When does a spouse who is entitled to receive a half share in immovable property become the owner of that half share? Does the real right in respect of half share in immovable property vest immediately upon granting of a divorce decree or does a spouse acquire personal right to claim formal transfer in the Deeds Registry by virtue of the divorce order? These questions were decided in a judgment of Fischer v Ubomi: Ushishi Trading CC and others 2019 (2) SA 117 (SCA) (“Fischer”).
In Fischer, the appellant sued the first respondent for payment of R566 500.00, based on an acknowledgment of debt by the first respondent and a suretyship agreement concluded by the second respondent for its indebtedness. The second and third respondent were the registered owners of the immovable property. Their marriage in community of property was dissolved by a divorce. In terms of a settlement agreement incorporated into a divorce order, the second respondent waived his rights, title, and interest in the property in favour of the third respondent.
The second respondent and the third respondent remarried in April 2014, out of community of property with the exclusion of the accrual system. They subsequently divorced again in 2015, and in terms of the second divorce order, the parties would retain their respective possessions.
HIGH COURT (COURT A QUO)
The appellant applied to the court for an order declaring the second respondent’s half share in the property executable. The third respondent raised the defence that she had full ownership of the property. The court held that upon granting of the decree of divorce, dominium of the property vested with immediate effect in the third respondent. In its judgment, the court considered two cases: Corporate liquidators (Pty) Ltd and Another v Wiggill and others 2007 (2) SA 520 (T) (“Corporate Liquidators”) and Middleton v Middleton and Another 2010 (1) SA 179 (D) (“Middleton”). In Corporate Liquidators, it was held that where parties enter into a settlement agreement regarding the division of their assets, which is made an order of court, ownership of the immovable property vests immediately. In Middleton, the court held that a settlement agreement only creates a personal right for the transfer of ownership as the divorce order cannot vest ownership without transfer or delivery. The High Court therefore followed the decision of Corporate Liquidators and dismissed the application.
SUPREME COURT OF APPEAL (SCA)
The SCA considered section 16 of the Deeds Registries Act (‘DRA”) as a starting point in deciding whether ownership of the property vests immediately on divorce. Section 16 of the DRA provides:
“How real rights shall be transferred
Save as otherwise provided in this Act or in any other law the ownership of land may be conveyed from one person to another only by means of a deed of transfer executed or attested by the registrar, and other real rights in land may be conveyed from one person to another only by means of a deed of cession attested by a notary public and registered by the registrar…”
The SCA held that the court a quo erred in finding that the ownership vested immediately upon granting of a divorce order. It held that the third respondent’s acquisition of property was derivative in nature, that is, by way of a settlement agreement which provided the third respondent with the personal right to enforce registration of the second respondent’s half share in the property. Accordingly, the settlement agreement, as per the court order, is binding on the former owner and the party acquiring the property, but it does not by itself pass ownership of the half share to the party acquiring property. The court, however, held that, at the time the divorce order was granted, there was no other greater or competing right to defeat the spouse acquiring the property’s claim. When the appellant sought the second respondent’s half share in the property, it had already been alienated to the third respondent. The appellant’s claim was preceded by the personal right in favour of the third respondent. The appeal was therefore dismissed.
This case has settled that transfer of property, which has been alienated in terms of a divorce order, does not immediately pass to the spouse acquiring it. For ownership of the property to pass, it is a prerequisite that the title deed be endorsed by the Registrar of Deeds. As such, if the title deed has not been endorsed, a creditor may seek an order declaring the former owner’s half share of the property especially executable. The only defence available to the spouse acquiring the property would be to prove that the personal right to individual full ownership of the property preceded the creditor’s claim.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)