South Africa is planning major property law changes – here are 3 important issues you should be aware of
South Africa’s Land Expropriation Bill is currently open for public until 10 February 2021.
While the issue of land expropriation without compensation remains a hot topic in the country, legal firm Cliffe Dekker Hofmeyr said that this comment period is particularly important as it has found a number of potential issues in the draft bill.
“The bill attempts to protect individuals’ Constitutional rights while implementing its objectives in historical redress, (but) there are areas within the bill which have glaring issues and will ultimately be problematic should consideration not be had to these issues,” it said.
While not an exhaustive list, Cliffe Dekker Hofmeyr drew specific attention to the following:
Potential to open the flood gates
Section 12(3) of the Bill sets out the listed circumstances under which land can be expropriated for nil compensation.
There are many aspects of this section that need to be addressed in order to provide clarity and certainty and to avoid the arbitrary deprivation of citizen’s right to property.
The use of the words “including, but not limited to” is unacceptable and should be deleted. This phrase opens the flood gates to a plethora of bases on which land can be expropriated and can lead to abuse.
One area requiring clear attention is the absence of the process of due service of relevant notices to property owners residing in foreign jurisdictions, Cliffe Dekker Hofmeyr said.
The firm has previously indicated that any preference given to foreign owners may constitute unfair discrimination based on nationality, which would be clearly unconstitutional.
Despite the need for equal treatment between foreign and local property owners, the bill is silent on how service of necessary documentation and publication for that matter is to be effected in respect of foreign-owned property targeted for expropriation.
What happens to your bond?
The bill leaves further uncertainty regarding the impact on financial institutions, particularly in their role as the mortgagee to a property intended to be expropriated.
While section 18 of the bill attempts to provide direction regarding a property to be expropriated which is subject to a mortgage – the bill leaves much to be desired regarding the position of mortgagees, said Cliffe Dekker Hofmeyr.
“What we would like to see is a clear definition of a financial institution as a right holder insofar as the encumbered property is concerned,” the firm said.
“Due consultation should be held with the financial institutions as mortgagees during the process of expropriation – whilst currently there is no clear obligation on the expropriating authority to engage with financial institutions as mortgagees prior to the contemplation of compensation for the property to be expropriated.”