EUAs and s 45

My only attempt to avail myself with a Section 45 application was rejected by the Deeds Office as they contended that a cession (or certificate) of Registered Real Rights cannot be endorsed in terms of Section 45 as the subject matter of that deed, the exclusive use area, is not immovable property.

I cannot accept the correctness of this view. Besides the absurdity to which it gives rise, viz the need to release the EUAs from the bond so that a ½ share can be ceded and then having to register a collateral bond so that the mortgagee retains all the security to which it is entitled, I believe the contention (that EUAs are not immovable) is based on a wrong premise.
My reasons for saying so are:

  1. The Sectional Titles Act, inter alia in Sections 11(3)(d)(iii) and 27(d) speaks of "Certificate of Real Right" in respect of Exclusive Use.
  2. The use of the words "Real Right" distinguishes the right from a Personal Right and signifies that the real right, or jus in re, is an interest or benefit enjoyed in a thing.
  3. I concede that does not dispose of the difficulty in that the object of the right can be either movable or immovable, corporeal or incorporeal.
  4. It therefore becomes necessary to determine whether the object of this right is movable or immovable, corporeal or incorporeal.
  5. Although the right is incorporeal, the fact that it pertains to an immovable (the sectional title unit) implies that that right too is immovable.
  6. I believe that it can be said that it is an incorporeal immovable thing. My reasons for saying so are set out below.
  7. The creation or transfer of a real right in a thing can be effected only by possession in the case of a movable and by registration in a Deeds Office in the case of an immovable.
  8. The Sectional Title Act provides specifically for the transfer of Exclusive Use Areas by way of cessions registered in the Deeds Office, implying that the object of the right is immovable.
  9. I believe an Exclusive Use Area is analogous to a registered lease or a leasehold right, both incorporeal immovables.
  10. Furthermore and importantly, EUAs are mortgaged together with the Unit to which they attach. If they were incorporeal movables a notarial bond would have to be passed over them.
  11. Section 53 of the Deeds Registries Act specifically forbids the registration of "any mortgage bond which purports to bind movable property".
I hope that what I have said above will persuade the Deeds Office that the Certificate of Real Rights can be endorsed in terms of Section 45 notwithstanding the conference Resolution. My sources of reference are "Wille's Principles of South African Law" 8th edition and "The Law of South Africa" by W A Joubert, First Re Issue Vol. 27.

As a final note, I refer to a more recently reported case on EUA's, viz Kmatt Properties v Sandton Square Portion 8 (Pty) Limited reported in All South African Law Reports 2007 Volume 3 August No 1 on page 256. The dispute related to an EUA and on page 260 at paragraph 20 Judge Blieden had this to say:-

'Whilst a right of exclusive use reserved in terms of section 27A of the Act is not deemed to be urban immovable property with the result that the registration of a separate mortgage bond over it is not possible, the right nevertheless attaches to the unit to which it has been allocated and therefore forms an integral part of the security of the holder of a mortgage bond registered over the unit'.

I believe one can conclude from this that a Section 27 EUA is urban immovable property".

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