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08 Dec 2021

EXPROPRIATION WITHOUT COMPENSATION – CONSTITUTIONAL AMENDMENT NOT CARRIED

You have probably already heard that Parliament has yesterday voted against the proposed amendment to our Constitution which would have confirmed the government’s right to expropriate without compensation. The votes were 204 in favour of the amendment and 145 against. The requisite two thirds majority was therefore not achieved, and the proposed amendment has accordingly failed. The Constitution will therefore remain unchanged. This is good news.

But where does this leave us? Well exactly where we started – just 3 years down the line with lots of money wasted. Let’s recap:

  1. On 21 December 2018 a draft Expropriation Bill was published for comment. This was intended to become a new Expropriation Act that was in line with our new Constitution.
  2. Substantial public participation was then engaged in, and the government also commissioned reports and appointed a committee to make recommendations.
  3. Late in 2019 a draft Bill was published for comment on amending the Constitution, which would expressly allow a Court to authorize expropriation without compensation.
  4. On 9 October 2020 a second (and slightly amended) draft Expropriation Bill was published again, for comment. The most notable difference between this draft and the previous one, was the proposed types of land that would be earmarked for expropriation without compensation.

In our opinion the Constitution has, since 1994, allowed for expropriation without compensation in limited circumstances and the pending Expropriation Bill of 2020 attempts to give effect to this. This piece of legislation has been running parallel with the constitutional amendment and we expect that the government will now push this piece of legislation through Parliament with greater urgency. The ANC will only need a simple majority to pass this law as it does not require a constitutional amendment.

What do we have to fear from this? The answer is not much! Our new Constitution has since day 1 contemplated expropriation for minimal or zero compensation in limited circumstances. Furthermore, the constitutional requirement that land may only be expropriated for a proper reason, and in terms of a law that applies equally to everyone in South Africa remains. In addition, property can only be expropriated for a public purpose or in the public interest and all relevant circumstances need to be taken into consideration in determining the issue of compensation. The amount of compensation to be paid also needs to balance the public interest and the interests of those who are affected by the expropriation.

Let’s hope that this latest development put’s paid to further attempts to water down the protection of private property rights as enshrined in our Constitution.

For further commentary on the proposed Expropriation Bill of 2020 click here.

01 Dec 2021

A CASE OF BUYER’S REMORSE?

A Case Study

Most Deeds of Sale have a mortgage bond clause which is a suspensive condition. Suspensive conditions must be met perfectly and on time, or otherwise the Deed of Sale will become null and void. Most mortgage bond clauses will have a time period in which the buyer must obtain the loan, the amount, and a sentence which says the loan will be on the bank’s normal terms and conditions.

What happens when a mortgage bond is initially granted within the time period, but is withdrawn later? Does the agreement become suspensive again?

In the case Dharsey vs Shelly, Dharsey bought a property and paid a deposit. He had to obtain a mortgage bond. The mortgage bond was granted for the agreed amount, in time, and subject to the bank’s normal conditions. The sale therefore became unsuspensive or final.

While the conveyancing was progressing Dharsey received two unpleasant tax assessments from SARS and realized that his purchase had just become unaffordable. He sent the tax assessments to the bank and asked them to review his financial qualification for the bond. The Bank promptly withdrew his bond. When the sale could not proceed, Shelly cancelled the sale and took the deposit for damages. Dharsey wanted his money back and went to Court. The Court found that once a suspensive condition has been met properly – in this case his mortgage bond – the sale does not become suspensive again if the bond is withdrawn. Therefor a buyer cannot sabotage his sale by getting his bank to withdraw the loan. All that happens is that he is now left high and dry without the ability to pay for the property or give the required guarantee. Such a Buyer will lose his deposit and be faced with a damages claim. Beware of Buyers remorse! Also bear in mind, a buyer who creates additional debt after the granting of a bond but before the registration could also see his bond withdrawn and be in the same trouble.

Andrew Murray
30 November 2021

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