Under financial pressure to sell?

Gerhard Faurie, partner at Faurie Nell Inc attorneys, has kindly outlined some detail and possible options to sellers who are feeling the pressures of poor economic conditions in South Africa.

"Lending banks take a compassionate stance towards their clients in financial distress and offer various programmes for home owners who are unable to maintain their mortgage repayments due to financial difficulties. It is in the best interests of both the lending bank and the homeowner that either the homeowner keeps the property if the debt can be restructured or that a well-executed marketing campaign is undertaken where a sale of the home is the desired option. It is critical that the debt issue is tackled head on before it escalates.

Traditional foreclosures by banks on residential homes was often a brutal process for the defaulting home owner. This historic approach has been much tempered, largely as a result of Section 26 of our Constitution and the legislative introductions following from that, combined with the our courts developing a completely new set of rules governing evictions from homes.

As recently as 2018, our High Court ruled in the Gauteng Local Division that a reserve price must be set by a court in all but exceptional circumstances where execution is granted against immovable property which is a primary residence. This is to prevent unjust and inequitable financial outcomes to the defaulting home owner.

Furthermore section 129 of the National Credit Act enables home owners to reinstate their credit agreement with the lending bank where they have fallen into arrears, by paying the credit provider all amounts that are overdue, together with the credit provider's prescribed default administration charges and reasonable costs of enforcing the agreement up to the time the default was remedied. The effect of section 129 is that if the home owner reinstates the agreement, the judgment is no longer alive and the lender can no longer act in terms of that judgment.

If you find yourself in the unfortunate position of having defaulted on your mortgage, approach your lending bank immediately and join their distress programme for a measured and economically viable solution"

Gerhard Faurie
E-mail address:  gerhard@fninc.co.za
Switchboard: 011 560 7100