AA - Jan 2021

Author: Gert Minnaar
STBB Illovo Office
28 October 2020

SA AFFORDABLE HOUSING THE CONVEYANCER’S OTIONS WHEN THE DEEDS OFFICE REJECTS DEEDS FOR THE WRONG REASON: PART2

What remedies has a conveyancer when an examiner at the Deeds Office rejects a deed for the wrong reasons?
The first part of this article appeared in the September issue of SA Affordable Housing, including points 1-3. 

They must be read in conjunction:

If you missed part 1: September / October 2020 – The conveyancer’s options when the Deeds Office rejects deeds for the wrong reason: Part 1 

4. The conveyancer’s response to the incorrect note

The incorrect note raised by the examiner which prevented the above transfer and bond (see May issue, Part 1) for the FLISP house under discussion from getting registered the first time read as follows: “Taking out a bond is the first step to alienation, lodge consent.”

It seems that this specific examiner was under the impression that Section 10A of the Housing Act, 1997 (No 107 of 1997) was applicable already in respect of the very mortgage bond without which the acquisition of this FLISP house would not be possible. The correct position is that Sections 10A and 10B of the Housing Act, 1997 (No 107 of 1997) only find application after both the transfer and required bond for the FLISP house are registered simultaneously, as indicated in Regulation 63(3) and Section 13(3) of the Deeds Registries Act, 1937 (No 47 of 1937):

  • Regulation 63(3) When a deed lodged for execution or registration is intended to be executed or registered, or otherwise dealt with, in conjunction with any other deed lodged, the conveyancer, notary or Government official responsible for the lodgement shall indicate in the manner approved by the Registrar that such deeds shall be executed or registered or dealt with simultaneously. If any conveyancer, notary or Government official omits to comply with this regulation, the deed in respect of which the omission was made may, if in order, be executed, registered, or otherwise dealt with independently of such other deed.
  • Section 13(3) All endorsements or entries made on deeds, documents or powers of attorney or in registers, in connection with the registration of any deed, document or power of attorney, shall be deemed to have been effected simultaneously with the affixing of the signature of the registrar thereto in respect of deeds executed or attested by a registrar or with the signing of his registration endorsement in respect of deeds, documents or powers of attorney lodged for registration, although in fact they may have been made subsequent thereto.

Only once this purchaser who obtained a FLISP subsidy and mortgage loan, after date of transfer and registration of the simultaneous mortgage bond, wishes to sell this property within a period of eight years from date of acquisition will he or she be required to first offer it to the relevant Department of Human Settlement in case of a voluntarily sale. The request by the examiner for a consent from the Department of Human Settlements to register the linked mortgage bond is thus premature because the restrictions in Sections 10A and 10B of the Housing Act, 1997 (No 107 of 1997) only become applicable after signature of this mortgage bond by the Registrar of Deeds and its simultaneous registration with the transfer of the FLISP house.

Despite these sound arguments in law by the conveyancers this examiner was not prepared to remove this incorrect note. The matter was escalated to the Deputy Registrar of Deeds and only when the NHFC was approached to issue a letter to the Deeds Office confirming the correct application of Sections 10A and 10B of the Housing Act, 1997 (No 107 of 1997) was this note removed, albeit reluctantly because it was requested that a copy of the NHFC letter be lodged with each following FLISP transaction, despite it not being a consent but a mere written confirmation of the correct legal position.

This saga started on 2 August 2019 and it took all of three weeks to get this note removed to get the transfer and bond registered. The developer was dumbfounded but mightily relieved that the same note was not raised on his other FLISP transactions by the other examiners in the same Deeds Office during this time.

5. What remedies are available when an examiner refuses to remove an incorrect note?
One of the duties of the Registrar of Deeds is described in Section 3(1)(b) of the Deeds Registries Act, 1937 (No 47 of 1937), and that is to examine all deeds or other documents to check that it complies with the provisions of the Deeds Registries Act, 1937 (No 47 of 1937), or of any other law:

The registrar shall, subject to the provisions of this Act -3(1)(b) examine all deeds or other documents submitted to him for execution or registration, and after examination reject any such deed or other document the execution or registration of which is not permitted by this Act or by any other law, or to the execution or registration of which any other valid objection exists; Provided that such deed or document need not be examined in its entirety before being rejected;

If a deed or document gets rejected because the examiner raised a valid note the conveyancers will rectify the mistake and relodge it. On the other hand, if the examiner exercised the abovementioned right but interpreted the applicable legislation incorrectly which resulted in the rejection of the deed or document because of such incorrect note, the conveyancer can approach the examiner who raised the note to discuss its merits. If the conveyancer can persuade the examiner with convincing evidence that his note is incorrect the examiner will agree to allow corrective maintenance on the deed or document, with permission of his Assistant Registrar or the designated Deputy Registrar. This means the deed or document is restored back into the system at the desk of the responsible examiner without having to relodge it afresh. The note gets removed and within two days from date of corrective maintenance it can be ready for registration.

If the examiner is not persuaded by the conveyancer’s argument he can escalate the matter, with the knowledge of the examiner, to the examiner’s Assistant Registrar or the designated Deputy Registrar. If the conveyancer has a sound argument the Assistant Registrar or the designated Deputy Registrar will allow for the removal of the incorrect note and the reintroduction of the deed or document back into the system at the desk of the responsible examiner without having to relodge it afresh.

6. A culture of accountability must be created

Section 33 of the Constitution of the Republic of South Africa Act, 1996 states that everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Everyone whose rights have been adversely affected by administrative action has the right to be given written reasons for such action. The Promotion of Administrative Justice Act, 200 (No 3 of 2000) was then enacted to promote an efficient administration and good governance as well as to create a culture of accountability, openness and transparency in the public administration or in the exercise of a public power or the performance of a public function.

Where the examiner raised an incorrect note and rejected a deed or document because of an incorrect interpretation of the law this must surely fall within the definition of “administrative action” in terms of the Promotion of Administrative Justice Act, 200 (No 3 of 2000). This means that a party who is prejudiced by the invalid rejection of a deed or document as a consequence of the failure by such examiner to exercise reasonable care and diligence in carrying out his duties may be entitled to redress.

In terms of Section 99 of the Deeds Registries Act, 1937 (No 47 of 1937) the State is accountable for the damages if an examiner executes his duties carelessly and neglectfully:

 99. Exemption from liability for acts or omissions in deeds registry. No act or omission of any registrar or of any officer employed in a deeds registry shall render the Government or such registrar or officer liable for damage sustained by any person in consequence of such act or omission: Provided that if such act or omission is mala fide or if such registrar or officer has not exercised reasonable care and diligence in carrying out his duties in connection with such act or omission, the Government shall be liable for the damage aforesaid: Provided further that the registrar or officer guilty of such act or omission shall be liable to make good any loss or damage resulting therefrom to the Government if such act or omission was mala fide.

7. Conclusion

The raising of incorrect notes by examiners as in the case of the FLISP house under discussion causes the rejection of deeds which are in fact permitted for registration by law. This postpones the registration of that matter unreasonably and subsequently also the flow of money linked to this transaction.

The majority of the examiners are willing to engage helpfully with conveyancers if they raised the wrong note and they accept accountability for such mistakes. If the incorrect note is removed by the examiner who acknowledges the mistake the delay in registration of that matter can be reduced and hopefully the same incorrect note will not be raised again.

The few examiners who refuse to budge when they raise the incorrect notes may have to be reminded about the financial implications of their actions on all the parties involved in that specific property transaction, which implications can be measured in monetary terms known as damages.

The original article can be viewed here: