lpl4805 Notarial Practice Study Guide.

CONTENTS Study unit Page ABBREVIATIONS FOR REFERENCE BOOKS, ACTS AND OTHER GENERAL TERMS viii MODULE OBJECTIVES AND LEARNING OUTCOMES x SUGGESTIONS FOR USING THIS STUDY GUIDE xi GLOSSARY xii PRACTICAL EXPOSITION xxi Study unit 1: OFFICE AND GENERAL FUNCTIONS OF THE NOTARY 1 1.1 General functions of the notary 1 1.1.1 Introduction and defi nition 1 1.1.2 Offi ce and conduct of notary 2 1.1.3 Protocol and protocol register 3 1.1.4 Duty of care 4 1.1.5 Deeds registry 5 1.1.6 Admission and removal from roll 5 1.1.7 Code of conduct 7 1.2 Drafting of documents 7 1.2.1 Introduction 7 1.2.2 Guidelines 8 1.2.2.1 Professionalism 8 1.2.2.2 Formal requirements 9 1.2.2.3 Content 10 1.2.2.4 Interpretation 10 1.3 Authentication of documents 10 1.3.1 Introduction 10 1.3.2 Rules for authentication of documents executed within the Republic of South Africa for use outside the Republic of South Africa – Government Notice 277 of 3 March 1967 11 1.3.3 Rules for authentication of documents executed outside the Republic of South Africa for use within the Republic of South Africa 11 1.3.3.1 Introduction 11 1.3.3.2 Rule 63 of Supreme Court Rules 12 1.3.3.3 Hague Convention 13 1.3.3.3.1 Documents 13 1.3.3.3.2 Procedure 14 1.4 Powers of attorney 14 1.4.1 Introduction 14 1.4.2 Requirements 15 1.4.3 Ambit 15 1.4.4 Termination 15 1.4.5 Amendment of power of attorney 15 1.4.6 Irrevocable power of attorney 16 1.4.7 Power of attorney intended for acts of registration in the deeds registry 16 1.4.7.1 General structure 16 1.4.7.2 Deeds registry requirements 17 (iv) STUDY UNIT PAGE 1.4.7.2.1 Paper and writing 17 1.4.7.2.2 Preparation certifi cate 17 1.4.7.2.3 Preparer’s responsibility for accuracy of facts in power of attorney 18 1.4.7.2.4 Foreign execution and language 19 1.4.7.2.5 Witnesses 19 1.4.7.2.6 Specifi c provisions regarding content 19 1.4.8 Conclusion 20 1.4.9 Self-assessment questions 20 1.4.10 Additional reading 21 Study unit 2: NOTARIAL BONDS 22 2.1 Introduction 22 2.2 Security by Means of Movable Property Act 57 of 1993 24 2.3 Categories of notarial bonds 25 2.4 Requirements in respect of form, content and registration 25 2.4.1 Form and content 25 2.4.1.1 Heading 25 2.4.1.2 Preamble 25 2.4.1.3 Supplementary provisions 27 2.4.2 Registration 27 2.4.3 Ranking 28 2.4.4 Copies 29 2.5 Specifi c mortgages 29 2.5.1 Minors 29 2.5.2 Parties married in community of property 29 2.5.3 Trusts and partnerships 29 2.5.4 Juristic persons 30 2.6 Proof of authority to act 30 2.7 Conclusion 30 2.8 Self-assessment questions 30 2.9 Additional reading 31 Study unit 3: ANTENUPTIAL CONTRACTS 32 3.1 Introduction 32 3.2 Civil Unions and Customary Marriages 33 3.2.1 Civil Union Act 17 of 2006 33 3.2.2 Recognition of Customary Marriages Act 120 of 1998 34 3.3 Registration requirements 35 3.3.1 Execution 35 3.3.1.1 Notarial execution 35 3.3.1.2 Language 35 3.3.1.3 Parties 35 3.3.1.4 Appearance by representative 36 3.3.1.5 Place and date of execution 37 3.3.1.6 Witnesses 37 3.3.1.7 Time of execution 37 3.3.2 Registration 37 3.3.2.1 Time of registration 37 3.3.2.2 Place of registration 38 3.4 Transfer duty, donation tax, stamp duty 38 3.5 Matrimonial Property Act 88 of 1984: accrual system 39 3.6 Amendment and cancellation of antenuptial contract 40 3.7 Postnuptial registration and postnuptial signing of antenuptial contract 41 3.8 Change of matrimonial property dispensation by the court in terms of section 21 of the Matrimonial Property Act 88 of 1984 42 LPL4805/1 (v) Study unit page 3.9 Conclusion 42 3.10 Self-assessment questions 42 3.11 Additional reading 43 Study unit 4: SERVITUDES 44 4.1 Introduction 44 4.2 Vesting 45 4.2.1 Doctrine of notice 46 4.3 Types of servitude 46 4.3.1 Praedial servitudes 46 4.3.2 Characteristics of praedial servitudes 47 4.3.3 Personal servitudes 47 4.3.3.1 Characteristics of personal servitudes 47 4.3.3.2 Types of personal servitudes 48 4.3.4 Public servitudes 49 4.3.5 Statutory servitudes 49 4.4 Servitudes in terms of Sectional Titles Act 95 of 1986 50 4.4.1 Implied servitudes 50 4.5 Creation of praedial and personal servitudes 50 4.5.1 General 50 4.5.2 Reservation in power of attorney to pass transfer of land 50 4.5.3 Court order, statute and prescription 51 4.5.4 Notarial agreement 51 4.6 Diagrams 51 4.7 Amendment 51 4.8 Termination of praedial and personal servitudes 52 4.8.1 General 52 4.8.2 Lapsing 53 4.8.3 Cancellation 53 4.9 Transfer duty 53 4.10 Conclusion 53 4.11 Self-assessment questions 53 4.12 Additional reading 54 Study unit 5: LEASES OF LAND 55 5.1 Introduction 55 5.2 Defi nition 55 5.3 Format and registration 56 5.4 Huur gaat voor koop rule and Consumer Protection Act 68 of 2008 57 5.4.1 Huur gaat voor koop rule 57 5.4.2 Consumer Protection Act 68 of 2008 57 5.5 Content 58 5.5.1 General 58 5.5.2 Contractual requirements 59 5.5.2.1 Parties 59 5.5.2.2 Formalities and key elements 59 5.5.2.3 Conditions and content 59 5.6 Transfer duty, stamp duty and clearance 60 5.6.1 Transfer duty 60 5.6.2 Stamp duty 60 5.6.3 Clearance certifi cate 60 5.7 Conclusion 60 5.8 SELF-ASSESSMENT QUESTIONS 61 5.9 Additional reading 61 (vi) STUDY UNIT PAGE Study unit 6: TRUSTS 62 6.1 Introduction 62 6.2 Defi nition 62 6.3 Creating a trust 63 6.4 Registration of a trust 64 6.5 Key elements of atrust 64 6.6 Setting up a trust 65 6.7 Trustee 65 6.8 Duties of a trustee 65 6.8.1 Handing in of deed of trust 65 6.8.2 Security 65 6.8.3 Address 66 6.8.4 Care 66 6.8.5 The trust account 66 6.8.6 Identifi cation of trust property 66 6.8.7 Custody of documents 66 6.8.8 Administration 66 6.8.9 Terminating offi ce of trustee 67 6.8.9.1 Resignation 67 6.8.9.2 Removal by court 67 6.8.9.3 Removal by Master 67 6.9 Remuneration of a trustee 68 6.10 Amendment and termination of a trust 68 6.11 Drafting a deed of trust 68 6.12 Additional points of importance 69 6.13 Conclusion 69 6.14 Self-assessment questions 69 6.15 Additional reading 70 Study unit 7: BILLS, CHEQUES AND PROMISSORY NOTES 71 7.1 Introduction 71 7.2 Important concepts 71 7.3 Acceptance 74 7.3.1 Presentment for acceptance 74 7.3.2 Requirements for presentment for acceptance 75 7.3.3 Exceptions 75 7.4 Non-acceptance 75 7.5 Bills: Presentment for payment 76 7.6 Promissory notes: Presentment for payment 76 7.7 Notice of dishonour 76 7.7.1 Notice not required 78 7.7.2 Dispensing with notice 78 7.8 Noting and protest 79 7.8.1 General 79 7.8.2 Noting 79 7.8.3 Protest 79 7.9 Conclusion 81 7.10 Self-assessment questions 81 7.11 Additional reading 82 Study unit 8: SELECTED LEGISLATION 83 8.1 Introduction 83 8.2 Transfer Duty Act 40 of 1949 83 8.2.1 Introduction 83 8.2.2 Remarks 84 LPL4805/1 (vii) Study unit page 8.3 Subdivision of Agricultural Land Act 70 of 1970 85 8.3.1 Introduction 85 8.3.2 Remarks 85 8.4 Conclusion 86 8.5 Self-assessment questions 86 8.6 Additional reading 87 BIBLIOGRAPHY 88 APPENDIX 90 LIST OF EXAMPLES 93 (viii) 1ABBREVIATIONS FOR REFERENCE BOOKS, ACTS AND OTHER GENERAL TERMS The following abbreviations will be used in this study guide: 1 Reference books Deeds Offi ce Practice Chief Directorate: Deeds Registration, Department of Rural Development and Land Reform Deeds office practice (2007) Deeds Practice Manuals The consolidated practice manuals of the deeds offi ce of South Africa (2006 updated 2013) Juta Law of Property Van der Walt AJ & Pienaar GJ Introduction to the law of property 6 ed (2009) Juta Notarial Practice Van der Merwe FE Notarial practice 2 ed (2001) Butterworths Practitioner West AS The practitioner’s guide to conveyancing and notarial practice Consulta 16 2 ed (2010 updated 2012) Law Society of South Africa SA Notary Lowe MJ, Dale MO, De Kock A, Froneman SL & Lang AJG Elliot – the South African notary 6 ed (1987) Juta 2 Acts Deeds Act Deeds Registries Act 47 of 1937 Sectional Titles Act Sectional Titles Act 95 of 1986 Other abbreviations eg for example CRC Chief Registrar’s Circular para paragraph r regulation RCR Registrars’ Conference Resolution s section SG Surveyor-General SU study unit sv sub voce/sub verbo – see under the entry MODULE OVERVIEW In this module, you will study not only the practical aspects relating to notarial practice, but also the theory on which it is based. This module is not an alternative to or substitute for the curricula that the Law Society of South Africa prescribes for admission as a notary. Moreover, it is not LPL4805/1 (ix) Abbreviations for reference books, acts and other general terms a technical course aimed solely at instilling the formal skills needed for drafting certain documents. The reason we emphasise the theory is to give you background knowledge on the legal principles and rules that underlie the different subjects relating to notarial practice that we will discuss here. The offi ces of conveyancer and notary are closely linked, and you should always keep this in mind. A conveyancer and a notary are both offi cers of the High Court, and both perform their duties under the supervision of the High Court of South Africa. Moreover, only a person already admitted as an attorney and practising as such may practise as a notary or conveyancer, after having been admitted as such by the court. The duties of the conveyancer (dealt with in the Conveyancing module, LPL4804) specifi cally centre on the preparation of documents and deeds aimed at registration in the deeds registry and, therefore, on setting them in order for lodgment and registration in the deeds registry. Certain documents may be accepted for registration in the deeds registry only if they were prepared by a conveyancer. Section 15 of the Deeds Act expressly provides that a deed of transfer, mortgage bond, certifi cate of title or any certifi cate of registration has to be prepared by a conveyancer. The functions of the notary are more multifarious, but drafting documents for registration in the deeds registry forms an important part of the work of a notary. For example, in terms of the Deeds Act, execution by a notary is a prerequisite for the registration of antenuptial contracts, notarial bonds, deeds of servitude, leases of land, subleases and cessions of these leases (see ss 87(1), 102 sv ‘‘notarial bond”, 65(1), 75(1), 77(1) and 3(1)(p) respectively of the Deeds Act). In addition, powers of attorney authorising the registration of a deed of transfer or a mortgage bond in the registry, which are usually prepared by a conveyancer, may also be prepared by a notary. In this study guide, which consists of eight study units, we deal with various aspects of notarial practice. But fi rst, under the heading PRACTICAL EXPOSITION we include a general practical overview or exposition, where we illustrate – by means of everyday examples – the transactions and acts that normally require the services of a notary. In study unit 1, we discuss the offi ce and general functions of the notary, including the drafting and authentication of documents, as well as powers of attorney. From study units 2 to 7, we deal with notarial bonds; antenuptial contracts; deeds of servitude; leases of land; trusts; and bills, cheques and promissory notes. In study unit 8, we discuss selected legislation, including the Transfer Duty Act 40 of 1949 and the Subdivision of Agricultural Land Act 70 of 1970. (x) 2MODULE OBJECTIVES AND LEARNING OUTCOMES The purpose of this module is to equip you with an advanced knowledge of – and basic research skills into – selected aspects of notarial practice, as well as with the knowledge, skills, reasoning capacity and competencies you will require to analyse and solve the basic and common notarial practice problems. If you diligently follow the study guide (which contains suggestions for how to use it) and work through all the activities, you ought to acquire/develop all the necessary skills (set out below in the learning outcomes). Remember that you may not register for this module until you have completed the Law of Property module (PVL3701, formerly PVL201T/PVL303Y), or unless you register for that module simultaneously with LPL4805. The learning outcomes for this module are as follows: • You should be able to recognise the role of notarial practice in everyday life. After having mastered this module, you should be able to demonstrate the ability to identify situations where notarial practice is involved, either in practice or in simulated situations. • You should be able to solve notarial practice problems. You should be able to use appropriate methods and skills to apply your basic knowledge of notarial practice in a variety of contexts. In order to do this, you will have to demonstrate your ability to – fi nd the relevant sources and authorities in the prescribed tutorial material to help you solve notarial practice problems – evaluate the information in these sources or authorities to determine whether it is applicable in a specifi c situation – choose the most authoritative legal sources in order to solve notarial practice problems – critically evaluate the different possible solutions to a notarial practice problem – provide substantiated answers, based on your knowledge of notarial practice – give advice on the appropriate course of action in the fi eld of notarial practice • You should be able to analyse legal texts relating to notarial practice. You must be able to analyse legal texts on notarial practice, offer arguments on these texts, and accept responsibility for your legal opinions. You thus have to demonstrate that you can read, understand and interpret texts on notarial practice, can respond to the different viewpoints in these texts, and can use the texts as references to substantiate your own opinions on and solutions to problems. LPL4805/1 (xi) 3SUGGESTIONS FOR USING THIS STUDY GUIDE • Prescribed works and bibliography. The only prescribed material for this module is this study guide, the prescribed legislation and the prescribed case law. A list of the prescribed material is provided in Tutorial Letter LPL4805/101/3. At the beginning of each study unit, we indicate which legislation and case law apply to that study unit. When studying a particular study unit, keep the relevant legislation at hand for easy reference. If we refer to a specifi c section of – or regulation under – an Act, or we indicate that the provisions of a specifi c section have to be complied with, you have to look up the section and/or regulation and make a note of these provisions. You must study all the prescribed sections and/or regulations under the Acts indicated at the beginning of each study unit, even if they are not discussed or explained in detail in the text of the study unit. It is advisable to summarise these sections in your own words, taking care to retain the correct meaning of a provision. If you feel that you have mastered a particular study unit, read the prescribed case law, ensure that you understand the application of the relevant legal principles and then summarise the cases briefl y, emphasising the ratio (reason for the judgment). Study and memorise the reasons why the court applied the relevant legal principles in each case so that you can refer to these readily and also apply the relevant legal principles to the practical scenarios posed in problem-type questions, when required. Keep your summaries of the judgments brief, especially when noting the facts. At the end of each study unit, we indicate specifi c chapters or paragraphs from Practitioner and/or other publications mentioned in the bibliography. If you want to read more about a certain subject, you may consult these sources. Only the cases and legislation prescribed at the beginning of each study unit must be studied. Other cases, legislation, notices, circulars, etc referred to in the text are stated as authority and for further reference. • Glossary. It is important that you understand and study the defi nitions and explanations of the concepts in the glossary, not only because you will be tested on these in the examination, but also because you will not understand the study material otherwise. • Examples of documents. For this module, you will not be required to draft any documents or forms. The examples of documents given at the end of the study guide (in the appendix) are merely for information purposes and so that you can form an idea of what these look like. This will help you to follow our discussions of these documents more readily. • Self-assessment questions. At the end of each study unit, we provide a number of questions that will help you to test your comprehension and knowledge of the content of that study unit. – Also in each study unit, there are activities with feedback designed to give you an idea how to approach and answer questions. (xii) 4GLOSSARY This glossary does not necessarily provide complete defi nitions and meanings for the words it sets out to explain. The purpose of the glossary is to provide you with a simple, basic explanation of terminology used in this guide, or related to notarial practice, with which you may not be familiar. You must study these defi nitions. Thereafter, keep the glossary close at hand to refresh your memory whenever necessary. ATTACHMENT A formal act performed by the sheriff of the court in terms of an order for execution issued by a court and an authorising writ of execution, whereby the judgment creditor acquires a judicial real security right to the object attached in fulfi lment of the judgment debt. ATTEST To bear witness; to affi rm the validity of something (eg the signature on a document). Depending on the context in which the word is used, attest can also mean ‘‘to bear witness and sign”. CAVEAT (see also Interdict) (in the conveyancing context) A notice of warning entered by the registrar of deeds (see s 3(1)(w) of the Deeds Act). It indicates a possible prohibition against dealing with a right to property or the possible restriction on the capacity of a registered holder of a right to act, for example in terms of a provisional sequestration order or other provisional order. CEDE (in the notarial and conveyancing context) The transfer of a right (a claim [personal right] or a limited real right) by the holder of the right (the cedent) to the person who takes transfer of the right (the cessionary). CERTIFICATE OF CONSOLIDATED TITLE A substituting title deed in terms of which two or more pieces of land belonging to the same owner (or more owners holding each component in the same undivided shares) are consolidated. No transfer of ownership is effected and the certifi cate is issued in place of the existing title deeds of the constituent components. CERTIFICATE OF REGISTERED TITLE A substituting title deed issued in place of an existing title deed, which does not effect any transfer of ownership. It is merely an extract of facts from the existing title deed(s). LPL4805/1 (xiii) Glossary CERTIFIED COPY A duplicate (eg a photocopy) of a document to which a certifi cate is attached, confi rming that the copy is a true version of the original document. CLEARANCE CERTIFICATE A receipt issued by a local authority as proof of payment of taxes and levies. CONVEYANCER A public offi cer admitted and authorised by the High Court to prepare and execute documents for registration in terms of the provisions of the Deeds Act and the Sectional Titles Act. Only a practising attorney may practise as a conveyancer (see also defi nition of ‘‘conveyancer” in s 102 of the Deeds Act). DEED (see also Document) For the purposes of this guide and unless the contrary appears, ‘‘deed” includes reference to a deed of transfer, a substituting title deed, a mortgage bond or a notarially executed contract. DEED OF GRANT A title deed (a ‘‘deed of transfer”) by means of which acquired or unalienated state land is transferred by the state to a new owner (see s 18 of the Deeds Act). DEED OF PARTITION TRANSFER A deed of transfer whereby, in terms of a redistribution, a demarcated portion of land or a new undivided share in the land (where the co-owner relationship is to continue) is transferred to a co-owner in the place of his or her original undivided share in the land. The redistribution can be in terms of an agreement or a court order. DEED OF SALE A document containing a contract of sale. A deed of sale is an agreement in terms of which a party (called the seller) sells a thing to another party (called the purchaser), who purchases the thing. DEED OF SERVITUDE A document containing a servitude agreement. It is drafted and attested by a notary and is registered in the deeds registry. DEED OF TRANSFER A document prepared by a conveyancer and registered in the deeds registry, evidencing the transfer of the ownership of land from the owner, called the transferor, to the acquirer, called the transferee. (However, compare the deeds of transfer in terms of ss 31 and 33 of the Deeds Act.) (xiv) GLOSSARY DEEDS REGISTRY A central government offi ce where the transfer of ownership and other limited real rights over immovable property and other related matters are noted and registered in terms of the Deeds Act and the Sectional Titles Act, and where the evidence of such registrations and notations is kept. See the defi nition of ‘‘deeds registry” in s 102 of the Deeds Act, where ‘‘deeds registry” (deeds offi ce) is defi ned as follows: (a) when used in relation to immovable property, the deeds registry which serves the area in which that property is situate; (b) when used in relation to any deed or other document, any deeds registry in the Republic wherein that deed or other document is registered or registrable; (c) when used in relation to a registrar, the deeds registry of which he or she is in charge. DIAGRAM A map of a surveyed piece of land which indicates the measurements and extent of the land, drafted by a surveyor and approved by the Surveyor-General or another competent offi cial (compare the defi nition of ‘‘diagram” in s 102 of the Deeds Act). DOCUMENT (see also Deed) For the purposes of this guide and unless the contrary appears, document includes all documents that do not qualify as deeds. In this guide, it refers mainly to a power of attorney, a consent, a waiver, an application, a notice, a clearance or a statement. DOMINANT TENEMENT The tenement (immovable property) in favour of which a praedial servitude (over the servient tenement) is exercised. EXECUTE (in the notarial and conveyancing context) The formal act of signing a document or deed, thereby giving it complete and full effect. EXECUTOR A person whose appointment as such is confi rmed by the Master of the High Court and who is responsible for the winding up of a deceased estate. This term also includes any legally acknowledged representative of a deceased person. GENERAL PLAN A plan which represents the relative positions and dimensions of two or more pieces of land and has been signed by a person recognised by law as a land surveyor, and which has been approved, provisionally approved or certifi ed as a general plan by a SurveyorGeneral or other offi cer empowered under any law so to approve, provisionally approve or certify a general plan. It includes a general plan or copy thereof prepared LPL4805/1 (xv) Glossary in a Surveyor-General’s offi ce and approved, provisionally approved or certifi ed as aforesaid, or a general plan which has at any time, prior to the commencement of this Act, been accepted for registration in a deeds registry or Surveyor-General’s offi ce (s 102 of Deeds Acts). HABITATIO (habitation) A personal servitude that entitles the holder and his or her household to inhabit the building of an owner while preserving the substance of the dwelling for a specifi ed period or as long as the holder of the right lives. IMMOVABLE PROPERTY Land and everything that is permanently attached to the land (see, however, the defi nitions of ‘‘immovable property” and ‘‘land” in s 102 of the Deeds Act). INTERDICT (see also Caveat) (in the conveyancing context) A notice entered (against a title deed) by the registrar of deeds (see s 3(1)(w) of the Deeds Act). It indicates a prohibition against dealing with a right to property, for example in terms of an attachment, or that there is a restriction on the capacity to act of a registered holder of a right in terms of a fi nal sequestration order. LEASE (deed of lease) A document containing a reciprocal agreement in terms of which a person (normally the owner), called the lessor, agrees to grant the use and enjoyment of a thing for a prescribed period, in return for the payment of monetary remuneration, to another person, called the lessee. LODGMENT The formal handing in of deeds or documents at the deeds registry for the purpose of registration. LONG-TERM LEASE A lease for 10 years or longer (see study unit 5, para 5.2). MASTER OF THE HIGH COURT A chief executive offi cer of the High Court who supervises the winding up and administration of deceased and insolvent estates. MORTGAGE A limited real security right to the thing of another as security for the payment of a debt. A distinction is made between a mortgage over immovables and a notarial mortgage over movables. (xvi) GLOSSARY MORTGAGEE The person or institution who, as the mortgage creditor, on registration of a mortgage bond, acquires a mortgage over the immovable property of the mortgagor. MORTGAGE BOND A document prepared by a conveyancer and registered in a deeds registry in terms of which the mortgagor grants a mortgage over his or her immovable property in favour of the mortgagee. MORTGAGOR The person or institution who, as mortgage debtor, presents his, her or its immovable property, in terms of a mortgage bond, as security for payment of the mortgage debt to the mortgagee. NOTARIAL MORTGAGE A mortgage over movable property embodied in a notarial deed of hypothecation. NOTARIAL MORTGAGE BOND A document prepared by and executed before a notary and registered in the deeds registry in terms of which the mortgagor grants a mortgage over his or her movable property (specifi cally or in general) in favour of the mortgagee. A notarial mortgage bond is generally and, also in this guide, referred to as a ‘‘notarial bond”. NOTARY A public offi cer admitted and authorised by the High Court of South Africa to prepare, execute and attest contracts and other documents and to authenticate public acts, under supervision of the High Court, and who must have passed a specialised examination prescribed by the Law Society in terms of statute. Only a practising attorney who has been admitted as a notary may practise as a notary. (Compare the defi nition of ‘‘notary public” in s 102 of the Deeds Act.