SA Affordable Housing July - August 2019 // Issue: 77 | Page 37

LEGAL MATTERS – SPONSORED BY STBB SECTION 10B(1) OF THE HOUSING ACT Section 10 B (1) of the Housing Act, has as heading ‘Restriction on involuntary sale of state-subsidised housing’ and reads, as follows: ‘(1) Notwithstanding any provisions to the contrary in any other law, it shall be a condition of every housing subsidy, as defined in the Code, granted to a natural person in terms of any national housing programme for the construction or purchase of a dwelling or serviced site, that such person's successors in title or creditors in law, other than creditors in respect of credit- linked subsidies, shall not sell or otherwise alienate his or her dwelling or site unless the dwelling or site has first been offered to the relevant provincial housing department at a price not greater than the subsidy which the person received for the property.’ This section acknowledges the existence of creditors (including financial institutions) that may have established rights in respect of the house or sectional title for which a non-credit linked subsidy or credit linked subsidy was received. In the case of houses and sectional title units purchased with FLISP subsidies where the owner financed the balance of the purchase price with a mortgage bond from a financial institution, section 10B(1) protects the interest of the financial institution as partner in a credit linked subsidy transaction. That owner cannot escape the normal commercial consequences like a foreclosure if he defaults on the repayment of his mortgage loan, and the financial institution does not require the consent of the relevant provincial housing department to enforce its right to foreclose. Even though this section still restricts the sale of the house or sectional title without the consent of the relevant provincial housing department, it allows the financial institution which granted the credit for the balance of the purchase price for this housing product, to sell it without having to get consent from the relevant provincial housing department. However, other creditors of and successors in title to the successful FLISP subsidy applicant are still required to offer the property to the relevant provincial housing department at a price not greater than the subsidy that the beneficiary received for the property, before the consent from the relevant provincial housing department for the sale of this property can be obtained. CONCLUSION Section 10B(6) of the Housing Act states that the Registrar of Deeds shall make this endorsement on the title deed of any dwelling or site and such entries in his registers, when necessary, to indicate that the provisions of subsection 10B(1) apply in respect of the dwelling or site. It is prudent for conveyancers to include the following title condition in respect of the first registration of title deeds for newly acquired FLISP subsidy houses and sectional title units as it incorporates the requirements of both section 10A and 10B of the Housing Act: ‘SUBJECT TO THE FOLLOWING CONDITION IMPOSED IN TERMS OF SECTION 10 OF THE HOUSING ACT, 1997 (NO107 OF 1997) A. The within mentioned property shall not, without the consent of the relevant provincial housing department, be sold or otherwise alienated within a period of eight years from date of transfer, unless it has first been offered the relevant provincial housing department B. In case of an involuntarily sale, the owner's successors in title or creditors in law, other than creditors in respect of credit-linked subsidies, shall not sell or otherwise alienate his or her dwelling or site unless the dwelling or site has first been offered to the relevant provincial housing department at a price not greater than the subsidy which the person received for the property.’ When Deeds Office examiners receive and examine transfer documents for FLISP subsidy houses and sectional title units, it allows them to take note of and respond to this title condition by requesting consent from the relevant provincial housing department for the sale of this property, if such voluntary sale was concluded within eight years from acquisition of the property. What happens if this title condition was not registered when the FLISP subsidy houses and sectional title units were first transferred? All the rights created in sections 10A and 10B are still in force during the first eight years of acquisition, even if these are not reflected as title conditions in the title deeds of the FLISP subsidy houses and sectional title units. The enforcement of these sections may pose a challenge, if not reflected as a title condition. The Deeds Office examiners will not have the benefit of a registered title condition noted against the title deed to remind them of the requirements of section 10A and 10B of the Housing Act, and voluntary transfers may be allowed to register within eight years from date of acquisition without the consent from the relevant provincial housing department. STBB offers a variety of legal services where our expertise and friendly approach allows us to deal with every legal matter in an effective and efficient manner ensuring a pleasant experience for our clients. In the property sector we cover: • Property law We offer benchmark services for both retail and development property transactions. We are reputed for our teams of seasoned property law practitioners who share an extensive set of skills to smoothly address every aspect of property law and land development transactions. • Local Government, Planning, Development and Environmental law Our Development Law Unit has nine specialists addressing development requirements in the fields of planning law, environmental law, construction law, renewable energy law and local government law. The Unit partners with land developers to function as a vital watchdog and one-stop-shop for all legal requirements of land development projects, including low cost housing projects. For more information related to the information published, please contact Gert Minnaar at [email protected] or visit our website https://www.stbb.co.za to view contact information for your nearest branch. www.saaffordablehousing.co.za JULY - AUGUST 2019 35