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ConCourt dismisses application in home repossessions case

Direct access to ConCourt in case against banks and home loan providers denied.

An application for direct access to the Constitutional Court (ConCourt) on behalf of some 200 people, objecting to the conduct of the nation’s largest banks and home loan providers in attaching and selling the homes of defaulting debtors at prices below market value, has been dismissed.

The application – filed in August – sought to bypass the Magistrates Court, High Court and Supreme Court of Appeal and go directly to the Constitutional Court on the basis that a case was being made on behalf of the country as a whole and as the case was being brought by people who are “exceptionally poor” and have been made “even poorer by the unconstitutional action of banks”.

Read: Banks to face R60 billion class action suit

The ConCourt has, however, dismissed the application for direct access. “The Constitutional Court has considered this application for direct access. It has concluded that the application should be dismissed with no order as to costs as it is not in the interests of justice to hear it at this stage,” it said in an order.

The application for ConCourt action also received support from Parliament’s Standing Committee of Finance and the Portfolio Committee on Trade and Industry on the Transformation of the Financial Sector, as noted in an interim report.   

Moneyweb previously reported that institutions cited in the application – Nedbank, Absa, FirstRand, Standard Bank, Changing Tides 12 (a trustee of the SA Home Loans Guarantee Trust) and Investec – stood to face a R60 billion class action suit related to the actions in attaching and selling properties at prices below market value.   

This, as the application – filed by Advocate Douglas Shaw – also sought to establish whether the country’s current law of sale in execution is constitutional. A sale in execution refers to a process by which properties are sold at a public auction held by a Sheriff of the Court in order to recover home loan repayments that are in arrears.  

The application claimed the process is unconstitutional in that it allows properties to be sold for less than their market value “which is against the rights to property and housing”, as defined by the Constitution.

At the time, the applicants also termed a previous ConCourt order that stated banks must only sell properties as a last resort, “a dead letter”, and called for an explanation of what is meant by last resort.

Read: Sale in execution a last resort, says Standard Bank

The applicants also wanted the court to order that no debt shall be reclaimable from a creditor when a property is sold for less than the value of the bond. They also wanted the court to determine that attached properties may be sold by estate agents rather than Sheriffs of the Court to maximise sales prices for the benefit of debtors and creditors. 

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The banks are not in a business of selling houses,It is the responsibility of the home owner to sell the property privately before bank can institute legal actions.

What a short sited view! If you must see how much money bank officials are making, not because of labour and innovation, but because of inside information, you will sing a different tune.

Well said.
It is a lengthy process to follow up arrears.The defaulter knows exactly where he/she stands regarding his arrears, from first month arrears to court action is taken. Then until ultimately execution sale through Sheriff of the court again the client is informed through out. No bank wants a repossessed property. It incurs costs and leads to a loss.

Every one should face the fact that we are responsible for our own actions. If we don’t honor our commitments there will be a penalty. No free lunch in this world of ours. Man up or woman up.

agree with both your views, but someone needs to consider an investigation into the shocking corruption at the Sheriff of the court – perhaps moneyweb should look into it.

Agree with both sentiments but accountability and taking responsibility for one’s action and commitments are foreign concepts in Africa and especially in SA. No respect for law or persons in SA. Culture of Corruption and entitlement and tribalism prevail. That is why SA is in such a mess.

Market value is what someone on the open market is prepared to pay for the property in question. So, how do you determine that a property is sold at auction “below market value”. Provided that the auction is properly advertised and properly conducted, the price fetched at the auction IS market value on that day. How can it be in the bank’s interest to sell for less than value? The bank wants to recover the money lent. By the time the stage of an auction is reached, that is the bank’s best chance of recovering anything.

So long as the populace does not understand that they are fodder to feed the “forests of capitalism”, they will be taken for a ride…. why did you buy that house with the banks money in the 1st place. Why didn’t you save till you had your own cash in full. why didn’t you buy a plot and build gradually. Then you bought the house for the wrong reasons, because even after it was taken you still have some shelter. So don’t cry when you lose the mansion you were enslaved to….. Pay for a bond or car only to lose it, that’s $%#@… Grow up and think before you do things.

The 200 individuals obviously don’t have the money to go to all the courts resonating before the ConCourt, but that is unfortunately how our sick, capitalistic legal system works. All South Africans should protest against this evil in society.

Perhaps if you were a producer as well as a consumer, you would not feel so vindictive against the system that keeps you alive and warm in spite of your near-worthless contribution!

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