PROPERTY: SEMESTER 3

OWNERSHIP

CONTENT OF OWNERSHIP

INTRODUCTION
●​ The context of ownership:
○​ Different economic systems differently define ownership depending on the
type of property involved. For example, South Africas understanding of
property is based on our constitutional imperatives.
○​ The history of ownership
Ownership evolved from the concept of use rights. Since tools could only be
used by one person at a time, it’s natural that individuals would want to protect
their access to these tools. As agrarian societies grew, the concept of property
expanded to encompass not just tools, but also the land and resources needed
for agriculture and herding. With the rise of trade, the need for clearly defined
‘ownership’ became even more pressing.
○​ Apartheid history of ownership
Ownership was dictated by race-based policies and thus the possession of
property is still contentious.
○​ Roots of ownership in South Africa
Roman-Dutch law & absolutist theory of the Pandectist movement.
○​ A core element of ownership
A core element of ownership is ‘plena in re potestas” which means the owner
can do as they please with their own property. From this, it can be inferred that
ownership is the most extensive legal relationship a legal subject can have
over a legal object.
○​ Ownership is limited:
■​ Not even in Rome was it ‘unlimited’.
■​ The very foundation of ownership is the idea that anybody can own
property.
■​ However, during Apartheid, the Pandectist understanding of ownership
was misconstrued so that ownership could be absolute.
■​ This was changed by the new constitutional dispensation.
●​ V & A Waterfront v Police Commissioner Case
In V & A Waterfront v Police Commissioner, the Constitutional Court explored how
the Constitution impacts private ownership, particularly the balance between property
rights and the rights of others. The case involved the Waterfront attempting to prevent
vagrants from being on its premises. When property is opened to the public, the
landowner must respect the public’s constitutional non-proprietary rights, including
access to the property. Landowners cannot deny access in certain circumstances
 because they do not have an absolute right to exclude others, as this would limit
people’s freedom of movement. The case redefined traditional notions of property
ownership, where landowners typically have control over who enters their property.
While the owner retains private ownership, their power to exclude others is limited
when it clashes with individuals’ right to freedom of movement, protected by the
Constitution.
●​ Property in the Constitution:
●​ S25: ensures private ownership but no absoluteness.
●​ Deals with expropriation & deprivation.
●​ The constitution discusses land reform therefore a more socially responsible
form of ownership is envisaged.
●​ Thus, our courts have been interpreting the nature of ownership to be more
socially bound.
●​ However, this ownership is still limited: the Constitution allows non-owners to
exercise non-property rights over quasi public property such as malls.
●​ Pursuant to this, the courts try and balance the interests of the owner with that
of non-owners.

DEFINITION OF OWNERSHIP
●​ No single definition is suitable because the understanding of ownership depends on
the demands and needs of that particular society.
●​ Elements of ownership
○​ Completeness: Ownership is the most complete right
○​ Individuality of Ownership: held by an individual as the default position.
○​ Ownership as an ‘Abstract Right’: worth more than the sum of its elements
○​ Elasticity of Ownership: Owner retains the right regardless of limitations.
○​ The Constitutional Vision of Property: should be understand in a way that
promotes equality.
●​ The South African common law def:
○​ Focuses on theoretical completeness: the most complete right a legal object
has in relation to a legal subject.
○​ This only applies to owners.
○​ Definition links to the nemo plus iuris rule.
○​ However (again!), this does not mean ownership is absolute, rather it gives
control over property subject to what the law allows.
●​ What limits ownership?
1.​ objective rules of the law
2.​ subjectives rights of other persons
3.​ non-property constitutional rights of non-owners
CONTENT AND ENTITLEMENTS OF OWNERSHIP
●​ Completeness in ownership
○​ Indicates that the owner has all possible proprietary rights
○​ Depending on the type of property, ownership comprises potentially limitless
entitlements.
●​ Entitlements
○​ What are they?
■​ use
■​ possess
■​ alienate
■​ encumber
■​ vindicate
■​ neglect/destroy
○​ Ownership does not depend on all the entitlements existing simultaneously.
○​ if an entitlement is permanently given to another person the content of
ownership changes.
●​ Entitlement to destroy: ius abutendi
-​ Not seen as very integral to ownership because sometimes it cannot be
exercised due to the nature of the property (e.g. if its historically important).
-​ Neglect: courts have adopted a ‘use it or lose it’ principle meaning a holder of
old-order rights may be compelled to convert them to new order rights (so
they are still functional).
●​ Entitlement to use and enjoy property: ius utendi
-​ linked to taking fruits (civil + natural)
-​ this entitlement can be restricted voluntarily
-​ can be limited involuntarily through legislation (e.g. with guns/cars)
●​ Entitlement to physical control: ius possidendi
-​ rebuttable presumption: you hold it you own it
-​ can be voluntarily assigned to another (delivery for a pledgee)
-​ can be restricted by legislation (confiscation of property used in crimes)
-​ can dissipate by way of sale,donation, or abandonment
-​ you can encumber property with a limited real right

FORMS OF OWNERSHIP
1.​ Individual title
-​ "Freehold title" vests in a single individual, subject to relevant limitations.
-​ The owner holds the full range of entitlements, but these are subject to land
reform measures.
-​ Land reform legislation establishes new mechanisms for granting individual
titles.
-​ The Land Reform Act allows individuals who qualify as labour tenants to
become the owners of land used for residential, grazing, and cropping
purposes, provided they have used it for at least one generation.
 -​ The Extension of Security of Tenure Act enables ‘occupiers’ to qualify for
ownership.
-​ Statutory changes redefine ownership beyond the traditional common law
definition.
2.​ Co-ownership
-​ ‘joint title’/ ‘ownership in common’
-​ This entails ownership by more than one person simultaneously.
-​ Co-ownership is governed by either: the common law or legislation.
3.​ Common law co-ownership
-​ Each owner receives an undivided co-owner share in the property
-​ Two elements:
1.​ An undivided share in the property reflecting personal interests. (can
be equal or unequal)
2.​ Moveable or immoveable property
-​ Two types:
1.​ Bound co-ownership: there is an underlying connection between the
owners ([Link] in COP/ business partners)
Main consequences:
●​ co-owners cannot burden/alienate their undivided co-ownership
if the underlying relationship is in tact
●​ the co-ownership cannot be terminated unilaterally
2.​ Free co-ownership: There is no underlying relationship.
Main consequences:
●​ co-owners can burden/alienate their undivided co-ownership
●​ can terminate co-ownership unilaterally
-​ Undivided co-ownership share
-​ distinguishable from the property itself
-​ undivided shares are alienated to a third party
-​ can also be encumbered
-​ Commonly owned property
-​ division not proportional to shares
-​ Legal acts performed to property must only be done by co-owners
-​ Use and enjoyment is proportional to the shares. If there is
unreasonable conduct this party can be charged with damages.
-​ Benefit depends on the use agreement (formal - written doc/informal -
verbal agreements)
-​ Can take fruits but are responsible for maintenance.
●​ Remedies
-​ Interdict: unreasonable use
-​ Damages: if harm occurred
-​ Subdivision and/or: actio communi dividundo
-​ Order of sale of the property & proportional distribution of proceeds:
Drumond v Dreyer
ALTERNATIVE FORMS OF TITLE

INTRODUCTION
-​ Legislation has developed alternative forms of title pursuant to projects that the
State has undertaken:
1.​ redistribution of land
2.​ facilitate more secure tenure
3.​ restore land & rights in land
-​ These alternative forms of title are considered manifestations of statutory
co-ownership.

SECTIONAL TITLE SCHEMES

●​ What is it?
Apartments, houses in an estate
●​ Legislation
Governed by Sectional Titles Act (STA); Sectional Title Schemes Management Act
(STSMA)
●​ Dividing a building and land into sections capable of individual ownership
Creating a new form of immovable property–sectional title unit
●​ Creates a composite thing consisting of:
○​ Owning a sectional title unit (section of the building) = principal component
○​ And undivided co-ownership share in the common parts of the building =
accessorial component
-​ Owned collectively by all owners of sections in the building
-​ To have an undivided share within a sectional title unit, you must first become the
owner of a section/unit
-​ New form of ownership:
individual ownership (of sectional unit) combined with undivided, tied/bound
common ownership (of common property)
●​ The participation quota:
determines the extent of an individual share of a sectional owner
●​ Body corporate: separate juristic person
○​ Management and enforcing the conduct rules of the sectional title scheme
 ○​ Administration by trustees for the day to day running of the sectional title
scheme
○​ Comprised of all sectional title owners- automatically members
●​ Levies
○​ Monthly contribution by owners to the body corporate to maintain the
sectional title scheme
○​ The more units owned- the higher the levies.
●​ Exclusive use
○​ Some parts of the common property may be exclusive to some owners
○​ Acquire a real right to that specific part of the common property

SHARE BLOCK SCHEMES

●​ Share Block Company Ownership:
○​ A share block company is a juristic person (i.e., a legal entity) that owns a
property on behalf of its shareholders.
○​ It holds a real right of ownership over the property but does not transfer this
ownership directly to the individual shareholders.
●​ Role of Shareholders:
○​ The shareholders come together to form the company.
○​ They are co-owners of the company but not the property (only have a personal
right).
●​ Right of Use:
○​ Each shareholder's right to use a specific part of the building is linked to their
shareholding in the company.
○​ This right is contractual in nature, not full ownership
●​ Share Blocks Control Act:​
The Share Blocks Control Act regulates the structure, functioning, and governance of
share block companies.
●​ Combination
governed by both common law possession rules and company law principles:
-​ The company itself is subject to company law regulations
-​ Individual members are subject to possession rules
●​ Leasing vs. Owning:
 If a company has been leasing for 10+ years they can register it as a LRR.
●​ Immovables or Large Movables:​
The share block system can apply to immovable property(buildings or land) or large
movable assets (yachts), allowing for flexible application in various sectors.
●​ Board of Directors:​
responsible for daily running, company's financial health, property management, and
ensuring compliance with relevant legislation.
●​ Advantages:​
Secure Tenure: Shareholders have secure tenure as long as the company remains
solvent.
Ease of Transfer: Shares in a share block company can be transferred relatively easily,
without the delays or costs associated with transferring actual ownership of property.
This allows for greater liquidity.
●​ Disadvantages:​
Risk of Financial Loss: Shareholders are exposed to financial risk if the company
goes bankrupt and is liquidated.
Limited Control: While shareholders have a right of use, they may have limited
control over the actual management of the property.
TIME-SHARING SCHEMES
●​ Definition
A time-sharing scheme allows multiple people to use a property for a set period each
year, each participant has exclusive use during their designated time.
●​ Property Time-sharing Control Act:​
regulates time-sharing arrangements, ensuring participants’ rights are protected and
clearly defined.
●​ Time-share Interests:​
Interests depend on the scheme. These can involve undivided co-ownership shares in
sectional title units or share block schemes.
●​ Co-owners’ Relationship:​
The relationship between co-owners is governed by a contract (the scheme’s founding
instrument), outlining rights responsibilities, and terms of use.
●​ Managing Agent:​
A managing agent oversees the property, ensuring its maintenance and scheduling.
INDIGENOUS LAND TENURE
-​ Indigenous Land Tenure:​
Certain land areas are under communal tenure, particularly in former
homelands/Bantustans.
-​ Communal Land:​
The land is collectively owned by the community, with traditional leadership
overseeing it. It’s used for residential and agricultural purposes.
-​ Land Allocation:​
Traditional authorities administer the allocation of plots within the community.
-​ Right of Use:​
All tribal community members are entitled to use the common land.
-​ Communal Land Rights Act (CLARA):​
This Act aimed to formalize communal land tenure but was found unconstitutional. It
failed to address the security of tenure for people in former Bantustans and didn’t
follow proper procedures.

CONSTITUTIONAL LIMITATIONS OF OWNERSHIP

INTRODUCTION
●​ Ownership is conceptually viewed as absolute, a principle reflected in the plena in re
potesta (full power over a thing). However, this notion is not entirely realistic.
●​ Ownership is not only about rights but also involves responsibilities. The scope of
ownership is therefore shaped by the limitations that the law places on it.
●​ Types of limitations
-​ Constitutional limitations
-​ Private law limitations
-​ Owner granting a servitude
-​ Neighbour law
-​ Public law limitations
National Heritage Resources Act 25 of 1999
-​ S34: no demolition of a building older than 60 years without a permit
-​ Limiting the ownership right to destroy one’s property
S25 OF THE CONSTITUTION
●​ Property rights in the Constitution:
-​ Chapter 2 of the Constitution (which outlines fundamental rights) includes the
right to not be arbitrarily deprived of property and the right to not be evicted
from one’s home.
●​ Section 25
-​ not only identifies situations that qualify as infringements but also defines the
conditions under which these infringements are constitutionally justifiable.
-​ It establishes the parameters for state interference, which can take the form of
deprivation [S25(1)] or expropriation [S25(2)]:
-​ Deprivation: This refers to the state's exercise of its police power—the
authority to regulate the use of private property by restricting the
owner's entitlements.
-​ Expropriation: This involves the state's exercise of eminent domain,
which is the power to "take" private property without the owner’s
consent, for a public purpose or interest, with compensation provided
to the owner.

DEPRIVATION VERSUS EXPROPRIATION

●​ What distinguishes deprivation from expropriation?
-​ Deprivation: The state regulates the owner’s entitlements, but there is no
requirement for compensation, and the owner’s entitlements are not
permanently withdrawn.
-​ Expropriation: The state appropriates the property, typically requiring
compensation and a permanent or partial withdrawal of entitlements from the
owner.
●​ Main differences
-​ The state is required to compensate owners for the expropriation where no
compensation is necessary when regulating entitlements.
-​ Expropriation is the owners withdrawal from entitlements (usually partially or
wholly), whereas deprivation does not usually have this effect.
-​ Expropriation assumes an appropriation by the state, this does not exist with
regulation.
 ●​ Agri SA v Minister for Minerals and Energy
In this case, the applicant argued that the Mineral and Petroleum Resources
Development Act effectively expropriated mineral rights from pre-Act holders. The
court disagreed, emphasizing that expropriation involves the state acquiring
ownership of property, and since the state did not acquire the mineral rights, there was
no expropriation. This case highlights the distinction between deprivation (state
regulation) and expropriation (state appropriation).
●​ FNB Case
This case dealt with a law that allowed the South African Revenue Service (SARS) to
confiscate property owned by one party to settle a debt owed by another party.
Specifically, SARS seized cars owned by FNB to settle a debt owed by their clients.
The court ruled this unconstitutional, reasoning that the seizure constituted a
deprivation.
The court established a framework for determining whether property interference is
justified under Section 25:
-​ Is the affected interest property under Section 25?
-​ Is the deprivation in conflict with Section 25(1)?
-​ Does the interference qualify as expropriation under Section 25(2), and if so,
does it meet the requirements for compensation and public interest?
-​ If not, can it still be justified under Section 36?

THE TWOFOLD TEST

●​ The relationship between deprivation and expropriation
-​ The court in the FNB case explained that deprivations are a broad category of
limitations with the most severe form being expropriation.
-​ In line with this understanding, S25(1) must be read with S36(1), meaning that
all deprivations (such as expropriation) must be imposed in terms of a law of
general application (non-arbitrary + reasonable and justifiable).
 ●​ Therefore, two different but cooperative tests arise in order to determine the
constitutionality of infringements

DEPRIVATION
1.​ Is the limitation non-arbitrary (reasonable purpose)
2.​ Is the limitation pursuant to a law of general application?

EXPROPRIATION
1.​ Is it for the benefit of public interest/purpose?
2.​ Is there compensation?

THE FACTORS TO CONSIDER

●​ Non-Arbitrariness
The law must demonstrate a rational connection between a legitimate government
purpose and the method of achieving that purpose. For deprivation to be justified,
there must be adequate cause. This requirement serves as both a procedural and
substantive safeguard.
How do we determine rational purpose? Consider:
1.​ The purpose of the infringement in relation to the affected property.
2.​ The nature of the affected property relative to the extent and purpose of the
deprivation.
●​ Law of General Application
An infringement can only occur if it arises from statutes, legislative regulations, or
rules from common law and customary law.
●​ Public Interest
The public interest requirement ensures that the state does not abuse its power of
eminent domain. Ultimately, it is up to the legislature to determine what qualifies as
public interest in a given context.
●​ Compensation
If expropriation occurs, compensation must be just and equitable. This includes
consideration of the amount, timing, and manner of payment, ensuring fairness to the
affected property owner.