Summary Security notes

UNIT 5: SECURITY

> ensure that debtors fulfil their Obligations creditors demand form of
TO can some
security .




There are forms of i
two
security




REAL 2 PERSONAL SECURITY
SECURITY

Debtor 's third undertakes fulfil the debtor 's
1 property serves as > A
party to



security for payment of debt obligation If the main debtor fails to do so .




E. G.
mortgage =
registered on



debtor 's house 1 creditor
The merely obtains a personal right against

who undertook to provide
the person security .




> Once a debt = secured by real



security the creditor obtains a , personal security = a weaker form of security
limited real right

i. If debtor fails to make



payment ,
the creditor can have


the house attached ( in the



case of )
a
mortgage



> Real security = the best form


of security




In both cases the right of security
,
= an
accessory right
i. the right is dependent on the
validity of the principal debt (
obligation ) which it secures .




'
If the principal debt =
void s the right will also be void .




Void Or
> If the right Of Security Is later on cancelled without the principal obligation being

satisfied ,
the principal Obligation will continue to exist > BUT as an unsecured obligation .




NOTE the would happen if the object of the was destroyed
; same real
security .




The National Credit Act 34 Of 2005 also all aspects of credit provision
regulates security as it
regulates .

, REAL SECURITY


C )
'




Forms of real
Security :
mortgage Bond over immovable property

l )
' '



Real
security over movable
property

liii ) of law
Security obtained by operation




The bond
accessory obligation bond confers on the
mortgage an A
mortgage creditor a
=
mortgage
-




which IS dependent on a valid principal debt . limited real right in the immovable
property which serves
,




• to ensure of the debtor 's
as
security payment mortgage -




'
A
mortgagor retains the ownership debt .




In ,
as well as the use of , the
property
1 The real right =
acquired through registration in the

'
until the mortgage bond is foreclosed Deeds Office subsequent to the parties agreement .




or cancelled - >
If the property is sold ,
the Registrar of Deeds will



not register the transfer of ownership unless the



mortgage bond is first cancelled or the
r




It is possible to register more MORTGAGE BOND OVER property is released from the
mortgage

than one over one
IMMOVABLE PROPERTY bond by written permission of the
mortgage

of (s )
property without the consent mortgagee .




( first )
the mortgagee .




A



If the debt paid , the mortgagee In terms Sec 88 Of Act
is not
may of the
insolvency ,
if the

'
foreclose on the mortgage bond and have debt origenated more than two months prior to


the mortgaged property sold in execution registration of the mortgage and the debt was



to the outstanding secured before registration of the
satisfy debt not mortgage
.



h




Mortgage regulated bonds bond , the creditor have a
pr ef erential will not
=




participation bonds = well -
established by the National credit claim , except in the case of so -
called

"
&
"


forms of investment where investors Act Its provisions have
Kllstlngs brief

lend
money to an investment comp to be complied with before
.
"÷




" "
Which in turn lends money to a a mortgage bond can be registered A Kllstlngsbrief = a
mortgage bond

3rd party .

registered simultaneously with the
>


mortgage bonds can be registered registration of transfer of land to the



over
existing debts & future buyer to secure the balance of the


debts purchase price

'
covering bonds secure future

debts