Land claims and their impact on the registration of mortgage bonds

When it comes to commercial lending transactions, the lender – usually a commercial or corporate division of a bank – may require confirmation that there are no land claims in process in respect of the property or properties that will form part of the security to be registered in the lending structure.

Building and renovation regulations

This instruction is actioned by the bank’s attorney of record who will make an enquiry with the Commissioner on Restitution of Land Rights (the “Land Claims Commission” / “LCC”). Should there be any land claims against the property or properties, the Commission will provide the relevant details i.e. the claim number, when the claim was lodged and the name/s of the applicant/s who lodged the claim. 

Land claims were lodged in terms of the Restitution of Land Rights Act 22 of 1998 (the “1998 Act”) and the Restitution of Land Rights Amendment Act, 2014 (Act no 15 of 2014) (the “2014 Act”), which was, subsequent to it being promulgated, found to be unconstitutional.

Claims under the 1998 Act

Claims lodged in terms of the 1998 Act are still in process. These claims were validly lodged in as far as they took place within the legislated time limits (31 December 1998) and their processing and finalisation are taking place in terms of the provisions of the Act. 

Section 11(7) of the Act read as follows:

  1. “Section 11(7) of the Restitution of Land Rights Act provides as follows:
    11 (7) Once a notice has been published in respect of any land –
    (a) No person may in an improper manner obstruct the passage of the claim(aA) no person may sell, exchange, donate, lease, subdivide, rezone or develop the land in question without having given the regional land claims commissioner one month’s written notice of his or her intention to do so, and, where such notice as not given in respect of

    (i) Any sale, exchange, donation, lease, subdivision or rezoning of land and the Court is satisfied that such sale, exchange, donation, lease, subdivision or rezoning was not done in good faith, the Court may set aside such sale, exchange, donation, lease, subdivision or rezoning or grant any to her order it deems fit;

    (ii) Any development of land and the Court is satisfied that such development was not done in good faith, the court may grant any order it deems fit;

As this section clarifies, any land claims lodged in terms of the 1998 Act will dilute the effectiveness of the registration of further security against the title and the enforceability thereof – property proposed to serve as security in a deal is therefore legally questionable at best. 

It’s important to note the absence of the words “Mortgage” and “Alienate” in the wording of the article. This would imply that a property may be encumbered by way of a mortgage bond without the notification required by the section. It is however submitted that the word sale would include sale in execution, therefore having a significant effect on a mortgagee’s security position. The status of a claim at any given time may also render registration of a bond an impossibility.

Claims under the 2014 Act

As previously mentioned, the validity of the 2014 Act was challenged in the Constitutional Court and found to be invalid due to parliament’s failure to facilitate public involvement as required by the constitution. On 28 July 2016, the 2014 Act ceased to be law. 

In contrast with the 1998 Act, the Constitutional Court ordered that while any claims lodged between 1 July 2014 and 27 July 2016 are validly lodged in terms of the 2014 Act, which re-opened the lodgement of claims for a period of five years, it interdicted the LCC from processing these claims, 

  • until the commission has finalised the claims lodged by 31 December 1998 (still in progress) or
  • until parliament passes a new law providing for the re-opening of lodgement of land claims. Parliament was given until 27 July 2018 to pass such a law, but failed to meet this deadline and instead approached the Constitutional Court for an extension until 29 March 2019. This application was rejected. 

The result is that the commissioner will not be processing claims lodged in terms of the 2014 Act.  

Section 11(7) of the 1998 Act, quoted earlier, has been misinterpreted to mean that once a claim has been lodged the landowner cannot sell, donate, develop, lease or exchange. What it actually means is that the land owner cannot do those things listed in section 11(7)(i) after a notice of claim has been published in a Government Gazette without giving one month notice of your intention to do so to the LCC having jurisdiction over such land and/or property.

From the above it is clear that in the case of claims having been lodged in terms of the 2014 Act, the commissioner is interdicted to publish and process said claims, which currently has no legal force and effect on any transactions relevant to the property. Any bonds registered will therefore be legally registerable and enforceable. 

It is submitted that such claims, if and when proceeded with (currently a spes/possibility at best), will be dealt with in the form of compensation by government and not cause transfer of the relevant property. Interestingly, the greater Pretoria area, including, for example, the property belonging to the CSIR, is subject to land claim.

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Land claims and their impact on the registration of mortgage bonds

When it comes to commercial lending transactions, the lender – usually a commercial or corporate division of a bank – may require confirmation that there are no land claims in process in respect of the property or properties that will form part of the security to be registered in the lending structure.

Building and renovation regulations

This instruction is actioned by the bank’s attorney of record who will make an enquiry with the Commissioner on Restitution of Land Rights (the “Land Claims Commission” / “LCC”). Should there be any land claims against the property or properties, the Commission will provide the relevant details i.e. the claim number, when the claim was lodged and the name/s of the applicant/s who lodged the claim. 

Land claims were lodged in terms of the Restitution of Land Rights Act 22 of 1998 (the “1998 Act”) and the Restitution of Land Rights Amendment Act, 2014 (Act no 15 of 2014) (the “2014 Act”), which was, subsequent to it being promulgated, found to be unconstitutional.

Claims under the 1998 Act

Claims lodged in terms of the 1998 Act are still in process. These claims were validly lodged in as far as they took place within the legislated time limits (31 December 1998) and their processing and finalisation are taking place in terms of the provisions of the Act. 

Section 11(7) of the Act read as follows:

  1. “Section 11(7) of the Restitution of Land Rights Act provides as follows:
    11 (7) Once a notice has been published in respect of any land –
    (a) No person may in an improper manner obstruct the passage of the claim(aA) no person may sell, exchange, donate, lease, subdivide, rezone or develop the land in question without having given the regional land claims commissioner one month’s written notice of his or her intention to do so, and, where such notice as not given in respect of

    (i) Any sale, exchange, donation, lease, subdivision or rezoning of land and the Court is satisfied that such sale, exchange, donation, lease, subdivision or rezoning was not done in good faith, the Court may set aside such sale, exchange, donation, lease, subdivision or rezoning or grant any to her order it deems fit;

    (ii) Any development of land and the Court is satisfied that such development was not done in good faith, the court may grant any order it deems fit;

As this section clarifies, any land claims lodged in terms of the 1998 Act will dilute the effectiveness of the registration of further security against the title and the enforceability thereof – property proposed to serve as security in a deal is therefore legally questionable at best. 

It’s important to note the absence of the words “Mortgage” and “Alienate” in the wording of the article. This would imply that a property may be encumbered by way of a mortgage bond without the notification required by the section. It is however submitted that the word sale would include sale in execution, therefore having a significant effect on a mortgagee’s security position. The status of a claim at any given time may also render registration of a bond an impossibility.

Claims under the 2014 Act

As previously mentioned, the validity of the 2014 Act was challenged in the Constitutional Court and found to be invalid due to parliament’s failure to facilitate public involvement as required by the constitution. On 28 July 2016, the 2014 Act ceased to be law. 

In contrast with the 1998 Act, the Constitutional Court ordered that while any claims lodged between 1 July 2014 and 27 July 2016 are validly lodged in terms of the 2014 Act, which re-opened the lodgement of claims for a period of five years, it interdicted the LCC from processing these claims, 

  • until the commission has finalised the claims lodged by 31 December 1998 (still in progress) or
  • until parliament passes a new law providing for the re-opening of lodgement of land claims. Parliament was given until 27 July 2018 to pass such a law, but failed to meet this deadline and instead approached the Constitutional Court for an extension until 29 March 2019. This application was rejected. 

The result is that the commissioner will not be processing claims lodged in terms of the 2014 Act.  

Section 11(7) of the 1998 Act, quoted earlier, has been misinterpreted to mean that once a claim has been lodged the landowner cannot sell, donate, develop, lease or exchange. What it actually means is that the land owner cannot do those things listed in section 11(7)(i) after a notice of claim has been published in a Government Gazette without giving one month notice of your intention to do so to the LCC having jurisdiction over such land and/or property.

From the above it is clear that in the case of claims having been lodged in terms of the 2014 Act, the commissioner is interdicted to publish and process said claims, which currently has no legal force and effect on any transactions relevant to the property. Any bonds registered will therefore be legally registerable and enforceable. 

It is submitted that such claims, if and when proceeded with (currently a spes/possibility at best), will be dealt with in the form of compensation by government and not cause transfer of the relevant property. Interestingly, the greater Pretoria area, including, for example, the property belonging to the CSIR, is subject to land claim.

Follow Snymans on Facebook for more legal information, tips and news about property.