(delivered today, 12th September 2018)
This is definitely a win for the people of South Africa against very dodgy banking practice.
(The judgement, heads and other documents can be found here).
What is most significant about this judgment is firstly that it says at point 4 of the order that “save in exceptional circumstances that reserve prices should be set”. This is important as some banks were apparently arguing (unbelievably unethically) that reserve prices should only rarely be set.
Secondly, it makes clear that if you pay off your arrears then the contract revives (this is not at the discretion of the bank) and you can continue with the bond. This is not at the bank’s discretion.
It was mostly about whether the money judgement and execution (selling of house) should be heard together. The decision was they should be. This is better in the sense that legal costs would be lower but worse if it results in less delay as delays can allow the debtor to pay the arrears or sell the house himself. But if orders are given that allow a time to sell before the house is sold by the sheriff then this remedies this.
What still needs to be decided is how to calculate these reserve prices.
In our view they should start at 90% of the market value of the property after the levies and rates and taxes have been taken off. After each 3 months it can drop a further 5% for those properties that still haven’t sold.
If the property is not in good condition then the market value would be lower. The market value in this definition is what the property would sell for if sold by a few estate agents over 3 to 6 months in a normal sale situation.
In this judgment there was an indication that each case the reserve price should be decided on the merits.
Then the next question is how we can improve the sheriff’s auction system to deliver these prices.
There appears to be some forward movement on the question of a reserve price.
As the article has correctly stated, the criteria for a reserve price still needs to be determined, but I wonder if there could be practical difficulties in implementing this.
I note the comment that the judge in this matter stated that the reserve price should be determined on an individual case. Does this mean that the bank should be compelled to request a reserve price when applying for a judgement and execution order? If so, and when making a recommendation, the bank is unlikely to be acting in the best interest of the evictee . Should there be any input given by the evictee on a reserve price and if so how would this practically work?
I would be interested to see how the law evolves on reserve prices.
These are my preliminary views on the article and I have not had an opportunity of perusing the supporting documents.
I know in a recent judgment that a court felt this should be applied retrespe tively. Had another judge ruled on this?
My house was sold in November 2017 and transfer took place in February 2018. Can one therefore apply that the judgment be rescinded based on above facts?