Study Theme 2: Property Law PDF

STUDY THEME 2: PROPERTY LAW CONCEPT OF PROPERTY INCLUDING REAL VS PERSONAL RIGHTS THE MEANING OF PROPERTY The law of property is concerned with the rights of persons towards one another in respect of things external to persons which have a pecuniary (relating to money or having financial interest)...

STUDY THEME 2: PROPERTY LAW CONCEPT OF PROPERTY INCLUDING REAL VS PERSONAL RIGHTS THE MEANING OF PROPERTY The law of property is concerned with the rights of persons towards one another in respect of things external to persons which have a pecuniary (relating to money or having financial interest) or sentimental value to them. The notion of property in its wildest sense includes not only corporeal or tangible things, like land and motor vehicles, but also incorporeal or intangible objects, such as rights, shares in a company, and the goodwill of a business. Certain things are excluded from the ambit of the law of property. These comprise, inter alia, things which are not susceptible to human control, such as Commented [MM1]: Among other things the sun and the moon; things common to all mankind, such as the atmosphere; and State property intended for use by the general public: public roads and bridges, the sea and seashore, etc. REAL RIGHTS Rights in respect of property are frequently classified as “real”. The most important characteristics of a real right are its absolute character and the preference it affords on execution or insolvency. The following are categories of real rights which have been recognized: Ownership Real and praedial servitudes Mortgage, pledge and cession in securitatem debiti The right of a lessee of immovable property (by virtue of the huur gaat voor koop doctrine, they effectively obtain a real right over the property) Leasehold Mineral rights According to case law, any right will be regarded as real if it was intended by the person conferring it to bind successors in title of the property concerned if it constitutes a “subtraction from the right of ownership”, that is a burden on the property itself as opposed to an obligation binding upon some person. Whether a right is recognised as being real depends upon considerations of policy and expediency rather than the application of any rule of law. THE DISTINCTION BETWEEN MOVABLE AND IMMOVABLE PROPERTY The rules governing the transfer and hypothecation of movable property differ from those relating to immovable property. The basic criterion for determining whether a corporeal thing is movable, or immovable is whether it can move or be moved from one place to another without sustaining damage or losing its identity. Land, things annexed firmly to land (buildings, trees, plants, etc) and things attached permanently to buildings (such as plumbing and electrical installations) qualify as immovables. Examples of movables are animals, motor vehicles, ships, and jewellery. In certain cases, by virtue of the principle of accession, a thing that can be moved without damage or loss of form may be classified as immovable property. For instance, although it may be possible to move a lift in a building without causing damage to either the lift or the building, the lift will still be regarded as immovable. Incorporeal property is also frequently classified as either movable or immovable, according to whether the object of the incorporeal is movable or immovable property, respectively. OWNERSHIP Ownership is the most extensive right that a person can possess in respect of a thing. It entitles the person, without interference from others, to deal with the thing as they please – to possess and use it, to enjoy its fruits, to diminish its substance, and even to destroy it. It also entitles the person to alienate the thing and to reclaim it (with a rei vindicatio) from anyone who withholds it unlawfully. The right of ownership however is not absolute: it is subject to numerous limitations imposed by the statute and the common law. Under the common law, the right of a landowner with respect to their property is restricted in various ways; for example, they must not use it to be a nuisance to occupiers of other properties, they must not increase or otherwise interfere with the natural flow of surface water across the land to adversely affect their neighbour's enjoyment in their property, and must now excavate on their land to deprive adjoining land of lateral support. Ownership is not confined to one person: two or more persons may own undivided shares in a single entity, such as a piece of land or a yacht. Each co-owner is entitled to use the item reasonably and in proportion to the size of their share. Profits and losses incidental to the common property must be borne by the co-owners in proportion to their respective shares. A co-owner is free to alienate and hypothecate their undivided share without the consent of the other co-owners. THE ACQUISITION OF OWNERSHIP IN CORPOREAL PROPERTY Ownership of corporeal property may be acquired in one of two main ways. o It may be acquired independently and without the cooperation of any previous owner (original acquisition). A completely new right is created which is free of the characteristics of the right of any previous owner. o It may be acquired by way of transfer from a prior owner (derivative acquisition). The acquirer succeeds to the predecessor’s right, including any benefits and restrictions attaching to it. Original modes of acquiring ownership in corporeal property Occupation - Ownership is acquired by occupation when a person takes possession of an unowned thing to become the owner of it. Important categories of unowned things for these purposes are wild animals, things cast up by the sea, and things that have been abandoned (lost items are not abandoned, the owner of the thing must have the intention to abandon the thing). The thing must be capable of being owned and must not be owned by anyone. Accession - Ownership is acquired by accession where a thing or portion of a thing is incorporated by natural or artificial means into another thing so that the former loses its identity and becomes an integral part of the latter. The thing incorporated is known as the accessory, and the thing into which it is incorporated is the principal thing. The owner of the principal thing becomes the owner of the new entity. o Accession of movables to immovables - Anything planted or sown on land accedes to the land as soon as it has taken root. Regarding movables attached by artificial means to the soil or another immovable — buildings and other structures, doors and windows, floor coverings, electrical installations, and fittings, etc — the courts have held that the question of whether the movable accedes to the immovable must be determined by considering whether the owner of the movable intended it remain attached for an indefinite period. Important considerations from which an intention can be inferred are the nature of the movable (whether it is capable of acceding to the immovable property and becoming an integral part of it), the degree and manner of its annexation (for example, whether the attachment is so secure that separation would involve substantial injury to the immovable property or the accessory), whether the annexation was effected by the owner of the movable himself, and the relationship of the owner of the movable and the landowner. Test whether the intention of Attaching the movable was permanent or not. o Accession of movables-to-movables - Ownership may also be acquired by accession where two movable things are attached, as where an arm or a leg is welded onto a statue or where the thread is woven into cloth. For accession to take place, the things  must not be easily separable. If they can be separated without great cost and any diminution in the value of the principal or the accessory, then no accession occurs. Specification – Specification takes place when a person creates a new thing, which cannot be reduced to its original form, out of materials which belong wholly or partly to another. Examples of specification are where clothes are made from wool or cloth, or an engine is constructed from spare parts. Unless agreed otherwise, the specificator (the person who makes the new product) becomes the owner of the new product. Mixing or mingling - Ownership is acquired by mixing or mingling where things belonging to different owners are mingled or mixed to lose their separate identities and so as not to be separable, except perhaps at great cost. Mixing and mingling differ from accession in that things of more or less equal value are combined, whereas accession entails the combining of a less valuable accessory with a more valuable principal thing. Mixing and mingling can be distinguished from specification in that human creativity plays a subordinate role in the creation of the mixture. The term ‘mingling’ is usually employed to refer to the situation where liquids (for instance, water and wine) or metals (for example, copper and bronze) are mingled or melted together; ‘mixing’ is normally applied to the case where solids (for example, grain) are mixed. It is immaterial whether the substances or products mixed are of the same kind or not. In the absence of agreement to the contrary, ownership in the final product is acquired as follows. o In the case of mingling, the owners of the original liquids or metals become co-owners of the mixture in proportion to the value of their materials. o In the case of mixing, each owner of a solid acquires ownership of a physical portion of the mixture, proportionate in size to the value of his solid. Separation or collection of fruits - As a rule, the owner of a thing is entitled to enjoy its fruits and remains the owner of the fruits even where they have become separated from the principal thing. However, the right to take and enjoy the fruits of a thing may be vested in another party, for instance, a lessee. In these circumstances, the other party acquires ownership of the fruits by separation (whether by natural forces or human agency) or by collection or gathering. Prescription - In terms of the Prescription Act, of 1969, a person becomes the owner of a thing by prescription if he possesses it openly (openly vis-à-vis the general public) and as if he were the owner for an uninterrupted period of 30 years. He must hold the thing as his own or to keep it for himself. If he possesses the thing by some contract or legal relationship which recognises the rights of the owner, or on the ground of revocable permission granted to him by the owner (on sufferance), he does not have the intention of an owner and, therefore, does not satisfy the requirements of prescription. Expropriation - Various statutory enactments empower the State to acquire private property by expropriation, usually against payment of compensation determined by the loss suffered as a result of the expropriation. The procedure to be followed in expropriating property is set out in the Expropriation Act, of 1975. The derivative modes of acquiring ownership in corporeal property. Under South African law ownership does not pass on account of the contract between them. An additional and separate transaction — an ‘act of transfer’ — is required. This may take place simultaneously with the conclusion of the contract or after it. The act of transfer stands apart from and is independent of the underlying contract giving rise to it. If the underlying contract is for some reason invalid, this does not affect the validity of the transfer of ownership. The principle applied is known as the abstract theory of transfer of ownership. The opposite approach, which makes the transfer of ownership dependent upon the validity of the underlying contract, is called the causal theory of transfer. The derivative modes of acquisition of ownership in corporeal are delivery (movables) and registration of transfer (immovable property). These concepts are discussed below. For ownership to pass by either mode, certain requirements must be fulfilled: The transferor must be capable of transferring ownership of property. A minor, for example, is under the same disability regarding the transfer of ownership as he is about the making of a contract. The owner himself (or his duly authorised agent) must affect the transfer. The maxim applied is nemo dat qui non habet (‘nobody can give what he does not have’). The transferee must be capable of acquiring ownership of property. At the time ownership is transferred (at the moment of delivery or registration), the transferor must have the intention to transfer ownership, and the transferee must have the corresponding intention of accepting ownership. Thus, in addition to the objective element of delivery or registration, there must be a subjective or mental element. The correspondence of intentions or ‘meeting of the minds’ of the parties is referred to as a ‘real agreement’ (‘saaklike ooreenkoms’) to distinguish it from the agreement which gives rise to the duty to transfer the property. The principles applicable to agreements in general apply to real agreements. 1. Delivery - Delivery may take the form of a physical handing over of the thing (actual or genuine delivery) or the placing of the transferee in a position so that he can exercise physical control over the thing (constructive delivery). Constructive delivery is usually resorted to where the thing to be delivered cannot be handled easily or where it is impractical or inappropriate to deliver the object physically. The following forms of constructive delivery have been recognised: a. Delivery longa manu - For delivery to take place longa manu, the transferor must (1) point the thing out to the transferee, clearly identifying it; and (2) place the thing at the disposal of the transferee so that he (and he alone) can exercise physical control over it. This form of delivery is often employed where the size, weight, or nature of the thing to be delivered makes physical delivery difficult or inconvenient. E.g., where the thing I a large load of timber, stones in a quarry, or a herd of cattle. b. Symbolic delivery - In the case of symbolic delivery, the thing is not handed over or pointed out; instead, the transferee is given some article which enables him to gain physical access to the property and to take control of it. The most obvious example is a key enabling the transferee to enter and take possession of, the contents of the building, such as a warehouse or a storeroom. c. Delivery brevi manu - This occurs where the intended transferee is already in possession of the thing in question, for example, as lessee, or as a contractor to do repairs, and the parties agree that the transferee will remain in possession as owner. Ownership passes as soon as the parties have the respective intentions to transfer and acquire ownership. Thus, no overt act of delivery is necessary. The rationale is that it would be nonsensical to require delivery back and forth between the parties. Because of the possibility of prejudice to creditors of the transferor, a court will scrutinise the transaction between the parties closely to ensure that it is genuine and that the parties’ intentions are bona fide. d. Constitutum possessorium - Constitutum possessorium is, in a sense, the reverse of delivery brevi manu. The transferor has and retains physical control of the thing to be transferred, but he acknowledges that it will thenceforth be owned by, and held in the name of, the transferee. Again, to avoid the necessity of delivery to the transferee and back again, no overt act of transfer is required. This type of delivery is very common in the business world. It occurs, for example, when a person buys a second-hand motor car from a garage and leaves it with the garage for repairs. Constitutum possessorium  provides a ready opportunity for a debtor to defraud his creditors (for instance, by pretending, to avoid attachment of the property, that it has been transferred to another) and, what is more, the false impression created by the transferor retaining possession of the property may induce creditors to extend further credit to him. As a result, before accepting that delivery has taken place, the court will require a proven contractual arrangement justifying the transferor’s continued physical control of the property. e. Attornment - Ownership is transferred by attornment when the thing in question is under the physical control of a third person, who holds it for the transferor, and the parties and the third person agree that the third person will thenceforth hold the thing on behalf of the transferee. The courts have accepted that the third person may consent in advance to hold the thing in the name of the transferee if and when the transferor and transferee agree that it should be transferred. In such a case, the third person need not be informed of the agreement to transfer when it is entered into: ownership passes immediately after the agreement is concluded, provided the third person is still in control of the thing at that time. 2. Registration of transfer - The expression ‘registration of transfer’ generally refers to the registration in the Deeds Registry of a deed of transfer in the prescribed form. The deed must be prepared by a conveyancer and executed in the presence of the Registrar of Deeds by the owner of the property or by a conveyancer authorised by power of attorney to act on his behalf. After registration, a copy of the deed of transfer (now the owner’s ‘title deed’) is returned to the owner. In certain cases — for instance, certain expropriations — registration of transfer takes place by way of an endorsement on an existing title deed. SECTIONAL TITLE Purpose of the Sectional Titles Act, 1986 Under the common law, ownership of a piece of land and the buildings erected on it is indivisible, which means that one person can't own the land and another the buildings or a portion of the buildings. As a result, at common law, a section of a building (an apartment, an office, a shop, etc) cannot be owned by any person who is not also the owner of the land on which the building is situated. The purpose of the Sectional Titles Act, 1986, is to overcome this deficiency in the common law, by making it possible for persons to acquire separate ownership of sections of a building. The Act is aimed at urban buildings. It does not apply to buildings erected or to be erected on land situated outside the area of jurisdiction of a local authority. ‘Local authority’ means a municipality contemplated in section 151 of the Constitution (s 1). ‘Section’, ‘common property’, ‘participation quota’, and ‘unit’ In terms of section 2(a), a building may be divided into ‘sections’ and ‘common property’. A ‘section’ is a portion of the building: in general, it is an area confined by walls, a floor, and a ceiling. A section can be separately owned, ownership extending to the centre line of the walls, the floor, and the ceiling. The ‘common property’ is the land on which the building is situated, and any parts of the building not included in a section, such as stairways, passages, the external shell of the building and the roof. The common property is owned jointly by all the persons who own sections of the building. A person who acquires a section simultaneously obtains a share in the common property. The extent of his shareholding is determined by the ‘participation quota’ of his section. This is a decimal fraction arrived at by dividing the floor area of the section by the floor area of all the sections in the building. The term ‘unit’ is used to denote a section together with the undivided share in the common property apportioned to that section by the participation quota of that section. If there is more than one building on the land, any of the buildings may be divided into a single section and common property. Establishment of a sectional title scheme In broad outline, a building (or buildings) and the land on which it is situated may be divided into sections and common property in the following way. The registered owner of the land (referred to as the ‘developer’) must cause a draft sectional plan to be prepared by section 5 of the Act and submitted to the Surveyor-General, together with the prescribed documents and particulars (s 4(1); s 7). A sectional plan basically shows the division of the land and building(s) comprised in the scheme into sections and common property. If any of the sections in the proposed scheme is let for residential purposes, the developer must, before submitting the sectional plan, call and attend a meeting of lessees for the purpose of: o supplying them with any particulars that they may reasonably require regarding the scheme. o giving them a certificate containing prescribed particulars regarding the scheme o informing them of the pre-emptive right under section 10 of the Act If the building to which the scheme relates has not been erected following building regulations or by- laws, or if the building or any other aspect of the scheme does not comply with a town planning scheme, statutory plan, or conditions or establishment, an architect or land surveyor acting on behalf of the developer must apply to the local authority for a certificate condoning the non-compliance. Once the Surveyor-General’s approval has been obtained, the developer may apply to the Registrar of Deeds for the registration of the sectional plan and the opening of a sectional title register. The application must be accompanied, inter alia, by the following: two copies of the sectional plan a schedule certified by a conveyancer setting out the servitudes and conditions of title burdening or benefiting the land, and the other registrable conditions imposed by the developer, as well as any other prescribed particulars. the title deed of the land in question any mortgage bond to which the land is subject together with the consent of the mortgagee to the opening of the sectional title register and to the endorsement of the bond to the effect that it attaches to the sections and common property shown on the sectional plan. a certificate by a conveyancer stating that the rules of the body corporate (see below) prescribed in terms of the Act are applicable, and contain any other rules substituted by the developer for those rules; and certificates of registered sectional title in the prescribed form in respect of each section and its undivided share in the common property made out in favour of the developer. If the Registrar of Deeds is satisfied that all the relevant requirements have been complied with, he must, inter alia, register the sectional plan giving it a number; open a sectional title register in which any dealings with the units, sections and common property can be filed or recorded; and issue to the developer a certificate of registered sectional title in respect of each section and its undivided share in the common property. On registration of the sectional plan, the land and buildings are deemed to be divided into sections and common property as shown on the sectional plan (s 13(1)). The developer thenceforth owns the units in the sectional title scheme as opposed to the land and the buildings on it. The sectional plan, together with the schedule of servitudes and conditions referred to above, is deemed to be part of the sectional title deed. Any servitudes, other real rights, or conditions burdening or benefiting the land attach to each unit in the sectional title scheme. Transfer of a unit - Transfer of a unit by the developer is affected by a deed of transfer signed or attested by the Registrar of Deeds (s 15B(1)(a)). Under section 10(1), the developer may not offer for sale or sell any unit which is occupied by a lessee unless he has offered it for sale, in the prescribed manner, to the lessee and the latter has refused or failed to accept the offer within 90 days from the date of the offer. Establishment of the body corporate - With effect from the date on which any person other than the developer becomes an owner of a unit in a building, a legal entity known as the ‘body corporate’ comes into being (s 36(1)). The developer and such person are members of the body corporate, and every person who thereafter becomes an owner of a unit in the building becomes a member of the body corporate. As more and more units in the scheme are transferred away, the developer’s interest in the body corporate diminishes, and, when all the units are owned by persons other than the developer, he ceases to be a member of the body corporate. The duties and powers of the body corporate - The body corporate is responsible for the control, administration and management of the common property following the provisions of the Act and for the enforcement of a set of rules which becomes applicable once the body corporate comes into being (s 36(4)). These rules provide for the control, management, use and enjoyment of sections and the common property (s 35(2)). They comprise ‘management rules’ and ‘conduct rules’ prescribed by regulation. Both types of rules are capable of being amended by the body corporate. The body corporate has perpetual succession and is capable of suing and being sued in its name (s 36(6)). The duties and powers of the body corporate are performed or exercised by trustees elected following the rules of the scheme (s 39). The powers of the body corporate include the power to: establish a fund for payment of expenses, such as the cost of maintenance and upkeep of the common property, rates and taxes on the property, and charges for the supply of electricity, water, and sanitary services to the property. require the owners of units to make contributions towards the fund. In practice, contributions are frequently called for in the form of a monthly levy. The amount of the levy which each owner can be required to pay is determined by the participation quota of the section which he owns. For instance, if his participation quota is 0,1 and the rates are R5 000, his share of the rates will be R500. SERVITUDES Nature A servitude may be defined as a right belonging to or held by one person in the property of another entitling the former either to exercise some right in the property or to prohibit the latter from exercising one or other of his normal rights of ownership. The holder of the servitude may perform all acts which are necessary for the proper exercise of the servitude and the owner of the servient tenement may not exercise his right of ownership to the extent that it is inconsistent or interferes with the servitude holder’s rights. Personal and praedial servitudes There are two types of servitude: personal and praedial. The nature of each is best explained by setting out their common characteristics and the main differences between them. The chief similarities are the following: Both are real rights and, therefore, binding upon successors in title of the owner of the servient property. The holder of either a personal or a praedial servitude is obliged to exercise it civiliter modo, that is, in a reasonable and considerate way, to cause as little harm or inconvenience as possible to the owner of the servient land. Neither a personal nor a praedial servitude may, as a rule, impose on the owner of the servient property a positive obligation — an obligation to do something (as opposed to an obligation to refrain from doing something or to allow the servitude holder to do something). The main differences between the two categories are the following. A personal servitude is constituted in favour of a person in his capacity. A praedial servitude is constituted in favour of a person in his capacity as owner of an adjacent piece of land — two  properties are involved: the property over which the servitude exists (called the ‘dominant tenement’) and the property subject to the servitude (the ‘servient tenement’). It is a requirement for a valid praedial servitude that it benefits the dominant tenement in some way, that is, enhances its usefulness to the owner, whoever he may be. A personal servitude lapses on the death of the holder or, if the holder is a juristic person, after 100 years. In principle (there are exceptions), a praedial servitude continues in perpetuity. A personal servitude may be established in respect of either immovable or movable property; the object of a praedial servitude is always immovable property. A personal servitude is inseparably attached to the person of the holder and cannot be transferred. A praedial servitude is incidental to the ownership of the dominant tenement and passes with it. Servitudal rights which by their nature would normally be praedial because they offer some permanent advantage to adjacent land (such as the right to quarry stone or draw water from a dam), are regarded as personal if they are granted to the owner of the land in his capacity and not in his capacity as owner. Common servitudes usufruct — the right to use and enjoy (but not diminish the substance of) the property (land, money, a motor vehicle, etc) of another and to gather and consume its fruits, for a certain period (often the lifetime of the usufructuary) usus — the right to use the property of another, but not to take its fruits. habitatio — the right to live in the house of another. Some of the more common forms of praedial servitude are: iter — the right to travel on foot or horseback across the servient tenement. actus — the right to drive cattle or light vehicles across the servient tenement. via — a general rite of passage, including iter and actus. aquaehaustus — the right to draw water from the servient tenement. pasturage — the right to pasture a defined or undefined number of cattle on the servient tenement. prospectus — the right to an open view across the servient tenement: one unimpeded by buildings or trees servitus altius non tollendi — the right to prevent the owner of the servient tenement from raising the height of the buildings on his land. The creation of servitudes Servitudes may be created or arise in the following ways: by registration in the deed’s registry of a notarial deed between the owner of the servient tenement and the person benefited or the owner of the dominant tenement (as the case may be) by reservation in a deed of transfer by prescription in terms of section 6 of the Prescription Act, 1969: the person concerned or the owner (or successive owners) of the dominant tenement must for 30 years exercise the servitudal ‘right’ openly and as though he were entitled to do so.  by court order, for example, where access is required to a public road. by expropriation by a competent authority by delivery, in the case of a personal servitude over movables, for example, a usufruct of a herd of cattle. Sometimes parties make a servitudal agreement but fail to have it registered in the Deeds Registry. Such an agreement is binding upon the owner of the servient tenement but not upon an onerous successor in title (such as a purchaser) unless he had knowledge of the grant of the servitude. Restrictive covenants Restrictive covenants (or conditions) limit the use of a piece of land for certain purposes. They are created by the owner or developer of a new township to preserve the amenities of the township. On the transfer of an individual lot in the township, the conditions are registered against the title deeds of that lot. A restrictive covenant may be either in favour of a person in his capacity (for example, the developer) or in favour of other landowners (the owners of the other lots in the township). In essence, restrictive covenants are no different from servitudes. Examples of such covenants are provisions prohibiting the sale of liquor, the carrying on of a business, and the keeping of animals, on the property.