Caveats and endorsements noted against a property

Conveyancers are keen investigators, they are specialists in their field as they exercise knowledge and skill in all of the transactions. Although every transaction might be different, the principles remain the same.

The job of a conveyancer is to ensure that the agreement of sale entered into, by all the parties, is adhered to and all the provisions are attended to and carried out.

When an agreement of sale is received, a deed search needs to be conducted, to ensure that we confirm the legal owner of the property, property description, and most importantly, any endorsement and/or caveat attached to the property and if the property is financed through a bond.

Before one enters into a contract, he or she should understand the contents of the contract and all its provisions. A reasonable person in the position of a purchaser must seek clarity on the clauses of an agreement.

Conveyancers have the responsibility to ensure that there are no issues pertaining to the title of the property, and need to investigate caveats on the title of the property. A conveyancer should also be able to explain the nature of an interdict.

The Legal Lowdown

Conveyancers are keen investigators, they are specialists in their field as they exercise knowledge and skill in all of the transactions. Although every transaction might be different, the principles remain the same. The job of a conveyancer is to ensure that the agreement of sale entered into, by all the parties, is adhered to and all the provisions are attended to and carried out. When an agreement of sale is received, a deed search needs to be conducted to confirm the legal owner of the property, property description, and most importantly, any endorsement and/or caveat attached to the property and if the property is financed through a bond.

Sometimes certain restrictions are placed on a property. These are known as endorsements. An endorsement can be a mortgage bond, mineral rights, and interdicts (caveat or attachment).  As the investigator, if we pick up from the deeds search that an endorsement or caveat is noted against a property, we ensure that it is attended to and dealt with accordingly.  Caveats, endorsements, and interdicts are all interchangeable words for an attachment made against a property.

These can be in the form of:

• a property that has been attached by the sheriff of the court where property must be sold in execution (in cases of repossession),
• an interdict indicating that the owner has been declared insolvent,
• or that the property is bonded, amongst others.

A simple deeds search indicates the type of an interdict/caveat noted against a property and this information is available from the Deeds office. There is no caveat that can be noted against a property which indicates that the property is under attack and can be hijacked. South African law is stringent with regard to the sale of immovable property.  Only the owner, save for attachment orders, can sell his or her property, it cannot be “Hijacked”.

However, what happens if a seller has been incorrectly or fraudulently declared insolvent and his property attached for liquidation,  or if a seller is declared mentally ill, or the property is attached and must be sold in execution?

This was the situation in the case of Anioma Property (PTY) LTD v DFMT Property Developers and Others (49230/2021)[2023] ZAGPJHC 209, that the applicants found themselves in when they realised a third party had tried to liquidate a high value property they owned in a Northern Johannesburg suburb. They approached the High Court for an interdict immediately to stop this third party and a caveat was issued and registered against the property.  This was to ensure that should any party wish to sell said property, they would require an order from the court to proceed with the sale.

Anioma Property (PTY) LTD eventually decided to sell this property and accepted a cash offer of R13 Million. In good faith the seller included in the Agreement of Sale a Special Condition Clause, that they would remove the currently registered caveat before registration of the property into the purchaser’s name.  However,  due to it being irrelevant to the purchaser, they did not disclose the content of this caveat to the purchaser.

The purchaser, upon finding out about the caveat, misunderstood the caveat to mean that the property was being hijacked and under attack. At this, naturally the purchaser wanted to cancel the agreement of sale and reneged in payment of transfer costs, which ensured the transfer could not proceed.

Conveyancers also play a mediator and, at times, the role of councillor. In this instance, the conveyancer could have assured the purchaser that the caveat noted was irrelevant and would be removed.

The seller was well within his right to place the purchaser on terms and claim specific performance. An agreement of sale is a legally binding contract, and parties cannot walk away from it as they see fit. The purchaser claimed misrepresentation from the seller, however this was not correct.  Misrepresentation occurs when a false or incorrect statement is made by a party or agent to the contracting party, which consequently induces the latter party to conclude the contract. Explanation of the caveat was irrelevant because the second respondent was briefed to have it uplifted from the property.

The court in the above mentioned case was correct in ordering the purchaser to pay the balance of the purchase price, and the costs of transfer, for the transaction to commence. At best, uplifting any caveats of this nature noted against a property will delay the transaction, however, it may not warrant the cancellation of the whole agreement of sale due to non-disclosure.

Sellers of immovable property are only required in terms of the Property Practitioners Act No 22 of 2019 to disclose all known patent and latent defects on the property. Furthermore, the court was correct in indicating that information detailing the history of events, that led to the filing of the caveat, could easily be accessed through the deed’s office.

Bibliography

Deeds Registries Act 47 of 1937

Property Practitioners Act 22 of 2019

Anioma Property (PTY) LTD v DFMT Property Developers and Others (49230/2021)[2023] ZAGPJHC 209

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Written by Frans Malete

Moderated and approved by Wessel de Kock