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ANTENUPTIAL CONTRACTS APPLY WHETHER REGISTERED OR NOT

Interesting • 14th Nov, 14

 

A situation which manifests itself from time to time is that parties conclude antenuptial contracts between themselves but these contracts are either not notarially executed or registered in the relevant Deeds Registry.  What then invariably transpires is that the conveyancer, faced with the requirements of the Deeds Registry concerned of a closed list of descriptions of the marital status of these parties, ends up registering such immovable property in both their names as if they were married in community of property.  The difficulty with this description usually does not present itself until the parties get involved in divorce proceedings.  When outsiders contemplate the title deeds bearing such descriptions they assume that both spouses own the property held thereby.

The correct position regarding such marriages was set out in Ex Parte Spinazze and Another NNO 1985(3) SA 650 (A).  In that case the Appellate Division (as it then was) held that an antenuptial contract which has not been registered or properly registered, though of no force or effect against persons not party thereto, is valid inter partes.  The Appellate Division also confirmed Ex Parte Kloosman et Uxor 1947(1) SA 342 (T) in which it was held that, Where parties have agreed informally that their marriage is to be out of community of property, that is the basis of the marriage, and all that registration does is to give notice to the world of, and to bind creditors to give effect to, a state of affairs that has existed since the inception of the marriage (p. 347).  In other cases and in text books on the matter parties to an unregistered antenuptial contract have been described as being married out of community of property inter partes, but with regard to third parties, married in community of property.  The references by some courts and academics to such marriages as being viewed as in community of property has confused the issue.  The better view, for the reasons set out below, would have been to refer to the legal relationship with third parties as entitling such third parties to treat the marriage partners as being married in community of property.

The legal construction consequent upon those judgements which is to be applied to such marriages is that the parties were married out of community of property with separate estates.  However, because they failed to give notice to third parties by having their antenuptial contract registered in the relevant Deeds Registry, creditors and other third parties in our law are entitled to treat them as if they were married in community of property.  The parties to such an unregistered antenuptial contract are then estopped from contending that the one party is not liable for the other party’s debts.  The fact that our law allows creditors and other parties to treat them as if they were married in community of property does not mean that a joint estate comes into being which then exists side by side with their separate estates.  That situation would create an impossible situation in that the one asset, such as their home, would at the same time vest in one estate (where his spouse is concerned) and in a joint estate (where creditors and third parties are concerned).

This situation can be illustrated with a situation where one spouse purchases a property as the sole purchaser.  That property would vest in his separate estate.  The other spouse does not acquire any rights in that property.  The position of her creditors is that the property-owning spouse with the unregistered antenuptial contract is now estopped from avoiding liability for the non-property-owning spouse’s debts.  The latter’s creditors would be entitled to execute against this property in liquidating his/her debts.

One of the problems that parties with unregistered antenuptial contracts face when it comes to the registration of a property purchased as referred to above, is that Deeds Registries do not accept any description of marital status except unmarried, married in community of property, married out of community of property (a registered antenuptial contract is essential) and foreign marriages.  No other descriptions have been allowed.  Registrars of Deeds have taken the position that the Deeds Registries Act 47 of 1937 (“the Act”) does not allow a different vesting.  In an attempt to follow the prescriptions of the courts and academics a description that takes into account the various legal relationships that apply, namely, between the spouses themselves and at the same time between them and third parties, was tendered, namely:

  1. N. Other

(identity number)

Married out of community of property

(but subject to the rights of third parties to treat him as

married in community of property to

M. A. Other

Identity number)

The aforesaid description gives proper expression to the legal relationships between the spouses but also protects the rights of third parties.It is clear from the above description that the property vests in the one spouse’s estate but it is also clear that third parties can execute against it, not because it forms part of a joint estate, but because neither of the spouses can object in law to such execution.

However, it would be more correct to delete the reference to the rights of third parties because the Deeds Registries Act 47 of 1937 (“the Act”) contains no express provisions dealing with such elaboration.Section 17(2)(b) of the Act imposes on the conveyancer a simple choice of describing the parties as being married in or out of community of property.The rights of third parties are a consequence of being married in or out of community of property and does not determine the marital status of the parties concerned.The Act therefore does not oblige the Registrar of Deeds to protect those third party rights by allowing an elaboration of the description of the marital status of the parties concerned or to assume any responsibility for the correctness of such elaboration.This position is in line with the current practice when a court authorizes the post-nuptial registration of an antenuptial contract.Such registrations are generally authorized subject to the rights of third parties but the antenuptial contract lodged for registration in the relevant Deeds Registry does not contain any reference to the rights of third parties.To refuse vesting in the name of the spouse who purchased the property because third parties would not be alerted to the fact that their rights could be prejudiced would, in the circumstances, be highly inconsistent.

A further question is whether it would be competent to seek to change a currently registered title deed reflecting the erroneous description of his marital status to reflect his correct marital status, first as being married out of community of property or when he is no longer married but divorced.The issue is not what his current marital status is but that the public record reflects an erroneous description of his historic marital status and a defective vesting of ownership rights in the relevant property in his former spouse’s name, which she never acquired whether by marriage or contract.In this regard each Deeds Registry has the following twin responsibilities: to serve as the public and quasi-judicial forum in which transfers of title are accomplished by the registration of duly executed deeds and to maintain as far as practical an accurate public record of titles (Ex Parte Menzies et Uxor 1993(3) SA 799C).

As long as the incorrect description of a party’s marital status and the consequent deemed vesting in the other spouse’s name remains on a title deed, such spouse is being prevented from dealing with his property on his own, and until it is rectified, he is further prejudiced in that transfer duty implications could be severe as well.Where a spouse obtained a divorce and the court held that he, despite the incorrect description of his marital status on the title deed of his property, owned the whole property, further problems await him in persuading the South African Revenue Services (“SARS”) that no transfer duty should be payable in correcting his title deed because he did not acquire the rights to the other half of the property in the divorce proceedings, he always had them.In such an instance it would constitute “an error in the registration of the acquisition of the property” as contemplated in section 9(2)(i) of the Transfer Duty Act 40 of 1949 and that such a spouse would be entitled to an exemption certificate issued by SARS to lodge with the other documents in the relevant Deeds Registry to correct his title deed.

In an instance where a registered title deed reflects the wrong description of the marital status of a person as set out above, it would represent a mistake and such a mistake can be rectified by making an application in terms of section 4(1)(b) of the Deeds Registries Act 47 of 1937.As such a person’s spouse did not acquire any rights in the property when it was purchased, the erroneous registration in both their names did not confer any rights on her and therefore a rectification in terms of the said section would not have the effect of transferring any rights.

Such a rectification of a title deed in terms of section 4(1)(b) of the Deeds Registries Act 47 of 1937 was registered by the writer in the Deeds Registry at Cape Town with transfer duty exemption.

 

William Du Toit



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