The last proviso to section 65 of the Deeds Registries Act, 47 of 1937, provides for the creation of negative personal servitudes in a deed of transfer of immovable property tendered for registration provided such condition is capable of being enforced by some person. It is thus clear that the conditions may be created in the power of attorney to transfer the immovable property, and incorporated as a condition in the deed of transfer. However, the question begging an answer is whether there is any transfer duty payable on the creation of such condition(s).
It is submitted that the answer to the question can be found in section 2 of the Transfer Duty Act, 40 of 1949, which reads as follows:
“…….. there shall be levied …….. on the value of property acquired by any person …….. by way of a transaction or in any other manner, or on the amount by which the value of any property is enhanced by the renunciation.” (my underlining)
Furthermore “property” and "transaction" are defined in section 1 as follows:
From the quoted section 2 and the two quoted definitions it is abundantly clear that the creation of a negative personal servitude in favour of somebody else than the transferor will attract transfer duty and the transaction will have to be accompanied with two transfer duty receipts, i.e. one for the transfer of the land and one for the creation of the negative personal servitude.
In instances where positive or negative personal or praedial servitudes are created in favour of the transferor in the power of attorney to transfer immovable property, no transfer duty is payable on the creation of such servitudes.
Cognizance must, however, be taken of CRC 14 of 2000 which provides that no transfer duty or transfer duty receipts need be lodged in instances where the servitude/s are being created in favour of the Municipality or State , as contemplated in section 9(1)(b) and (Bb) of the Transfer Duty Act, Act 40 of 1949.
Mr West has this spot on!
In case of a negative servitude, how must the property be described in the Transfer duty receipt. The property we are transferring is ERF 1962. My servitude reads:
"B. SUBJECT FURTHER to a Road Servitude of Right of Way, represented by the figure S 7 P n j on General Plan 1310/2010, imposed by Swartland Municipality, upon approval of the subdivision of ERF 186 RIEBEEK WEST in terms of Section 42(1) of Ordinance 15 of 1985, over Remainder Erf 186 Riebeek West."
On my transfer duty receipt should I mention both properties - ERF 1962 subject to a servitude right of way and Remainder Erf 186 subject to a servitude of way or just put ERF 1962 subject to servitude right way.