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Transcript of REAL SECURITY RIGHTS - University of the Free Statelearning.ufs.ac.za/SAK324_OFF/Resources/1....
REAL SECURITY RIGHTSREAL SECURITY RIGHTS(Mortgage and pledge)(Mortgage and pledge)
Chapter 18Chapter 18Chapter 18Chapter 18
Learning outcomes of this UnitLearning outcomes of this UnitDistinguish between the different forms of Distinguish between the different forms of security.security.
List the categories of real security in our law.List the categories of real security in our law.
Explain why real security is described as an Explain why real security is described as an accessory legal relationship.accessory legal relationship.accessory legal relationship.accessory legal relationship.
Know the following regarding pledge:Know the following regarding pledge:–– What this concept meansWhat this concept means
–– What requirements must be met regarding the object of What requirements must be met regarding the object of the pledgethe pledge
–– What requirements must be met regarding controlWhat requirements must be met regarding control
–– The rights and duties of the pledgeeThe rights and duties of the pledgee
Learning outcomes of this Unit Learning outcomes of this Unit (Continued….)(Continued….)
Know the following regarding mortgage: Know the following regarding mortgage: –– What this concept meansWhat this concept means–– The requirements that must be met regarding the object The requirements that must be met regarding the object of mortgageof mortgage
–– The requirements that must be met for the registration The requirements that must be met for the registration thereofthereof
–– The distinction between the various categories of The distinction between the various categories of –– The distinction between the various categories of The distinction between the various categories of mortgagesmortgages
–– The rights of a mortgageeThe rights of a mortgagee
Identify the conditions that are unenforceable in Identify the conditions that are unenforceable in the case of a mortgage and pledge.the case of a mortgage and pledge.Explain how a pledge and mortgage can be Explain how a pledge and mortgage can be terminated.terminated.
INTRODUCTIONINTRODUCTIONCategories of securityCategories of security–– Personal / real securityPersonal / real security
DefinitionsDefinitionsPersonal security:Personal security: creditor on basis creditor on basis performance due (principal debt) , acquires performance due (principal debt) , acquires performance due (principal debt) , acquires performance due (principal debt) , acquires creditor’s right as security for payment of creditor’s right as security for payment of principal debt.principal debt.
Real security:Real security: creditor acquires limited real creditor acquires limited real right as form of security against payment of right as form of security against payment of principal debt.principal debt.
Creditor(Bank)
Object/Thing
Debtor
Principal debt
REAL SECURITY
(Bank)Object/Thing
Limited real right
Categories of real securityCategories of real security––PledgePledge
––MortgageMortgage
––Cession in Cession in securitatemsecuritatem debitidebiti
––Security granted by operation of Security granted by operation of lawlaw
––Security granted by operation of Security granted by operation of lawlawTacit hypothecs of landlord and credit Tacit hypothecs of landlord and credit grantorgrantor
Judicial pledgeJudicial pledge
Statutory security rightsStatutory security rights
Liens (Retention)Liens (Retention)
GENERAL PRINCIPLES GENERAL PRINCIPLES REGARDING REAL SECURITYREGARDING REAL SECURITYterminates automaticallyterminates automatically
against 3rdagainst 3rd partiesparties
preferential claimpreferential claim
principal debt and interestprincipal debt and interestprincipal debt and interestprincipal debt and interest
no entitlements of use and enjoyment no entitlements of use and enjoyment
butbut pactumpactum antichreseosantichreseos-- agreementagreement((may enjoy fruits instead of interestmay enjoy fruits instead of interest ))
form of securityform of security
PLEDGEPLEDGE
DefinitionDefinition
ObjectObjectmovablemovable
single object or collection single object or collection egeg flock of flock of sheepsheepsheepsheep
incorporeal movable property incorporeal movable property egeg shares shares in company (in company (BritzBritz v v SniegockiSniegocki))
fruit form part of object of pledgefruit form part of object of pledge
DeliveryDeliveryexercise control continuouslyexercise control continuously
ConstitutumConstitutum possessoriumpossessorium not not recognisedrecognised
if removed from control without if removed from control without permission, may claim back and permission, may claim back and continue to exercise controlcontinue to exercise control
Rights of Rights of pledgeepledgee (holder of (holder of pledge)pledge)
Limited real right as securityLimited real right as security
Preferential claim to proceeds of sale in Preferential claim to proceeds of sale in executionexecution
Sequestration Sequestration –– preferential claimpreferential claim
Enrichment claim for necessary Enrichment claim for necessary Enrichment claim for necessary Enrichment claim for necessary expenses and useful expensesexpenses and useful expenses
Prior in tempore Prior in tempore potiorpotior in in iureiure
Obligations of Obligations of pledgeepledgeeCare for property like reasonable manCare for property like reasonable man
No right to use, alienate or enjoyNo right to use, alienate or enjoy
Must return on terminationMust return on terminationMust return on terminationMust return on termination
PledgorPledgor can ask security from pledge in can ask security from pledge in case of neglect of propertycase of neglect of property
Compensation if damaged or destroyedCompensation if damaged or destroyed
–– (intentional or negligent actions)(intentional or negligent actions)
MORTGAGEMORTGAGEDefinition Definition
Object Object -- movable / immovablemovable / immovable
RequirementsRequirements
Functions of mortgage bondFunctions of mortgage bondFunctions of mortgage bondFunctions of mortgage bond
Information in a mortgage bondInformation in a mortgage bond
CategoriesCategoriesKustingsbriefKustingsbrief
Covering bondCovering bond
NotarialNotarial bondbond
Rights of mortgageeRights of mortgagee
Unenforceable conditionsUnenforceable conditions
––NBNB PactumPactum commissoriumcommissorium
Ownership transfer if payment Ownership transfer if payment not in fullnot in full
Graf v Graf v BeuchelBeuchel 2003 (SCA)2003 (SCA)
––NB NB parateparate executieexecutie p 269p 269
May sell without recourse to May sell without recourse to courtcourt
Bock v Bock v DuburoroDuburoro (Pty) Ltd 2004 (SCA) (Pty) Ltd 2004 (SCA)
How How parateparate executieexecutie is appliedis applied
Homework ActivityHomework ActivityDiscuss the obligations of the pledgee Discuss the obligations of the pledgee towards the pledgor.towards the pledgor.Will attornment be a valid form of Will attornment be a valid form of delivery to establish pledge? Motivate delivery to establish pledge? Motivate your answer.your answer.your answer.your answer.Briefly describe the following terms:Briefly describe the following terms:-- Pactum antichreseosPactum antichreseos
-- Pactum commissoriumPactum commissorium
-- Parate executieParate executie
Indicate how pledge or mortgage may be Indicate how pledge or mortgage may be terminated.terminated.