Title Deeds' Restrictive Conditions

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12 Jun 2013

A recent judgement is a reminder to property owners of their obligation to ensure that they comply with conditions of title and of the potential consequences of not doing so,according to Fritz Schulz, director in the real estate department at Norton Rose Fulbright South Africa.

A recent judgement is a reminder to property owners of their obligation to ensure that they comply with conditions of title and of the potential consequences of not doing so, according to Fritz Schulz, director in the real estate department at Norton Rose.

Schulz was referring to the ruling made in the case of the Mossel Bay Municipality versus the Evangelical Lutheran Church.

Sale agreements of land normally contain a condition stipulating that the purchaser acquires the property subject to the existing conditions of title.

In most cases, buyers never see the conditions of title before, or even after, taking transfer because title deeds are almost always retained by the mortgagees, explains Schulz.

“Buyers should therefore always be advised to familiarise themselves with the conditions of title when acquiring a property and to ensure compliance therewith.”

Schulz says the title deeds for certain portions of land contain a restrictive condition that the land be used solely for church or educational purposes, and if at any time the owner ceased to use the properties for those purposes, or when it was no longer required for those purposes, it reverted to the municipality without payment of compensation for any improvements. 

For various reasons, including the church’s inability to finance renovations to the building situated on the properties, the buildings became derelict. 

The buildings stood vacant and were not used in accordance with the restrictive conditions of title, he says.

The church’s defence was that it had always used and intended to continue using the properties for church and educational purposes. 

Its current failure to do so was as the result of its temporary inability to obtain financial assistance to repair the derelict buildings.

The municipality contended that extensive negotiations between the parties failed and that it was incumbent upon the municipality to act in the interest of its residents, in order to fulfil its constitutional mandate.

Despite the church’s defence, an order was granted that the properties in question were to be transferred to the municipality, he adds.

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