To foreclose or not to foreclose: Revealing the 'cracks' within the residential foreclosure process in South Africa

• Jurisdiction: South Africa
• Pages: 145-162
• Date: 27 November 2019
• Published date: 27 November 2019

TO FORECLOSE OR NOT TO FORECLOSE:

REVEALING THE ‘CRACKS’ WITHIN THE

RESIDENTIAL FORECLOSURE PROCESS IN

SOUTH AFRICA

CIRESH SINGH*

Abstract

The execution against hypothecated immovable property, also known

as foreclosure, involves a delicate balancing of mortgagor and

mortgagee rights. Section 26(1) of the Constitution of the Republic of

South Africa, 1996 (‘Constitution’) provides that ‘everyone has the

right to have access to adequate housing’. Foreclosure can be seen as an

infringement of a mortgagor’s right to have access to adequate housing.

Thus, during foreclosure a balance needs to be struck between the

mortgagor’s right to have access to adequate housing and the

mortgagee’s foreclosure rights. Unfortunately, South African law has

not provided clarity on the balancing of mortgagor and mortgagee

rights during the foreclosure process and this has resulted in

considerable inconsistency. With the exception of rule 46A of the

Uniform Rules of Court, there is no specific legislation that governs

foreclosure process. This ‘crack’ in the law is concerning given the

economic and social impact of mortgage and foreclosure. The

argument in this article is that current rules governing foreclosure are

inadequate and lack a structured framework. In particular, the current

laws do not provide any clarity as to when foreclosure against a home

is justifiable or when it is not, nor do they provide any guidelines for

courts to consider during foreclosure proceedings. This lack of clarity

has resulted in much confusion, and it is submitted that there is a need

for establishing clarity for purposes of certainty in law regarding

foreclosure. Accordingly, it will be suggested that the adoption of a

‘Foreclosure Act’ is required to establish clarity in foreclosure process

and fairly balance the interests of all parties concerned during

foreclosure against a home.

* LLB, LLM, PhD Candidate at the University of KwaZulu-Natal.

145

(2019) 31 SA Merc LJ 145

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I INTRODUCTION

In the case of Jaftha v Schoeman,

1

the Constitutional Court held that ‘to

have a home one calls one’s own, even under the most basic circum-

stances, can be a most empowering and dignifying human experience’.

2

The ‘home’ is an important element of each and every individual’s

well-being, as it is in a home where families are made, memories are

created, and where we all feel our safest. The home is an embodiment of

personhood and is a key element in self-development. In fact, it has been

said that the joy of owning a home, or just having the security of living in

a home, is fundamental to the maintenance of dignity, privacy, and

freedom.

3

The value and protection afforded to the home have been captured in

several well-known maxims, such as: ‘a man’s home is his castle’; ‘home

is where the heart is’; and ‘safe as houses’.

4

These maxims encapsulate

the ideology that a home is much more than a mere object. Most

individuals are emotionally attached to their homes and the loss of such

an asset can be severely detrimental to a person’s well-being.

5

Naturally,

it is accepted that reasonable efforts should be taken to avoid such a

deprivation, and several laws have provided protection for the home or

to the right to have access to adequate housing.

6

Foreclosure

7

against a home can be seen as an infringement of the

1

Jaftha v Schoeman & others 2005 (2) SA 140 (CC) (‘Jaftha’).

2

Jaftha para 39.

3

See Fox & Sweeney, The Idea of Home in Law: Displacement and Dispossession (Routledge

2010) 4; Fox, ‘Creditors and the concept of family home: A functional analysis’ (2005) 25(2)

Durham University Legal Studies at 201; Barros, ‘Home as a legal concept’ (2006) 46(2) Santa

Clara Law Review 255 at 256; ‘Radin, ‘Property and personhood’ (1982) 34(5) Stanford Law

Review 957.

4

See Ferguson, The Ascent of Money: A Financial History of the World (Penguin USA 2008)

241; Steyn, ‘Safe as houses? Balancing a mortgagee’s security interest with a homeowner’s

security of tenure’ (2007) 11(2) Law, Democracy and Development 101.

5

See Davidson, ‘Property and identity: Vulnerability and insecurity in the housing crisis’

(2012) 47(1) Harvard Civil Rights Liberties Law Review 119: Stern, ‘Residential protectionism

and the legal mythology of home’ (2009)107(7) Mich L Rev 1093.

6

There are various international statutes that recognise the value of the home by

providing for the right to an adequate standard of living and/or housing. These include the

International Covenant on Economic, Social and Cultural Rights (art 11(1)), the Universal

Declaration of Human Rights (art 25), the European Social Charter (art 31), and the African

Charter on Human and People’s Rights (art 16). In South Africa, s 26 of the Constitution of

the Republic of South Africa, 1996 (‘the Constitution’) provides for the right of access to

adequate housing.

7

The word ‘foreclosure’ is not def‌ined in South African law. The term foreclosure is

generic term used to describe the process in which a mortgagee enforces a mortgage

agreement by executing against the hypothecated immovable property in a case where a

mortgagor fails to meet its mortgage bond repayments. The term ‘foreclosure’ will be used in

this article to describe the process in which the mortgagor enforces its security rights against

the mortgagor’s home.

(2019) 31 SA MERC LJ

146

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