SOUTH AFRICA Law and Practice Contributed by: Ulrike Naumann, Alison Mellon, Joshua Janks and Aneria Bouwer, Bowmans
law. The following items are always considered to be immovable property: • land, minerals in the soil, trees (unless being felled) and growing crops of fruit; and • a building annexed to the land or an object attached to immovable property, if the attach- ment in question is so secure that its separa- tion would involve substantial injury to the land, building, object or property, as applica- ble. The question of whether the separate identity of an annexed item is preserved, and the annexed item can be detached with relative ease depends on the intention of the item’s owner. If the owner intends that the items or buildings should be annexed permanently then those items or build- ings are considered immovable property. An intangible asset is immovable if the tangible asset to which it relates is itself immovable prop- erty (for example, mineral rights in land). Security over immovable property (excluding mineral rights) can only be effected by a special mortgage of immovable property as set out in the Deeds Registries Act, 1937 (DRA). A mort- gage bond does not transfer title in the mort- gaged immovable property to the party in whose favour the mortgage bond is registered (mort- gagee). Rather, it creates a limited real right in favour of the mortgagee to have the immovable property sold in execution, and the proceeds applied to settle, or reduce, the debt secured by the mortgage bond. Security Over Tangible Movable Property Movable property is any property which can be moved from place to place without damage to itself. Generally, all property which is not classi- fied as immovable property is considered to be
movable property. A further distinction should be drawn between: • tangible movable property, which can be han- dled and touched; and • intangible movable property, which cannot be handled and touched – common exam- ples are intellectual property, book debts and shares. Aircraft and ships are considered tangible mov- able property. However, there are unique legisla- tive requirements for taking security over aircraft and ships. The most common forms of security that can be granted over tangible movable property are described below. Pledge A pledge is a type of mortgage of movable prop- erty provided by a borrower (pledgor) in favour of a lender (pledgee) as security for a debt or other obligation. A pledge can be utilised as security for both tangible and intangible movable prop- erty. General notarial bond A general notarial bond is a mortgage provided by a security provider of all of its tangible mov- able property in favour of a lender as security for a debt or other obligation. A general notarial bond does not (in the absence of attachment of the property before insolvency) make the lender a secured creditor of the security provider. Con- sequently, it is merely a means of obtaining a limited statutory preference above the claims of concurrent creditors in the borrower’s insolvent estate, not a true mortgage of movable property. Special notarial bond A special notarial bond is a mortgage which:
402 CHAMBERS.COM
Powered by FlippingBook