Prior In Tempore, Potior In Iure

The principle of “first in time first in law”, known as Prior In Tempore, Potior In Iure, applies to. This means that if there are other creditors with rights over the property, this will take precedence over them as it is registered first in time.

Maximum Protection

Provides maximum protection to the seller of the land by guaranteeing that the purchase price will be paid in the full purchase price, even if the buyer defaults on payment. Preventing other third-party loans. It is therefore a secure ranking form of security of real estate transactions for purchasing a property. There are exceptions and grey areas here – for example, lending money to a dependant family member might be exempt, and limited exceptions are applying to “juristic person” consumers.

Get the Best Protection with a purchase money mortgage bond

If you are looking to get the best protection & ranking form of security for your real estate bank bonds transaction when purchasing property, then this is a perfect choice. With a Kustingsbrief, you can be sure that the purchase price will be paid in full and that your real estate transaction is secure. Get the best protection for your real estate or bond with this agreement template when purchasing a property. This could assist by avoiding third-party loans and avoiding high-interest rate & incurring additional costs such as further bonds.

Alienation of Land Act and Kustingsbrief

The Alienation of Land Act No 68/1969 in South Africa states that no transfer or sale of immovable property will be valid unless it is preceded by a kustingsbrief. Thus serves as evidence of the seller’s agreement to sell the property, and protects both the seller and buyer from any fraudulent transactions which may occur during the sale process safe guarding your financial position.

Get Professional Help to Prepare You

Kustingsbriefs can be complex documents, so it’s important to get professional help when preparing one. A qualified attorney or convey can be requested on demand on the website. Go to the home page and request legal assistance for one of our legal representatives to assist by area, province, or suburb.

Kustingsbrief example

Mr. A. sells his registered property to Ms. B. for a purchase price paid of an amount R 650 000. 00. Upon payment of the amount of R350 000.00 Ms. B. then demands transfer of the property and registers a kustingsbrief over the property in favour of Mr. A, which serves as security for the remainder of the purchase price. Mr. A. is then obliged to transfer the property within 3 months of Ms. B’s demand.

There are remedies available if the seller fails to tender a transfer to the purchaser within three months of the purchaser’s demand. One of these remedies would be the right to cancel the agreement in terms of Section 27(3) of the Act and the recovery of all payments and interest as set out in Section 28(1) of the Act.

Although Section 27(3) does not refer to other remedies, the Constitutional Court in the case of Botha and Another v Rich NO and Others 2014 (4) SA 123 (CC) found that cancellation is not the only remedy available to the purchaser. The court confirmed that the common-law right of specific performance remains available to the purchaser. In terms of this remedy the purchaser can insist on the transfer and registration of the bond as set out in Section 27(1) of the Act. Transfer can only take place if any existing mortgage bond (if applicable) in favour of a third party over the property, is first paid up and then canceled. It is therefore crucial that the purchaser insists on receiving bank statements on the current state of any existing bond to monitor payments to the third party by the seller.

The principle of reciprocity in a kustingsbrief

the arrangement also applies, meaning that the vendor undertakes to pay the purchaser any moneys due from a tenant or occupier of the property and is liable for any monies which were owing at the time of registration of kustingsbrief. The kustingsbrief must be registered against the title deed of the property in order to give effect to its contents.
A Kustingsbrief is an essential document when selling a property in South Africa. It guarantees payment of the purchase price by providing security in case of default by the buyer, as well as protection from fraudulent transactions. It also provides remedies in cases where the transfer does not take place within 3 months of demand.

Kustingsbrief and the national credit act – nca South Africa

The provisions of the National Credit Act 34 of 2005 apply to a mortgage bond and prescribe the lapse of minimum periods between the various stages of the debt enforcement process. Section 129(3) of the Act permits a consumer who has fallen into default, at any time before the credit provider has canceled the agreement, to reinstate or remedy default in such agreement by paying all arrears and prescribed charges and costs.
Since the enactment of the National Credit Act – nca South Africa, the position is significantly different when dealing with debt enforcement processes as a credit provider. The Act applies to counter the harsh consequences of enforcement when a mortgagor defaults in paying the prescribed costs of the mortgage. The National Credit Regulator (NCR) is the administrative regulator responsible for the enforcement of the National Credit Act. When a debtor is unable to pay his/her debt, the NCR may be approached to assess the procedures under which the loan was granted.
If there were improper steps taken the debtor’s debts could be canceled or the payment of the debt could be restricted. If no infringements can be found or proved, the debtor’s assets will be repossessed.

How long does it take for the bond to be registered in south africa ?

In South Africa, the registration of a bond usually takes between 2 to 8 weeks depending on the complexity of the transaction and all parties involved. The process is largely determined where the property is registered and can sometimes be more lengthy due to delays in processing documents or any other issues that arise.

Why do transfers get rejected at deeds office?

Transfers can be rejected at the deeds office for a number of reasons. It could be due to incorrect documents being submitted, not meeting the requirements of the Deeds Office, not having all necessary consents or documents in place, incorrect payment of transfer duty, or any other issue may have identified. It is important for all parties involved to ensure that all necessary documents, consents and payments are in place as the bond will be registered in the deeds office simultaneously with the transfer of the property. Making sure a very strong security is maintained at the deeds office. Always check the buyer's creditworthiness as this will affect the process.

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Who pays the bond registration costs?

The bond registration costs are usually shared between the purchaser and the vendor. The purchaser will typically pay for the cost of registering the bond in their name, while the vendor is responsible for covering any other associated fees such as transfer duty or notary fees. In some cases, a seller may also grant a special concession to cover some of these.

Conclusion

The use of a kustingsbrief has proven to be a beneficial option to a purchaser who is in the process of buying a new property, with the added security to the seller of the property. This process is regulated by the Alienation of Land Act which makes it an alternative with a strong legislative framework.

The use of a kustingsbrief can be very favorable to purchasers in the property market who find themselves in a situation where they have paid at least half of the purchase price of the property and wish to secure the remainder thereof by way of the special mortgage.

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Hi, I’m Kailash Pillay, an attorney from the city of Johannesburg. My passion for the law stems from a desire to improve the lives of the vulnerable who fall prey to a corrupt system.
I studied at the University of Johannesburg where I obtained my Bachelor of Laws degree, the starting point to the long journey of becoming a legal practitioner.
This profession has taught me to persevere through the complexities of the law and to continually develop my skills as a legal professional.