The Principles of the
Law of Property
H Mostert, A Pope, P Badenhorst,
W Freedman, J Pienaar, J van Wyk
© Oxford University Press Southern Africa 2011
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Chapter 3
RIGHTS
Introduction
• There are two types of relationships in respect of property
(proprietary relationships):
– Possession
– Rights
• The law acknowledges different kinds of rights in respect of
property
– The main distinction is between real rights in property and personal
rights (creditor’s rights) in property.
Introduction (continued)
• Importance of distinction:
– The manner in which rights are acquired, exercised and protected
depends on whether the rights in question are real or personal
• Some rights in respect of land can be registered in the Deeds
Registry as real rights, while others may not be registrable
• Not all rights in respect of property will automatically be
typified as real rights.
Relationships in respect of property
Rights in respect of property
• South African law acknowledges a variety of rights in respect of
property
• A real right can be either:
– The right of ownership
– A limited real right
• Ownership is the most complete real right, and is the only real
right held in one’s own property (ius in re propria)
• A limited real right is a real right held by a non-owner in the
property owned by another (ius in re aliena).
Real rights
Real rights are categorised according to their nature and the entitlement to hold them.
A real right is either the right of ownership or some other limited real right.
The right of ownership
• This is the most complete real right and constitutes the most
comprehensive relationship between a person and a thing
• Ownership is the only real right that one can hold in respect of
one’s own property (ius in re propria)
• Ownership is an independent right, whereas other rights in
respect of property are derived from the right of ownership
and have a more circumscribed content.
The right of ownership (continued)
• If a right in property is real in nature and is held by a person
other than the owner of the property, the right is classed as a
limited real right (ius in re aliena)
• Servitudes are limited real rights, usually in respect of land
• A servitude entitles the holder thereof to use the property
owned by another person
– Thus, the servitude constitutes a restriction on the right of ownership of
the owner of the property in question.
Real security rights
• Real security rights are created and enforced to ensure the
performance of a specific obligation between two parties
• A real security right gives the holder of the right (the creditor)
an interest in the property of the debtor so that if the debtor
fails to perform in terms of the contract, the creditor can
realise his interest in the property to satisfy the debt
– Example: a mortgage bond (immovable property) or a pledge (movable
property).
Real security rights: mortgage bond
Johan buys a house for R850 000. He puts down a R50 000 deposit and pays the
seller the balance of the purchase price by way of a loan from a bank. Johan is
required to pay off the loan of R800 000 over a period of 20 years, by means of
regular (usually monthly) payments to the bank. The bank will make money out of
this loan by charging interest on the loan (which means that Johan will end up
paying far more than R800 000 to the bank). In order to secure the loan (i.e. to
protect itself in the event that Johan cannot or does not repay the loan as agreed),
the bank will usually pass a mortgage bond over the property. In the event that
Johan cannot repay the loan as agreed, the bank will be entitled to attach the house
and sell it in execution, in order to recover the amount of the loan still outstanding.
Thus, the mortgage bond constitutes a limited real right in Johan’s property (the
house).
The concept of real rights
• South African law does not conceive of a restricted category of
real rights
• Thus, our courts can recognise new categories of real rights.
• It can sometimes be difficult to categorise rights in respect of
property
• A right in respect of property may not fit comfortably within
the definition of real rights, limited real rights and real security
rights
• This was the case with regard to mineral rights prior to 2004
(when the MPRDA came into effect).
Real and personal rights
• There is no closed list of real rights
• Distinguishing between real and personal rights can be
problematic, especially where one is dealing with real rights in
land which are clearly not limited real rights or real security
rights
• The land registration system permits registration of real rights
in land only, and precludes the registration of personal rights in
land except in strictly circumscribed circumstances
– Sections 16 and 63(1) of the Deeds Registries Act 47 of 1937.
Real rights and personal rights (continued)
Classical Roman Law theory
• Real rights establish a direct relationship between the
person and the property.
• Personal rights establish a relationship between one person
and another in respect of a delictual or contractual obligation,
which is known as a “performance”.
Real rights and personal rights (continued)
Personalist theory
• The personalist approach focuses on the persons against
whom the particular rights operate
• The holder of a real right can enforce his right to the property
in principle against all other persons
• This means that the right is enforceable against anyone who
interferes with the relationship between the right-holder and
the property and who disregards the holder’s entitlement over
the property.
Real rights and personal rights (continued)
Personalist theory (continued)
• It is sometimes said that a real right is enforceable against
the world at large
• By contrast, a personal right can be enforced only against the
person who is party to the agreement creating the right
• Because of this contrast, real rights are said to be absolute,
while personal rights are said to be relative.
Real rights and personal rights (continued)
• It can sometimes be difficult to determine whether a right is a real or
a personal one
• However, it is crucial to determine whether one is dealing with a real
right or a personal right because real rights bind successors in title
(because they attach to the object of the right, which is usually land)
• In contrast, personal rights exist between individuals and are
extinguished when a contract lapses
• In distinguishing between real rights and personal rights, the courts
will look at all the circumstances of the case, and will be especially
concerned to infer the intention of the parties regarding the right in
question.
Real rights and personal rights (continued)
• Real rights are created and transferred in different ways
• Real rights are also exercised and protected in different ways
• Real rights, such as the right of ownership, may be exercised
against the world at large
• In contrast, personal rights usually bind specifically identified
persons
• Thus, whether one is dealing with a real right or a personal
right determines the extent to which, and the persons against
whom, it can be exercised.
Real rights and personal rights (continued)
• Real rights are protected by the law of propriety by means of
the proprietary remedies
• Personal rights are protected by means of the law of contract
or delict
• Real rights are transferred by way of registration
(immovables) or delivery (movables)
– Real rights in respect of land must be registered with the Deeds Office
» Section 63(1) of the Deeds Registries Act 47 of 1937.
• In contrast, personal rights are transferred by way of cession.
• Personal rights cannot be registered in the Deeds Registry
– Section 63(1) of the Deeds Registries Act 47 of 1937.
Hierarchy of rights
It can therefore, be said that there is a hierarchy of rights within the legal framework
for land. This hierarchy can be represented diagrammatically as follows:
Difficulties in classification
• It can sometimes be difficult to classify a right as real or
personal
• It is important to distinguish between real rights and personal
rights because
– only real rights in land are registrable and hence automatically
enforceable against successors in title.
Difficulties in classification (continued)
• If the right or obligation is merely personal,
– then successors in title cannot automatically be bound
• Where a provision relating to the use of property is contained
in a clause or a will,
– recognition that the right in question is real will mean that successors in
title will automatically be bound
• However, if the right is merely personal, successors in title will
not be bound,
• The latter could mean that the principles of freedom of
contract or testation will not be upheld (because the
testator’s / contractor’s legally enforceable wishes will not be
carried out in respect of successors in title).
The courts’ approach to classification
• The courts have adopted a practical two-fold test to determine
whether a right is real or personal
– The court will ask the following questions:
» Was the right intended to bind successors in title?
» Does the right constitute a subtraction from dominium?
• “Subtraction from dominium” refers to
– whether the right in question amounts to a diminishment of the owner’s
rights in respect of his use of the property
• The test operates in tandem and is not mutually exclusive.
• Both questions must be answered in the affirmative in order for
it to be said that a real right exists.
Real and personal rights
• The mere fact that a personal right is registered in the Deeds
Registry does not convert it into a real right
• There are policy considerations which dictate that restrictions
on the use of a property should be registered against the title
deeds of the property
• Erroneous registration or omission to carry forward previously
registered rights does not affect the nature of the right as being
either real or personal (Cape Explosive Works v Denel (Pty) Ltd
2001 (3) SA 569 (SCA)).
Principle of publicity
• Real rights are enforceable against the world at large, including
third parties who act bona fide and who, in good faith, acquire
such rights for value
• Because the existence of a real right can cause significant
prejudice to third parties,
– it is desirable that the existence of a real right, its content and the
identity of its holder be made known (i.e. publicised to the world at
large)
• Since real rights in respect of land are registered,
– every person is deemed to have knowledge of real rights so registered in
the Deeds Registry
– This is referred to as the “doctrine of constructive
knowledge”.
Doctrine of notice
• The law protects the holder of an unregistered real right in
certain instances
• In the law of property,
– no one may defeat another person’s potential real right for his own
benefit
– if he knows of the existence of that potential real right, as no one may
derive an advantage from his own bad faith
• This is referred to as the “doctrine of notice”.
Doctrine of notice (continued)
• The doctrine of notice forces the acquirer of the real right to
give effect to the earlier personal rights that would have given
rise to the acquisition of a real right by the frustrated party had
the subsequent acquirer of the real right not frustrated the
acquisition of the real right
– Example: Where the purchaser knows that the thing sold has been sold
previously to someone else (someone else has a potential real right in
respect of the property in question)
– Example: Where the purchaser acquires a thing contrary to an option or
a pre-emptive right, or contrary to a prohibition of alienation.
Doctrine of notice (continued)
• The application of the doctrine of notice is triggered by the
acquisition of the real right with the required knowledge
• Three requirements must be met in order for the doctrine of
constructive notice to apply:
– A prior personal right (which would lead, in turn, to the holder of the
personal right acquiring a thing) must exist against the holder of a real
right
– The subsequent acquirer of the real right must infringe against/upon the
pre-existing personal right
– The acquirer of the real right must know of the existence of the prior
personal right.
Doctrine of notice (continued)
• Thus, actual knowledge of the existence of the prior personal
right is required
– Constructive knowledge is not sufficient to activate the doctrine
– The knowledge should exist at the time of the acquisition of the real
right (i.e. at the time of transfer).
Doctrine of notice: example
Arnold purchases a farm from Bert. Typically, some time elapses between the
purchase and sale of the land and the completion of the required registration
procedures in the Deeds Registry. After the conclusion of the contract for the sale of
the farm, but before registration is achieved, Arnold is informed by Cathy of the
existence of an unregistered right of way in respect of the land, and is requested to
co-operate in having the right registered. May Arnold refuse to co-operate because
he was unaware of the unregistered servitude at the time of purchase? Or would
Cathy be able to rely on the doctrine of notice to compel Arnold to co-operate in
registering the servitude?
In our law, significance is attached to two moments in the process of acquiring a real
right. The first moment is the point of which the parties agree to buy and sell the
property, usually by means of a contract of purchase and sale. The second point is
the point where the property in question is transferred (known as the “moment of
transfer”).
These two moments can occur simultaneously at the same place, or can be separated
in space and time.
Successive sales
The doctrine of notice thus operates to enable the first purchaser who did not take
transfer (Beth) to claim that the second sale be cancelled, and to claim delivery or
transfer of the property if it can be shown that the second purchaser (Carl) had
knowledge of the prior sale to the first purchaser at the time he took delivery of the
thing.
Unregistered servitudes
If Chris had actual knowledge of Adam’s unregistered servitude at the time of
registration of transfer, he will be bound by it notwithstanding the fact that the
servitude is not registered. In terms of the doctrine of notice, Chris would then be
compelled to co-operate in having the servitude registered.
The Principles of the Law of Property
Thank you.
© Oxford University Press Southern Africa 2011
[Link]/za