LPL 4804 Conveyancing summaries updated.

LPL – 4804 – SUMMARIES S/U 1 – P 1 –OVERVIEW OF THE SOUTH AFRICAN LAND REGISTRATION SYSTEM 1. Differentiate between the positive and negative deeds registration systems. A. A positive system implies the following: a. The State guarantees to bona fidethird parties that the state register in the designated deeds registry is an authoritative record of the rights to clearly defined units of land. b. The State examines/investigates documentation and transactions for legality. c. The State completes and maintains a register of title. d. Register of title is linked to a cadastral system of maps and diagrams. e. Transfer takes place when the register of title is annotated and any deeds are merely endorsed. f. From this it follows that new deeds are not necessary for each transaction  as the main source of information is the deeds register which is merely annotated/updated. g. Linking of different transactions occurs h. The State guarantees the accuracy of the deed register and is liable for shortcomings. i. Such a deeds register is characterized by a high degree of state interference  (as for instance in the Torrens system, created by Sir Robert Torrens and which is still being used in New Zealand and in New South Wales, Australia) B. A negative system implies the following: a. The State gives no guarantees to bona fidethird parties regarding the accuracy of the state deeds register. b. The State simply records deed submitted at face value. c. There is no examination of the deeds or investigation by the State prior to recording d. Transfer is effected in the new deed, not when the state deeds register is annotated/updated so a new deed must be executed for each transaction. e. There is usually no link to a cadastral system of maps and diagrams f. Third parties cannot rely on the accuracy of the State records, which might give an inaccurate or incomplete picture g. The State incurs no liability for inaccurate or incomplete records h. There is minimal state interference (as for instance in the land registration system in the Netherlands) 2. Discuss which system applies in South Africa, substantiate your choice with references to cases a. In SA land registration is based on statute (Alienation of Land Act and Deeds Registries Act) and is unique because it is nominally negative, but has some characteristics of a positive system as well. b. While the State does not guarantee the correctness of the data contained in the SA deeds registries, it does not simply record deeds at face value either.  It provides owners/real right holders with security of title.  Both titleholders and bona fidethird parties do rely on the correctness of the information contained in the title and deeds registry records.  It is also unnecessary for SA titleholders to insure their rights in case a third party should subsequently prove to have a better title to the property, as is the case with other negative registration systems. c. Barclays Nasionale Bank v Registrateur van Aktes – land which was subject to a mortgage bond was transferred to a bona fidepurchaser without the bond first being cancelled.  The court held that the mortgagee’s secured real right was not terminated by the transfer, and that the transferee therefore acquired the land subject to the bond.  Until the mistake is discovered and rectified, the same principle will apply to all subsequent transfers.  This means that the mortgagee’s rights remain intact to the detriment of subsequent transferees although a number of subsequent transfers may have been registered. d. Standard Bank v Breitenbach– relates to the reliability and completeness of deeds office information.  There the court held that a mortgage bond that had erroneously not been endorsed on the title deed of the land was in fact duly registered once the registrar had signed the mortgage bond, and that a bona fidepurchaser of the land therefore acquired the land subject to the bond. e. Legato McKenna Inc v Shea (SCA) – following a motor vehicle accident in which Ms Shea suffered severe brain injuries making it impossible for her to manage her own legal and financial affairs, attorney McKenna of Legator McKenna Inc was appointed by the court as curator in March 2002.  Then before receiving a letter of appointment from the Master, in April 2002, McKenna sold Ms Shea’s immovable property to Mr and Mrs Erskine, in order to pay Ms Shea’s pressing debts.  With his signature McKenna inserted the words “curator” and “Subject to the approval of the Master”.  The Master’s appointment in favour of McKenna was issued in June 2002 and the Master’s consent to the sale followed on 17 July 2002.  The transfer in favour of the Erskine’s was registered on 27 July 2002 and in March 2003.  Ms Shea recovered to such an extent that the court declared her once more capable of managing her own affairs.  Approximately a year later Shea applied to court for, among others, an order for the return of the immovable property against repayment of the purchase price.  The Erskines in turn instituted a conditional damage claim against McKenna for R1.7m should the immovable property be returned to Shea, based on McKenna’s breach of his implied warranty that he was authorized to sell the property.  In the court a quo Shea succeeded.  The sale was declared void, so was the subsequent registration of transfer in the deeds office.  On appeal this decision was reversed and the abstract theory of the passing of ownership applied.  It has thus now been definitively decided that the abstract theory of passing of ownership applies in SA.  This means that even though the original causaof a transaction registered in the deeds office may be defective, if there is a real agreement to transfer ownership and both parties have performed under that real agreement, then the subsequent transfer is valid. NB** In terms of the abstract theory, there are 2 requirements for passing ownership: 1) Delivery: In the case of immovable property, this is effected by registration of transfer in the Deeds office.