Class Chapter 5- Ownership PDF

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Summary

OWNERSHIPThe concept of ownership If misrepresentation of ownership occurs, then purchaser becomes a bona fide individual of the purchase, meaning that they’ve only transferred the right of possession, not ownership Limitations on ownershipOwnership is the most complete right a legal subject can ha...

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OWNERSHIP The concept of ownership

Ownership is the most complete right a legal subject can have in relation to an object

No one has more rights in relation to a thing than the owner of the thing

When an owner is dispossessed and the thing is put in the hands of a third party, ownership remains intact e.g. thef The owner has a real right in the thing owned by him, which can be enforced against the world at large A person who purports to transfer ownership rights to a third party cannot do so without the cooperation of the owner. e.g. PnP selling Lindt products to consumers

 If misrepresentation of ownership occurs, then purchaser becomes a bona fide individual of the purchase, meaning that they’ve only transferred the right of possession, not ownership Limitations on ownership

Ownership is not absolute

Ownership is limited by: Objective law (i.e. legislation and neighbour law) The subjective rights of other persons (limited real rights and personal rights) The Constitution, which requires the courts to balance ownership rights with other socially desirable programmes such as land reform and protection of the natural environment.

The content of ownership •

The exact content of ownership may differ from situation to situation, depending on the specific circumstances in each case

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Ownership may include several entitlements, including: (can exist at the same time, but don’t have to) 1. The right to use and enjoy the property (ius utendi) - MY PROPERTY! I CAN DO WHATEVER I WANT -

Limitations exist shouldn’t infringe on other people’s rights

2. The right to possess the property (ius possidendi) -

Could have lent, rented or borrowed property

3. The right to make use of the fruits of the property (ius fruendi) -

Profits

4. The right to alienate (sell) and encumber (burden) the property (ius dispondendi) -

Sell/ get rid of Pledging property as security

5. The right to vindicate (recover) the property (ius vindicandi). •

Under some circumstances, the owner may also have the right to neglect or destroy the property -

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As long as it doesn’t damage another’s property

The above list is not exhaustive, and not all of the above entitlements will be present in every instance.

Existence of ownership •

The continued existence of ownership is not dependent on the permanent presence of all entitlements simultaneously: •

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Some entitlements may be assigned to other persons by the owner, thereby diminishing the number of remaining entitlements

For example, when Lindiwe leases her flat to Johan, she temporarily loses the right to use and enjoy her property: •

However, she at all times remains the owner of the flat.

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Johan (as tenant) is not a bona fide possessor. He has the right to use and enjoyment of the property and is responsible for reasonable maintenance to ensure that the flat is returned in the same condition (subject to reasonable wear and tear) as was handed to him.

Statutory restrictions on ownership 

Destruction of property

One cannot destroy protected buildings even if one owns the buildings in question (National Heritage Resources Act 25 of 1999) “Use it or lose it” principle o In some cases a person may be compelled by law to use his/her property (e.g. old order mineral rights which have been converted into new order rights will be lost if they are not used) o

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The content of ownership          

The content of ownership varies enormously from one situation to another The content of ownership is affected by legislation and whether certain of the entitlements have been assigned to other persons As the number of entitlements attaching to the right of ownership fluctuates, this allows for a significant degree of flexibility in a content-based definition of ownership The owner is entitled to use and enjoy his property, including the fruits thereof The fruits can either be civil (e.g. interest and rental payments) or natural (e.g. crops and the young of animals) This entitlement may be restricted voluntarily (e.g. where a person grants to another usufruct over property owned by the former) Certain legislation (e.g. firearms control laws and motor traffic rules) restricts the right of the owner of a firearm to use and enjoy his property freely. An owner is entitled to be in physical control of his property There is a presumption in law that a person who is physically in control of a property is the owner thereof, unless the contrary is proven The right to physical control of one’s property can be voluntarily assigned to another person (e.g. where a person pledges his property as security for a debt).

The content of ownership •

Legislation may also restricts this right (e.g. some criminal offences may in terms of the Prevention of Organised Crime Act 121 of 1998 lead the confiscation of property used in the commission of the crime)

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An owner is entitled to dispose of his property by way of sale, donation or abandonment

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Specific requirements govern the transfer or termination of ownership

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Transfer of ownership can only be effected by the owner or a duly authorised agent.

The content of ownership  

An owner may use his property to serve as security for debts (e.g. pledging movable property or passing a mortgage bond over immovable property) An owner may encumber (burden) his property by granting a third party limited real rights in the property (e.g. allowing a servitude or a right of way to be registered against the title deeds of the property).

Vindication (rei vindicatio)   

Vindication enables the owner to claim her property from whoever possesses it This power may only be exercised by an owner This entitlement cannot be assigned to others in the form of (a) limited real right

 Cant pass the right on to someone else to vindicate property on your behalf Limitations •

The sum total of entitlements inherent to ownership may differ, depending on the facts and circumstances of each case

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The entitlements of ownership may be limited by:

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Objective law (e.g. legislation and neighbour law)

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The subjective rights of other persons (limited real rights or personal rights)

Limitations on the right of ownership may be necessary to preserve buildings of historic value or protect the natural environment.

Forms of ownership •

At common law, ownership could take either of the following forms:  Individual title  Co-ownership

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In recent years, legislation and land reform programmers have increased the number of forms of ownership available in South African law

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However, the recent innovations are all substantially based on the common-law concepts identified above.

Individual title: land reform •

This is also known as “freehold title”.

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The following are its key features:

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It vests in one person only

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The single owner has the sum total of entitlements in relation to the property, movable or immovable, subject to the particular relevant limitations

Individual title may be affected by legislative measures dealing with land reform (e.g. the Land Reform (Labour Tenants) Act 3 of 1996 and the Extension of Security of Tenure Act 62 of 1997).

Co-ownership •

This is also known as “joint title” or “ownership in common”

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Co-ownership entails ownership in the same property by more than one person (or entity) simultaneously

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Co-ownership may take either of the following forms: •

Co-ownership derived from the common law

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Statutory co-ownership.

Common- law co-ownership •

Common-law co-ownership relates to both movable and immovable property, and can take either of the following forms: •

Free co-ownership

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Bound (tied) co-ownership.

Statutory co-ownership (NB NB NB NB NB NB NB NB) •

Statutory co-ownership relates mainly to immovable property, and can take either of the following forms: •

Sectional title schemes

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Share block schemes

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Timesharing arrangements.

Common-law co-ownership   

Occurs when more than one person simultaneously has ownership rights in a property Each owner acquires an undivided co-ownership share in the property concerned Co-ownership completes two elements: 1. An undivided share in the property, which may be unequal 2. Property which is movable or immovable

Implications of co-ownership •

Co-ownership has the following implications: •

The property cannot be divided for as long as co-ownership endures -

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Once a co-ownership has been entered into, the asset cannot be divided further for as long as the relationship endures

A co-owner cannot burden or alienate the property without the consent of the other co-owner(s).

Free and bound co-ownership Bound co-ownership: •

Signifies an underlying relationship that binds the co-owners, separately from the fact that they are co-owners

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Examples of bound co-ownership are marriage in community of property and a partnership (as a business enterprise)

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The main implications of bound co-ownership are that the co-owners cannot alienate or burden their undivided co-ownership share as long as the underlying relationship is intact, and that the co-ownership cannot be terminated unilaterally.

Free co-ownership

Free co-owners are not bound by an underlying contractual relationship Co-ownership is the only relevant relationship between the parties A free-co-owner can alienate or burden his undivided co-ownership share in the property independently (i.e. unilaterally) A free co-owner can also unilaterally terminate the co-ownership The content of co-ownership, as well as how it may be exercised, is not dependent on any underlying relationship.

The undivided co-ownership share

The undivided co-ownership share is distinguishable from the property itself The undivided share reflects each interest in the property A co-owner can generally do as he pleases in respect of his ownership share The use of the property will generally be governed by a use agreement, which can be made a condition of sale.

The commonly owned property

Co-owners may not deal with the commonly owned property as they please Any legal act relating to or affecting commonly owned property must be performed by the co-owners jointly The co-owners must decide how and for which purposes the property may be used The proportionate use of the undivided share must be reasonable. Remedies      

The consequences and obligations of co-ownership sometimes lead to disputes which must be resolved by the courts Unreasonable conduct on the part of one co-owner can be halted or prevented by means of an interdict If harm has resulted from unreasonable use of the co-owned property, a claim for damages may be instituted Where the co-ownership relationship has deteriorated so that it cannot continue, it can be terminated by means of the common-law separation action (actio communi dividundo) Ideally, the co-owners should present the court with a plan for how the matter should be resolved However, if this is not possible, a court may order the division of the property, or it may order that the property be sold and the proceeds distributed proportionately among the coowners

KNOW VARIOUS FORMS OF STATUTORY OWNERSHIP FOR EXAMS! GUARANTEED QUESTION

Alternative forms of title

Sectional title schemes

Share-block schemes

Time-share schemes

Communal property associations

Indigenous land tenure Sectional Title Schemes •

Sectional Titles Act 95 of 1986

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Act varies the common law and allows for apartment ownership

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Act allows for the densification of areas (i.e. increasing the number of dwellings that are permitted on a particular erf size) and the commercial use of buildings

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Sectional title ownership enables a sectional title owner simultaneously to co-own land and individually own a part of a building situated on that land.

Sectional Title Schemes 

Act creates a new composite thing made up of 1. The sectional title unit, and 2. An undivided co-ownership share in the common part of the building and the land  Respect for the common part of the building as it is shared with other owners  Sectional title unit is the principle component, while the undivided share is the accessory  Sectional title owner is a compulsory member of the juristic person responsible for the management of the sectional title scheme  Called the body corporate. They give owners a certain measure of individual protection. Juristic person liable for gross negligence, finances, insurance, etc.  Sectional title unit is thus a statutory form of immovable property

 Why? It was created as a possibility by the Sectional Titles Act  Sectional title owner acquires a unit, which comprises ownership of a section (i.e. an apartment) and tied co-ownership (joint ownership) of common areas  The sectional title owners are represented in a juristic person known as the body corporate, which is the sum of all unit holder who are automatically members  They can participate in the Annual General Meeting and give items for the agenda  Sectional title ownership is genuine ownership, although it differs in scope and extent from ordinary individual title or free co-ownership Share-block schemes •

Share-block title consists of a combination of common-law possession and company law rules

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Governed by the Share Blocks Control Act 59 of 1980

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Juristic person (the share-block company) owns or leases a building

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Members of the share-block company (the block shareholders) acquire a right of use in relation to a part of the building (e.g. a flat, office or coffee shop) on the basis of their shareholding

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Scheme is run and managed by the participants in the scheme when the company owns buildings or land •

A board of directors is elected by the block shareholders to run the shareblock company

 Not run/registered ito Company law  As board of directors, the laws of company law apply Time-share schemes •

Time-share schemes are associated usually with the recreational use of property

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Time-share schemes allow different people to use a property at different times of the year, for instance for accommodation purposes, or on an annual basis

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Governed by the Time-Sharing Control Act 75 of 1983

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The Act defines “time-share interest” as “any right to or interest in the exclusive use or occupation, during determined or determinable periods during any year” (section 1)

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The Act permits a variety of legal bases for a time-sharing scheme, including coownership, sectional title ownership, use rights in a share-block scheme, and ownership of a club that includes use rights.

 People who know each other, then form an association for recreational use a vast number of people then use the same property at different times of the use  Allows people to have an interest in time  Own right to exclusive use of a property only on a determinable time of the year

Retirement schemes Retirement schemes address the housing needs of people who have retired or are about to retire

Investors are required to pay a lump-sum upfront to obtain a “housing interest” in a scheme

Investors are also required to make regular contributions to a levy fund to cover maintenance and administrative costs

Scheme may be based on sectional title, block shareholding, club membership or any other construction, but it cannot operate as a timesharing venture.

Governed by the Housing Development Schemes for Retired Persons Act 65 of 1988

 Type of scheme to retire in depends on the type of care one would like to have once retired Communal Property Associations •

The Communal Property Associations Act 28 of 1996 enables disadvantaged communities to form juristic entities to acquire, hold and manage property on a basis agreed to by the members in terms of a written constitution

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Thus, a new form of ownership flows from CPAs, which are intended to promote access to land and security of tenure

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CPAs broaden access to land, as any number of persons may be members of a CPA and thus gain access to the land in question as a whole

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CPAs are useful in situations where the land is not viable for subdivision into smaller units

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The land owned by a CPA can be mortgaged, enabling the community to obtain finance to develop the land or a specific commercial undertaking on the land.

Indigenous land rights •

Vast tracts of land in South Africa are under communal tenure, mainly in areas that were designated as “national states” and “self-governing territories” prior to 1994

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Communal land is “owned” and controlled by the community concerned

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Communal land can be used for residential and agricultural purposes, with the remaining land – the commonage – being reserved for grazing, or for extending the existing residential or agricultural areas.

Indigenous land rights…

Communal tenure means that the head of the group (traditional leader) assigns entitlements to property (usually land) to individuals who belong to a particular political or ethnic group The property is regarded as belonging to the group and individuals are entitled to use (parts of) the property on the basis of their group membership All members of the community have access to the commonage and may use its resources. Communal Land Rights Act 11 of 2004   

The Communal Land Rights Act 11 of 2004 (CLA) is intended to secure tenure for millions of people who currently live on communal land CLA aims to formalise the traditional system of communal land tenure and democratise the administration of communal rights through statutorily instituted community rules and bodies The CLA is not yet in operation and has been extensively criticised by academic commentators....