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
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