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The Expropriation Bill - 2
28 January 2021 00:00
- Real Estate Land and Conveyancing
- Expropriation without Compensation
- Lexis Convey
- Deeds Office
- Wiseman Bhuqa
Wiseman Bhuqa continues his analysis of the Expropriation Bill, covering notices of expropriation; noting an expropriation in the Deeds Office; the vesting of ownership; the vexed question of bond repayments; and rates and other taxes.
THE NOTICE OF EXPROPRIATION
Notification of Owners, Holders of Land Rights and Administrative Bodies Regarding Expropriation
In terms of section 8(1) and (2) the expropriation notice must be served on the owner and the known holders of unregistered rights, whose rights in the property are to be expropriated. Strangely enough, the Act is silent on notice on the holders of numerous other registered land rights except bond holders. The Act provides that notices must also be served on the following persons:
- municipal manager in terms of section 8(2)(c)(i);
- director-general responsible for Rural Development and Land Reform, for Environmental Affairs, for Mineral Resources and for Water and Sanitation or any other affected organ of the State in terms of section 8(2)(c)(ii); and
- holder of a mortgage bond registered in the deeds office in terms of section 8(2)(c) (iii).
In terms section 8(3) the notice of expropriation must contain inter alia, a full property description, the reason for expropriation, the date of expropriation, the amount offered as compensation, etc. The date of expropriation is very crucial as it determines the point in law when transfer of the ownership occurs.
NOTING OF AN EXPROPRIATION AND REGISTRATION OF TRANSFER OR CESSION IN THE DEEDS OFFICE
Sections 31(6)(a) of the Deeds Registries Act deals extensively with noting of an expropriation of a land parcel while section and 32 (5) of the said Act deals with noting of an expropriation of a real right.
Section 31 of the Act deals with registration of transfer of an expropriated land parcel while section 32 deals with the registration of a cession of an expropriated real right.
The above sections provide the machinery for registration of expropriation transfers and cessions in the deeds office. It is important to take cognizance that the cession in question does not involve drafting of any notarial deed of cession; it is an underhand cession issued by the Registrar of deeds in terms of section 32 of the Deeds Registries Act.
There is a conjecture with regard to noting of an expropriation in respect of registered land rights due to the fact that section 8(1)(a) and (b) of the new Expropriation Act do not make any provision for serving a notice on a holder thereof. The section only covers notice on holders of unregistered land rights, thus omitting registered holders of land rights such as leases, fideicommissary heirs, holders of rights of usus, of habitatio and of usufruct.
The proviso to section 31 of the Deeds Registries Act currently only provides for the right of a registered owner to receive compensation; it is envisaged that the section will undergo consequential amendments to also make provisions for a nil compensation in accordance with the new Expropriation Act and the amended section 25(1) of the Constitution.
VESTING OF OWNERSHIP OF EXPROPRIATED LAND
This matter is succinctly addressed by section 9(1)(a) of the Act, which provides that the ownership of the property described in the notice of expropriation vests in the expropriating authority or in the person on whose behalf the property was expropriated on the date of expropriation. It follows that after this date the registered owner cannot alienate or dispose of the expropriated property.
In terms of section 9(1)(d) the property remains subject to all registered rights in favour of third parties, except a mortgage bond, unless such rights are also expropriated.
HOW WILL A MORTGAGE BOND BE REPAID WHERE AN OWNER HAS BEEN OFFERED NIL COMPENSATION?
Section 18(3) of the Act provides that where the expropriated land is mortgaged or subject to a deed of sale the expropriating authority provides that the expropriating authority may not pay out any portion of the compensation money except on terms agreed upon by the owner, holder or the mortgagee or buyer concerned. This, in essence, means that the debt and obligations must be paid off before the owner receives his/her compensation.
The big question then becomes; how in the same vein must such debt be discharged where a property is expropriated without compensation; how does an indebted owner pay off his/her mortgage loan when his property is seized without compensation?
The Act is silent on this question; needless to say that the failure of the legislator to address this scenario is a fatal flaw that borders on economic catastrophe. The resultant quandary and the unintended consequence of this discrepancy is that both the registered owner and the bondholder are deprived of their rights simultaneously; the owner is deprived of their land ownership, and the bondholder loses its real when the property gets transferred to the expropriator.
RATES AND OTHER TAXES
No rates clearance certificate is required; section 19(3)(b) of the Bill provides that the expropriating authority will pay outstanding rate to the municipality out of the compensation due to the deprived owner. Thus the Registrars Conference Resolution RCR 5/2009 which provides that no rates clearance certificate is required in respect of expropriation is still valid.
No transfer duty receipt must be lodged either as the expropriation transfer is exempt in terms of section 9(9) read with sections 9(1)(a) and (b) of the Transfer Duty Act, 1949 (Act 40 of 1949).
Instead of lodging a rates clearance certificate and transfer duty receipt, the expropriation authority will lodge a certificate in terms of section 31(4)(a) of the Deeds Registries Act, to the effect that all the applicable laws have been complied with in respect of transfer of ownership.
Section 22 of the new Expropriation Act provides for urgent expropriation in terms of which extraordinary shortened procedures may be invoked without following sections 5, 6 and 7 of the Act. The Deeds Registry will need to devise a tailored procedure to meet this provision and make the necessary regulations pertaining thereto.
WITHDRAWAL OF EXPROPRIATION
In terms of section 23(1)(a) an expropriation authority may withdraw an expropriation from a date mentioned in a notice of withdrawal; however, section 23(2)(b) prohibits withdrawal of an expropriation in the case of land, where the property has already been registered in the name of the expropriating authority. The effect of withdrawal is, according to section 23(3)(a) that ownership of the expropriated property reverts to the owner of the land in question; and any mortgage bond or other rights that were discharged by virtue of expropriation are fully revived.
Section 23(3)(b) prescribes that the Registrar of Deeds must, upon receipt of a notice of withdrawal cancel any endorsement made on the title deed of the land and on the office registers in connection with the expropriation.
Practitioners and administrators or custodians, as the case may be, must brace themselves the consequential amendments which will be enacted when the new Expropriation Act comes into operation.
Numerous PowerPoint Presentations on expropriation and other deeds registration topics from the author e.g. SPLUMA are available for free on www.slideshare.net or can be requested from email@example.com.
Former Lecturer: Deeds Registration Practice and Procedure
Directorate: Deeds Training, Office of the Chief Registrar of Deeds/Justice College