Cilna Steyn, Managing Director at SSLR property experts, answers this week’s property question.
I bought a property at a sheriff auction eight months ago. The bank foreclosed on the previous owner, the owner is still living on the property and refuses to move out. I was told by my attorneys that we cannot start eviction because the previous owner is back in court with the bank, they claim that the sale was done illegally. This surely can’t be right, I have paid the full deposit and I am paying the rates and taxes and even worse I am paying the water and electricity bill! Apparently, I am not allowed to disconnect this. I cannot cancel the transaction or take transfer until the court case between the previous owner and bank is resolved. Please help.
This is unfortunately not a unique situation, I deal with this problem very often. You can find yourself in a similar situation stemming from various forms of sale, the most common of these are sheriff auctions, insolvency sales and sales from deceased estates. These types of sales may cause unwanted problems with occupation and eviction. To successfully obtain an eviction order the party asking the court to grant an order to evict another person, must show that she is the owner of the property and secondly that the person in occupation of the property is in fact, in illegal occupation.
Where there is any doubt about the validity or legality of the sale, the first thing you must prove to obtain an eviction order is unclear and a court will not be satisfied with this position. There can be two possible situations in these cases; the first being that the property has not been transferred and the second, where transfer already took place.
In a case where the property wasn’t transferred yet, we cannot even consider initiating eviction proceedings, due to a lack of standing before court. Only the registered owner of the property, or the person in charge of the property (this will be a person who has the right to lease the property, for instance a tenant with the right to sub-lease) has the right to bring an eviction application. Unfortunately, the purchaser awaiting transfer, cannot be described as the person in charge of the property. This position was confirmed in Red Stripe Trading 68 CC v Mahlomola and Another (2011/06)  ZAGPHC 39, where the court held that until the point of transfer, the purchaser is not in a position to bring an eviction application.
Where the property was transferred the problem described above doesn’t exist. The problem in these cases only arise in the second part of your eviction application, being the duty to prove that the occupant is in illegal occupation of the property. Should the occupant be the previous owner or a tenant of the previous, and the sale and transfer is disputed and part of active litigation for a court to determine the validity of the sale, then a court will not be in a position to grant an eviction order. In these cases, the previous owner will usually bring a sperate application to interdict the new owner from trading with the property until the dispute regarding the sale has been determined by a court.
It’s a pretty gloomy picture, unfortunately there isn’t much anybody can do at this point but to wait for a court to confirm or reject the validity of the sale, whether before or after transfer. There is however a light at the end of this tunnel. The occupant, in the majority of these cases are running up utility bills, while the purchaser is already liable for payment to the municipality. In a case where you, as the owner or purchaser of the property, are in a position where you cannot, for some reason in law, commence or finalise eviction proceedings, you can approach court for an order to mitigate your damages. It is illegal to disconnect utility supply to a premises, but in a case where the applicant can demonstrate to court that they have no other means of mitigating damages, the court will order the occupant to pay the utilities on invoice. If the occupant fails to pay in terms of the court order, the court will order that the sheriff, with the assistance of a plumber and electrician, be allowed to limit the water supply and disconnect the electricity supply.
If the sale was handled incorrectly and is set aside by a court, the purchaser might have a damages claim, depending on the particular facts of the matter. When you are in a position like this, you will have to wait for the underlaying litigation to be finalised, this can take up to two years which is why it is crucial to mitigate all other damages you will suffer.
The very old rule applies in these cases, prevention is better than cure. If you are buying from a sale in execution or auction, attend to court to peruse the court file to see if the case was opposed and what the basis for the opposition was and the reasons why the court granted the order. Should you be buying from a deceased estate, arrange a meeting with the executor of the estate and find out if there is a will or if it is an intestate estate and understand who the beneficiaries are and if there will be any objection against the sale. Be sure that all parties are satisfied with the sale, only then conclude a sale agreement. Once an agreement has been concluded, it can only be cancelled in terms of the particular agreement, which is in most cases only based on breach of the agreement, in most cases litigation regarding the validity of a sale will not constitute breach. Once you have concluded an agreement, you are bound by the terms of the agreement; be very sure that you understand the risks involved and are comfortable with the risks before you dive in.
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