Practitioners and deeds office examiners are often confronted with the question of whether a co owner of land may mortgage his/her share in such land. To answer the question a few definitions as contained in the Deeds Registries Act 47 of 1937 (the Act) must firstly be consulted, namely:
“means a bond attested by the registrar specially hypothecating immovable property”
“means a share in land”
Although all the joint owners may in unison encumber their immovable property, a joint owner or owners acting without the participation of all the other co owners may hypothecate his/her share (see Dircks Estate v Gwadiso and Komani’s Estates 1936 EDL 303). One of several joint owners cannot, however, mortgage the whole of the property in the absence of express authority from the other co owners (see Jewell and Rutter v Hazell and Steer (1897) 14 SC 16). Before a co owner of land can mortgage his/her undivided share, the provisions of section 34(1) of the Act must be adhered to , which provides inter alia as follows:
“Any person who is the joint owner of a piece of land the whole of or shares in which is or are held by such person and others under one title deed, may, subject to the provisions of section thirty-seven, obtain a certificate of registered title of his undivided share in such land and ……. no hypothecation or lease of the whole or any fraction of his undivided share in the land shall be registered in a deeds registry unless a certificate of registered title of such undivided share is produced to the registrar ……..”
It is clear that a co owner of immovable property (see the definition of immovable property as provided for in section 102 of the Act) may, subject to the provisions of section 34 of the Act, hypothecate an undivided share in such immovable property. From a security perspective, it may hold risks should foreclosure take place. Usually financial institutions will require the other co owners to bind themselves as surety should foreclosure occur.