In or about 2006, the deceased, namely Nkhwile Alpheus Moropo acquired a property (“the Property”) in terms of the Housing Act No. 107 of 1997 (“Housing Act”). Prior to his death the deceased sold the property to the First Applicant (Initial Sale) and separately to First Respondent (Second Sale).
The Initial sale was not in accordance of section 10A(1) of the Housing Act, which prevented the deceased from being able to lawfully alienate the property within eight years of acquiring the Property without the consent of the relevant provincial housing department (“Department”), or unless it had first been offered to the Department. However, the Property was never transferred to the First Applicant despite the Applicants taking occupation of the Property. In the second sale, the deceased transferred the property to the first respondent on 31 st July 2013, however, the First was unaware that property had already been sold to the First Applicant and was occupied by the Applicants.
The Applicants sought to have the transfer of the Property to the First Respondent to be declared invalid and for the First Applicant to be the beneficiary of the Property.
In light of the above, the deceased clearly did not possess the requisite authority to sell the Property to both the First respondent and First Applicant as the transactions did not comply with section 10A(1) of the Housing Act. The transfer to the First Respondent was also fraudulent as the First Respondent was not informed of the sale of the Property to the First Applicant.
As a result of the taint of fraud, notwithstanding registration in the deeds office, the transfer to First respondent was declared void ab initio and it was argued that this transfer should be set aside by the Court.
As the deceased had vacated the Property at the time of sale to the first respondent, his ownership had lapsed and the relevant provincial housing department was the deemed owner according to section 10 A(3) of the Housing Act. As this was the case, the court did not see the need to determine whether the First Applicant was the lawful owner/beneficiary of the Property and held that an application must be made to the Registrar of Deeds by the Provincial Housing department for the title deeds of the
Property to be endorsed to reflect it’s ownership of the property.
Moreover, the court considered the two requirements of the abstract theory of transfer namely, effective delivery (e.g effected by registration of transfer in the deeds offices) and whether there was a real agreement between the buyer and seller. In that ‘the essential elements of the real agreement are an intention on the part of the seller to transfer ownership and the intention of the buyer to become the owner of the property.
In the light of the fact that the sales were both prohibited in terms of the Housing Act and fraudulent, they cannot be described as bona fide. In this regard the transfer to the first repsondent is declared unlawful and set aside. The issue of beneficial occupation was a matter that can be taken up with the relevant provincial housing department.
The abstract theory of transfer applies to movable as well as immovable property. Accordingly, this means that the validity of the transfer of ownership is not dependent upon the validity of the underlying transaction.
However, the passing of ownership only takes place when there has been delivery effected by registration of transfer coupled to a ‘real agreement’. Moreover, where any such underlying transaction is tainted by fraud, ownership will not pass despite registration of transfer.
Written by Ayanda Katjitae and supervised by Musa Mathebula