Introduction:
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019) chapter 12.1
o Kilburn v Estate Kilburn 1931 AD 501
o Thienhaus NO v Metje & Ziegler Ltd and Another 1965 (3) SA 25 (A)
Special mortgage over immovable property:
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019) chapter 12.2
o Absa Bank Ltd v Sweet and Others 1993 (1) SA 318 (C) 323-324
o Barclays Nasionale Bank Bpk v Registrateur van Aktes, Transvaal, en ’n Ander 1975 (4) SA
936 (T)
o Standard Bank van SA Bpk v Breitenbach en Andere 1977 (1) SA 151 (T)
o Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC)
o Gundwana v Steko Development and Others 2011 (3) SA 608 (CC)
o Nedbank Ltd v Fraser and Another and Four Other Cases 2011 (4) SA 363 (GSJ)
o High Court Rule 46 GG 10779, GN 41257, R. 1272 of 17 November 2017
Notarial bonds
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.3.4
o Security by Means of Movable Property Act 57 of 1993
o Ikea Trading und Design AG v BOE Bank Ltd 2005 (2) SA 7 (SCA)
Pledge of movable property
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.3 -12.3.3 & 12.3.5 & 12.3.6
o Lighter & Co v Edwards 1907 TS 442
o Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A)
o Heydenrich v Saber and Others (1900) 17 SC 73
o Payn v Yates (1891-1892) 9 SC 494
o Bock and Others v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA)
,Tacit hypothecs:
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.2
o Bloemfontein Municipality v Jacksons Limited 1929 AD 266
o Paradise Lost Properties (Pty) Ltd v Standard Bank of South Africa (Pty) Ltd and
Another 1997 (2) SA 815 (D)
o Eight Kaya Sands v Valley Irrigation Equipment 2003 (2) SA 495 (T)
o Section 2 of the Security by Means of Movable Property Act 57 of 1993
o Sections 84 and 85(2) of the Insolvency Act 24 of 1936
o Sections 31 and 32 of the Magistrates’ Courts Act 32 of 1944
o Section 1 of the National Credit Act 34 of 2005 (definition of ‘instalment
agreement’)
Rights of retention (liens)
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.3
o D Glaser & Sons (Pty) Ltd v The Master and Another NO 1979 (4) SA 780 (C)
o Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (A)
o Buzzard Electrical (Pty) Ltd v 158 Jan Smuts Avenue Investments (Pty) Ltd en ’n
Ander 1996 (4) SA 19 (A)
Judicial and other statutory real security rights:
✓ Prescribed Onjectives
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.4 & 12.4.4
o Section 98 of the Insolvency Act 24 of 1936
o Sections 30 and 31 of the Land and Agricultural Development Bank Act 15 of
2002
o Schedule 1 part 4 item 4 of the Co-operatives Act 14 of 2005
o Section 114 of the Customs and Excise Act 91 of 1964
o Section 15B(3)(a)(i)(bb) of the Sectional Titles Act 95 of 1986
o Section 118 of the Local Government: Municipal Systems Act 32 of 2000
o Section 20(5)(a)(i) of the Alienation of Land Act 68 of 1981
Page 2 of 66
,Contents
1. INTRO TO REAL SECURITY: ................................................................................................................. 4
2. EXPRESS REAL SECURITY RIGHTS: .................................................................................................... 10
2.1. SPECIAL MORTGAGE OVER IMMOVABLE PROPERTY: ............................................................ 10
2.2. NOTARIAL BONDS OVER MOVABLE PROPERTY : ................................................................... 27
2.3. PLEDGE OVER MOVABLE PROPERTY: ..................................................................................... 37
3. TACIT REAL SECURITY RIGHTS: ......................................................................................................... 49
3.1. LESSOR’S TACIT HYPOTHEC: .................................................................................................... 49
3.2. RIGHTS OF RETENTION (LIENS): .............................................................................................. 53
3.3. JUDICIAL AND OTHER STATUTORY REAL SECURITY RIGHTS: ................................................. 61
Page 3 of 66
, 1. INTRO TO REAL SECURITY:
• Real security rights fall within the category of limited real rights because it is a property right
that the creditor has in a piece of property that belongs to his debtor or sometimes even to
someone else.
o The limited real rights have the effect of detracting from or limiting the ownership right
relating to a piece of property.
o The holder of the real security right has a right in an asset that is owned by someone
else.
o Purpose of a limited real right: to serve as security for the fulfilment of a personal
obligation (repayment of the debt).
o The value of this property will serve as the creditors backup and that is when the debtor
cannot repay for example, the creditor can have the property sold and use the proceeds
to settle the debt.
o The holder of the security right is a creditor that can retain its hold over the asset until
the debtor performs according to the underlying indebtedness.
• A personal obligation (debt) can be created through contract, delict & unjustified enrichment.
o Debt can be created through statute, for e.g. tax liability.
o E.g. when debt is created through contract: is when a duty (of the debtor) to repay a
loan & a personal right (of the creditor) to reclaim money lent are established ito a
loan agr.
o E.g. of debt include where a tenant has a duty to pay rent & a purchaser has a duty to
pay the purchase price.
• Where a person (debtor) owes performance to someone else (creditor), there will be a risk that
the debtor cannot/ will not fulfil his duty to pay according to the terms of the ctr.
o There may be a situation where the creditor would have to share with other creditors
and therefore would be able to retrieve only a small portion of what is owed,
particularly of the debtor is sequestrated (or liquidated in the case of company).
▪ THIS IS WHERE SECURITY RIGHTS COMES IN.. it serves as a “backup” or as a
secondary claim what the creditor can rely on when he cannot get his money
back by relying simply on the personal right/ primary claim.
• To mitigate the risks associated with credit, the law provides a few ways in which a creditor can
(in addition to its claim for repayment) obtain an additional right (a security right) to strengthen
its chances of retrieving the money.
PERSONAL
RIGHT
CREDITOR DEBTOR
Personal
Rights Ownership
OWNER
Real Servitudes REAL RIGHT
Limited real
rights
Real security REAL BURDEN
rights PROPERTY
Page 4 of 66
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019) chapter 12.1
o Kilburn v Estate Kilburn 1931 AD 501
o Thienhaus NO v Metje & Ziegler Ltd and Another 1965 (3) SA 25 (A)
Special mortgage over immovable property:
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019) chapter 12.2
o Absa Bank Ltd v Sweet and Others 1993 (1) SA 318 (C) 323-324
o Barclays Nasionale Bank Bpk v Registrateur van Aktes, Transvaal, en ’n Ander 1975 (4) SA
936 (T)
o Standard Bank van SA Bpk v Breitenbach en Andere 1977 (1) SA 151 (T)
o Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC)
o Gundwana v Steko Development and Others 2011 (3) SA 608 (CC)
o Nedbank Ltd v Fraser and Another and Four Other Cases 2011 (4) SA 363 (GSJ)
o High Court Rule 46 GG 10779, GN 41257, R. 1272 of 17 November 2017
Notarial bonds
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.3.4
o Security by Means of Movable Property Act 57 of 1993
o Ikea Trading und Design AG v BOE Bank Ltd 2005 (2) SA 7 (SCA)
Pledge of movable property
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.3 -12.3.3 & 12.3.5 & 12.3.6
o Lighter & Co v Edwards 1907 TS 442
o Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A)
o Heydenrich v Saber and Others (1900) 17 SC 73
o Payn v Yates (1891-1892) 9 SC 494
o Bock and Others v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA)
,Tacit hypothecs:
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.2
o Bloemfontein Municipality v Jacksons Limited 1929 AD 266
o Paradise Lost Properties (Pty) Ltd v Standard Bank of South Africa (Pty) Ltd and
Another 1997 (2) SA 815 (D)
o Eight Kaya Sands v Valley Irrigation Equipment 2003 (2) SA 495 (T)
o Section 2 of the Security by Means of Movable Property Act 57 of 1993
o Sections 84 and 85(2) of the Insolvency Act 24 of 1936
o Sections 31 and 32 of the Magistrates’ Courts Act 32 of 1944
o Section 1 of the National Credit Act 34 of 2005 (definition of ‘instalment
agreement’)
Rights of retention (liens)
✓ Prescribed Sources:
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.3
o D Glaser & Sons (Pty) Ltd v The Master and Another NO 1979 (4) SA 780 (C)
o Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (A)
o Buzzard Electrical (Pty) Ltd v 158 Jan Smuts Avenue Investments (Pty) Ltd en ’n
Ander 1996 (4) SA 19 (A)
Judicial and other statutory real security rights:
✓ Prescribed Onjectives
o Muller G (ed) General principles of South African property law (2019)
chapter 12.4.4 & 12.4.4
o Section 98 of the Insolvency Act 24 of 1936
o Sections 30 and 31 of the Land and Agricultural Development Bank Act 15 of
2002
o Schedule 1 part 4 item 4 of the Co-operatives Act 14 of 2005
o Section 114 of the Customs and Excise Act 91 of 1964
o Section 15B(3)(a)(i)(bb) of the Sectional Titles Act 95 of 1986
o Section 118 of the Local Government: Municipal Systems Act 32 of 2000
o Section 20(5)(a)(i) of the Alienation of Land Act 68 of 1981
Page 2 of 66
,Contents
1. INTRO TO REAL SECURITY: ................................................................................................................. 4
2. EXPRESS REAL SECURITY RIGHTS: .................................................................................................... 10
2.1. SPECIAL MORTGAGE OVER IMMOVABLE PROPERTY: ............................................................ 10
2.2. NOTARIAL BONDS OVER MOVABLE PROPERTY : ................................................................... 27
2.3. PLEDGE OVER MOVABLE PROPERTY: ..................................................................................... 37
3. TACIT REAL SECURITY RIGHTS: ......................................................................................................... 49
3.1. LESSOR’S TACIT HYPOTHEC: .................................................................................................... 49
3.2. RIGHTS OF RETENTION (LIENS): .............................................................................................. 53
3.3. JUDICIAL AND OTHER STATUTORY REAL SECURITY RIGHTS: ................................................. 61
Page 3 of 66
, 1. INTRO TO REAL SECURITY:
• Real security rights fall within the category of limited real rights because it is a property right
that the creditor has in a piece of property that belongs to his debtor or sometimes even to
someone else.
o The limited real rights have the effect of detracting from or limiting the ownership right
relating to a piece of property.
o The holder of the real security right has a right in an asset that is owned by someone
else.
o Purpose of a limited real right: to serve as security for the fulfilment of a personal
obligation (repayment of the debt).
o The value of this property will serve as the creditors backup and that is when the debtor
cannot repay for example, the creditor can have the property sold and use the proceeds
to settle the debt.
o The holder of the security right is a creditor that can retain its hold over the asset until
the debtor performs according to the underlying indebtedness.
• A personal obligation (debt) can be created through contract, delict & unjustified enrichment.
o Debt can be created through statute, for e.g. tax liability.
o E.g. when debt is created through contract: is when a duty (of the debtor) to repay a
loan & a personal right (of the creditor) to reclaim money lent are established ito a
loan agr.
o E.g. of debt include where a tenant has a duty to pay rent & a purchaser has a duty to
pay the purchase price.
• Where a person (debtor) owes performance to someone else (creditor), there will be a risk that
the debtor cannot/ will not fulfil his duty to pay according to the terms of the ctr.
o There may be a situation where the creditor would have to share with other creditors
and therefore would be able to retrieve only a small portion of what is owed,
particularly of the debtor is sequestrated (or liquidated in the case of company).
▪ THIS IS WHERE SECURITY RIGHTS COMES IN.. it serves as a “backup” or as a
secondary claim what the creditor can rely on when he cannot get his money
back by relying simply on the personal right/ primary claim.
• To mitigate the risks associated with credit, the law provides a few ways in which a creditor can
(in addition to its claim for repayment) obtain an additional right (a security right) to strengthen
its chances of retrieving the money.
PERSONAL
RIGHT
CREDITOR DEBTOR
Personal
Rights Ownership
OWNER
Real Servitudes REAL RIGHT
Limited real
rights
Real security REAL BURDEN
rights PROPERTY
Page 4 of 66
