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Question 1
1.1. Zanele Khumalo owns erven 3 and 4 of Kruger Township and wishes to consolidate the
properties. Erf 3 has been hypothecated with a mortgage bond in favour of Blue bank. How
should she deal with the mortgage bond over Erf 3? Discuss fully.
To consolidate the properties of Erf 3 and Erf 4, Zanele Khumalo must first address the mortgage
bond over Erf 3, which is held by Blue Bank. The existence of the mortgage bond restricts her ability
to freely transfer or consolidate Erf 3 as it serves as security for the loan with the bank. In terms of
South African property law, the process of consolidation involves the merging of two or more erven
into one. However, before consolidation can take place, Khumalo must ensure that the mortgage
bond over Erf 3 is appropriately managed.
The first step in this process would be to consult with Blue Bank to determine if they are willing to
consent to the consolidation. Generally, a mortgage bond remains attached to the property it is
registered against, even if that property is consolidated with another. In this case, if Blue Bank agrees
to the consolidation, they may require that the bond be re-registered over the consolidated property
(which would include Erf 4). This process involves the cancellation of the existing bond on Erf 3 and
the registration of a new bond over the consolidated erf, provided the bank approves of the new
terms1 .
If Blue Bank does not consent to the consolidation, Khumalo could consider paying off the bond or
negotiating a settlement with the bank, after which the bond could be cancelled. Once the bond is
cancelled, Khumalo would be free to proceed with the consolidation of the two properties without
any encumbrances. Alternatively, if Khumalo is unable to settle the bond immediately, the
consolidation could still proceed with the mortgage bond remaining attached to Erf 3, but she would
need to ensure the bond is amended to reflect the new ownership structure.
It is crucial for Zanele Khumalo to work closely with legal professionals and the bank throughout
this process to ensure that all legal requirements are met and that her ownership of the consolidated
erf is unencumbered by legal issues.
1: (Deeds Office, 2019)
Question 1
1.1. Zanele Khumalo owns erven 3 and 4 of Kruger Township and wishes to consolidate the
properties. Erf 3 has been hypothecated with a mortgage bond in favour of Blue bank. How
should she deal with the mortgage bond over Erf 3? Discuss fully.
To consolidate the properties of Erf 3 and Erf 4, Zanele Khumalo must first address the mortgage
bond over Erf 3, which is held by Blue Bank. The existence of the mortgage bond restricts her ability
to freely transfer or consolidate Erf 3 as it serves as security for the loan with the bank. In terms of
South African property law, the process of consolidation involves the merging of two or more erven
into one. However, before consolidation can take place, Khumalo must ensure that the mortgage
bond over Erf 3 is appropriately managed.
The first step in this process would be to consult with Blue Bank to determine if they are willing to
consent to the consolidation. Generally, a mortgage bond remains attached to the property it is
registered against, even if that property is consolidated with another. In this case, if Blue Bank agrees
to the consolidation, they may require that the bond be re-registered over the consolidated property
(which would include Erf 4). This process involves the cancellation of the existing bond on Erf 3 and
the registration of a new bond over the consolidated erf, provided the bank approves of the new
terms1 .
If Blue Bank does not consent to the consolidation, Khumalo could consider paying off the bond or
negotiating a settlement with the bank, after which the bond could be cancelled. Once the bond is
cancelled, Khumalo would be free to proceed with the consolidation of the two properties without
any encumbrances. Alternatively, if Khumalo is unable to settle the bond immediately, the
consolidation could still proceed with the mortgage bond remaining attached to Erf 3, but she would
need to ensure the bond is amended to reflect the new ownership structure.
It is crucial for Zanele Khumalo to work closely with legal professionals and the bank throughout
this process to ensure that all legal requirements are met and that her ownership of the consolidated
erf is unencumbered by legal issues.
1: (Deeds Office, 2019)
