A closer look at two cases where HOA restrictions were dealt with

In 2014, a developer in Midstream estate in Midrand instituted legal action against two sets of owners/respondents in almost identical cases. Both cases dealt with clauses that imposed an obligation to build a dwelling within a prescribed time frame.

July 25, 2022

Here’s a closer look at the court ruling in both instances.

  • Bondev Midrand (Pty) Ltd v Puling Puling and Tapiwanashe Puling
  • Bondev Midrand (Pty) Ltd v Petrus Kgosi Ramakgopa

The facts of both cases

The Appellant, in both cases, sold immovable property to a Mr and Mrs Puling and Mr Ramokgopa respectively. In both sets of title deeds, there were two clauses of conditions imposed. The first clause obliged the transferees or their successors in title to erect a dwelling on the property within an 18-month period. The second clause provided that in the event of a dwelling not being erected within that period, the Appellant was entitled but not obliged to have the property re-transferred to it against return of the purchase price. The Respondents in both cases failed to comply with the conditions.

The property sold to Mr Ramokgopa was transferred in November 2006 and the 18-month period to erect a dwelling lapsed in May 2008. The property sold to Mr and Mrs Puling was transferred in March 2007 and the 18-month period to erect a dwelling lapsed in September 2008. The Appellant then instituted action against Mr Ramokgopa in January 2014, and against Mr and Mr Puling in March 2014, to re-transfer the properties back to it and tender payment of the original purchase price.  

Points raised by the Respondents

The Respondents pointed out that the claim against them had prescribed as more than three years had elapsed since the date upon which the Appellant’s claim for re-transfer of the property had become due.

They further submitted that the claim for re-transfer constituted a debt for the purpose of the prescription Act 68 of 1969, particularly section 11(d) which states that the prescriptive period is three years.

Points raised by the Appellant

The Appellant submitted that the conditions of the title deeds gave rise to a real right, which does not prescribe within three years, and not merely a personal right in favour of the Appellant.

Findings of the Supreme Court of Appeal

The court submitted that common to both cases was the issue of whether the Appellant’s claim for re-transfer of the properties prescribed three years after its claim became due when the respondents failed to erect a dwelling on their respective properties within the 18-month period.

The court submitted that the first clause reflected an intention to bind not only the transferees but their successors in title. Moreover, the requirements of the first clause resulted in a restraint upon the exercise of the owners’ rights of ownership of their land. Accordingly, this clause gave rise to a real right.

The court further submitted that the right of the Appellant to claim re-transfer of the property against repayment of the original purchase price as set out in the second clause did not amount to such restraint. It is a right which can only be enforced by a particular person, the Appellant, against a determined individual, and does not bind third parties. Not only is this a feature of a personal right but it is a right which the Appellant can exercise at its sole discretion.

The court cited section 63(1) of the Deeds Registries Act 47 of 1937, which indicates that no condition in a deed “purporting to create or embodying any personal right shall be capable of registration”. Although only real rights and not personal rights should be registered against a title deed, the fact that a personal right becomes registered does not in itself convert that right into a real right.

The court indicated that a debt includes the right to claim the return of property and that the Appellant’s right to claim re-transfer is to be regarded as a personal right. It also indicated that not only would prescription have begun to run on the date by when the title deed reflected a dwelling had to be erected but that the Appellant’s claim in each case had prescribed before proceedings were even commenced.

Therefore, the Appellant’s claim in each case was correctly dismissed by the court on the basis of prescription, and the appeal in each case was also dismissed.

Written by Wessel de Kock

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