe 2011 (2) SA 26 (CC) the court decided that the right to transfer property is a debt described in section 11 (d) of the Prescription Act 68 of 1969 to which prescription applies.

Does Buyer A have a right to claim?

Buyer A’s claim or interest is nothing more than a claim for the enforcement of the purchaser’s right to ownership or occupation. As such, it is a personal right.

To enforce this right buyer A should have instituted legal proceedings against the seller to claim the transfer of the land or to take possession. Buyer A, on these sets of facts, will face prescription difficulties.

It has been years since the purchase of the premises by Buyer A, and certainly, if we are to apply case law Buyer A’s right to have the property transferred into his own name in the event of the dispute has been prescribed.

Conclusion

When you purchase immovable property, be mindful that absent registration only holds a personal right susceptible to prescription after three years. Where a person buys property but fails to take possession or transfer ownership. It does not follow that where a third party takes possession of the said property, the initial buyer is deprived of possession or ownership. The initial buyer, in actual fact, has no more than a personal right 

Clement Dankuru

Clement Dankuru

Senior Associate Attorney

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