It may happen, that as a purchaser, the transferring attorney tells you that they need to correct a defect in a title deed. But that this correction means that you, as the new owner, will become liable to and beholden to another for either a levy, a right of pre-emption and so forth. Is this fair? Well according to Cape Explosive Works Ltd and another v Denel (Pty) Ltd and others [2001] 3 All SA 321 (A) it is. Albeit an older case it still stands as the authority for issues of this kind.

The appeal in this matter was whether certain conditions registered in a title deed and not brought forward in transfers were binding on the current owner of the property in question and then future owners. The First Appellant had sold two properties to the Second Respondent with a condition that the properties would only be used research, development, and manufacture of weapons. The Second Respondent granted the First Appellant the first right to repurchase, or a pre-emption, over the properties. This was linked to the fact that should the properties no longer be required armaments research and manufacture then this ‘right’ would kick in. This right was registered in the title deeds to the properties, and the properties were transferred to the Second Respondent. Yet part of one of the properties was transferred by the Second Respondent to the First Respondent and the condition regarding the right of repurchase was omitted from this title deed.

There was a dispute between the First Respondent and First Appellant as to whether the latter was entitled to repurchase the relevant should the property no longer be used for the specified purpose. The First Respondent applied for an order declaring its ownership of the property was not subject to the right. In a counter-application, the First Appellant applied for the rectification of the relevant title deeds and inclusion of the omitted condition. The court a quo found that the First Respondent’s right of ownership was not encumbered by the conditions relied upon by the Appellants.

This court held that the intention with which transfer of the properties was given and received was significant in the present matter. The First Appellant had transferred the properties with the intention that the transfer and property be subject to a right of pre-emption. The Second Respondent, as the buyer in that transaction, never disputed the applicability of the said condition. It was seen as intending to pass and receive transfer of the properties subject to the relevant conditions.

What was to be decided was whether the conditions were capable of being registered, and what the effect of their omission from subsequent title deeds was.

Section 3 of the Deeds Registries Act 47 of 1937, provides that all real rights in respect of immovable property are registrable. For the right relating to land to be a real one, two requirements must be satisfied. Firstly, the creator of the right must intend to bind the present owner and successors in title. Secondly, the nature of the condition must be such that the registration thereof should result in a “subtraction from dominium” of the land against which it is registered.

With the requirements from section 3 in hand and the intention as shown in the court papers, the Supreme Court of Appeal held that the appeal must be upheld and that the conditions must be included. Thus it authorised the rectification of the title deeds.

What can be taken from this case is that, if there is a real right registered in a titled deed prior to your Sellers holding title, such as a right in favour of homeowners association, or pre-emptive right, then that right can be brought forward into your title deed. That you will be then subject to that condition and beholden to obey it should the provisions of the condition be triggered?

Contact the ESI team for any and all property related matters.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)