Know how to protect yourself from banks trying to auction your repossessed property.
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In the recent news, Lawyers representing consumers facing home repossession have applauded a recent case in the Gauteng High Court that blocks lawyers trying to side-step court procedures by selling these homes for less than their market worth.
The February 2022 ruling by Judge Fisher slapped down the practice of banks’ lawyers approaching judges in chambers in an attempt to circumvent the reserve (floor) price requirement. Until 2018, banks were frequently selling repossessed homes at well below market price, giving rise to suspicions that syndicates operating in the banks and sheriffs’ offices were engineering these sales so they could pick them up for a song. Some were sold for as little as R10, often leaving the defaulting borrower with a huge outstanding debt to the bank, and with no chance of receiving any equity built up in the home.
This followed a 2017 change in Court Rule 46A which requires the sheriff of the court to personally serve the execution notice on the debtor, and not to a neighbour or the debtor’s child as had happened in the past.
This was intended to provide the debtor with an opportunity to mount a legal defence. The change in the court rules also made provision for the court to impose a reserve price, with the sheriff reporting back to the court within five days if that price was not obtained at auction.
To circumvent this requirement, lawyers were found to be side-stepping the court by approaching judges in chambers when a reserve price was not obtained at auction to seek the judge’s blessing to sell the property at a lower price.
The February 2022 ruling by Judge Fisher slapped down the practice of banks’ lawyers approaching judges in chambers in an attempt to circumvent the reserve (floor) price requirement. Until 2018, banks were frequently selling repossessed homes at well below market price, giving rise to suspicions that syndicates operating in the banks and sheriffs’ offices were engineering these sales so they could pick them up for a song. Some were sold for as little as R10, often leaving the defaulting borrower with a huge outstanding debt to the bank, and with no chance of receiving any equity built up in the home.
This followed a 2017 change in Court Rule 46A which requires the sheriff of the court to personally serve the execution notice on the debtor, and not to a neighbour or the debtor’s child as had happened in the past.
This was intended to provide the debtor with an opportunity to mount a legal defence. The change in the court rules also made provision for the court to impose a reserve price, with the sheriff reporting back to the court within five days if that price was not obtained at auction.
To circumvent this requirement, lawyers were found to be side-stepping the court by approaching judges in chambers when a reserve price was not obtained at auction to seek the judge’s blessing to sell the property at a lower price.
