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South Africa's abstract system of land ownership

One of the most important concepts in our law is that of private property – that is to say, the idea that a person can, in law, be the owner of property with all the rights that the law attaches to ownership.

Where movable property is concerned, there is no register of owners. For example, a business may own a computer, but there is no official register of computers and their owners.

You may own a car, and that car may be registered in a government registry, but registration of the car in someone’s name is not proof of ownership. If I sell my car to you, receive the price, and hand it over to you, ownership has passed to you, irrespective of what the record in the government register may say.

A different principle applies to immovable property (land and fixed structures built on land). In law (with very few exceptions) whoever is registered in the records of the Deeds Office as being the owner of land is, in law, the owner of that land. In other words registration in the Deeds Office is proof of ownership.

In this regard, our law has a so-called abstract system of land ownership. In other words, the transfer of immovable property through registration in the Deeds Office remains valid even if there was some defect or flaw in the agreement in terms of which that transfer took place.

Thus, if you sell land or a building to me, and I pay you in full for it, I am entitled to demand that you "register transfer" of the land to me, in other words, to demand that you co-operate in having my name registered in the Deeds Office as the owner of the land.

But – unlike in the example of the car, given above – I am not the owner of the land unless and until it is registered in my name in the Deeds Office.

THE PROBLEM OF DOUBLE SALES

Assume that A is the owner of land, and it is registered in his name in the Deeds Office. A enters into a contract with B, in terms of which he sells the land to B. Then A sells the self-same land to C.

What does the law say of this situation of a so-called "double sale"?

Firstly, both contracts are entirely valid. Each fulfils all the legal requirements for a valid contract. And, significantly (for the reasons explained above) A did not cease to be the owner of the land just because he had sold it to B.

Of course, A is not going to be able to pass transfer of the land to both B and C. But the only consequence of this is that A is going to be in breach of contract toward either B or C, whichever is unable to get registration of transfer of the property.

It was, of course, foolish or dishonest of A to sell the same land to two people. But A has done so, and must bear the consequences, namely that he is going to be sued for breach of contract by either B or C.

Let us add another complicating factor to the hypothetical scenario. Let us assume that C manages to get the land registered in his name in the Deeds Office before B does so.

Can B – who, we have postulated, purchased the land from A before C did so – demand that, since he was the first purchaser, C must transfer the land to him?

The difficulty is clear. B will say – I was the first purchaser, so my rights should prevail. C will say, I got transfer into my name first, so my rights should prevail.

Our law solves the problem of such double sales by the application of a simple principle, called "the doctrine of notice" which decrees that, if at the time he took transfer of the property, C knew of – in other words had notice of – the earlier sale to B, then he must transfer the property to B and be content with a claim for damages against A.

If, at the time he took transfer, C did not know of the earlier sale to B, then C does not have to transfer the property to B. In that event B’s only recourse is to sue A for damages, that is to say, for monetary compensation for breach of contract.

Our law takes the view that, if C knew of the earlier sale at the time he took transfer, then it was a form of fraud on his part to accept transfer into his name.

Thus, in the recent case of Riley v Sliep NO [2008] ZANHC 22 the court quoted with approval an earlier judgment which held that – "it is a species of fraud to attempt to secure a res (an item of property) which is known to have been promised to another".

It is clear, therefore, how important it is not to delay taking transfer of immovable property that you have purchased.

It would, for example, be extremely dangerous to purchase immovable property in terms of some kind of instalment agreement whereby you would only take transfer when you had paid the final instalment.

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