INCIDENTAL SUBJECTS AFFECTING PROPERTY TRANSFERS: DIVORCED PARTIES - SECTION 45 ENDORSEMENTS

If a Buyer is divorced, this creates no problems provided he really is legally divorced. It occasionally happens that people tell agents and attorneys that they are divorced while the case is still being finalised. A copy of the divorce order must always be obtained and submitted to the Conveyancer.

The problems start when the Sellers are divorced or are still in the process of being divorced. In most divorces these days, the parties sign an Agreement of Settlement which becomes part of the Divorce Order. Invariably the property the Conveyancer has been instructed to transfer will have been dealt with in the agreement and one party's share in it will usually have been awarded to the other. The award and settlement of the property is usually dealt with in the following ways:

1. The one party, usually the husband, will agree to transfer the whole property to the other as her sole and absolute property alternatively;
2. The parties will agree to sell the property and divide the proceeds between themselves.

In the first case, problems may arise. Your Seller will not have the right to sell the property if he has already awarded it to his spouse.

In the second case, no problem arises but if the property was registered in both names or they were married in community of property, you will need the signatures of both parties on the contract of sale. Likewise, if they were married outside South Africa, both signatures will be needed.

Usually, however, your Seller will be the one who was awarded the property. It cannot be transferred, however, until an application is done in terms of Section 45 of the Deeds Registries Act for an endorsement on the Title Deed giving him the sole right to deal with it. This should not delay the transfers as, once again, the application can be lodged simultaneously with the property transfer.

In times past, the Deeds Office insisted on lodgement of a copy of the Settlement Agreement certified by the Supreme Court where the divorce took place. This used to cause delays where the divorce took place in another part of the country. Today, however, a certified copy by a Notary is acceptable. Whatever the case, it helps to call for a copy of the Settlement Agreement and Divorce Order right at the start as delays can be caused when the Seller cannot find them. If the divorce took place a few years earlier, time may be consumed tracing the case number or the attorneys who handled the divorce (your Seller may have been the Defendant and cannot remember who did the divorce).

It is also important to inform your Seller that he is obliged to pay a transfer fee to get the endorsement registered. This will be calculated on the municipal valuation of the property.

A Section 45 endorsement is actually a form of transfer and when lodged in the Deeds Office, is lodged just like an ordinary transfer. The application form must be accompanied by the original Title Deed, Transfer Duty Exemption Certificate, Clearance Certificate, Divorce Order and Settlement Agreement. It is important to find out early if the endorsement still has to be done, especially to ensure that the Seller is not unpleasantly surprised with an extra account for transfer costs when he calls to sign his documents.

Even though the parties may have agreed that the property (or the ½ share of one of them) will be awarded to only one of them in a Settlement Agreement, the heavy expenses incurred by this party can be legally avoided. If they are still on reasonable terms, the Conveyancer can draw an addendum to the Settlement Agreement wherein they agree to waive the provisions of the agreement regarding the property and in place thereof, agree that the property shall be sold and that the one party alone shall receive the nett proceeds. All of the above costs will then be avoided and both parties can sign the new sale contract in the normal way.

Section 45 makes provision for any agreement of settlement arising out of the divorce and this must be taken to include any amendment thereof or later addendum thereto. (It is my personal experience that the Deeds Office will apply the terms of a later agreement lodged with the transfer papers even though the provisions of the original agreement, already made part of a Court Order, are thereby reversed).

Deeds Offices invariably call for a copy of the Settlement Agreement to be lodged in any transfer where it is apparent that the Seller has become divorced since he originally took transfer. This is to ascertain whether the property was dealt with at the time of the divorce to see if the Seller has the right to sell or whether a Section 45 endorsement must first be recorded.

CREDIT:

Property Law Publications

John Gilchrist

082 904 1300