Author: Deandi Aletta van de Vyver
Once your estate has been sequestrated and you become insolvent – you will need to be rehabilitated in order clear your name and be able to restore your credit reputation.
One way a person’s insolvency can come to an end is by being rehabilitated. In Ex Parte Le Roux 1996 (2) SA 419 (C) the court stated that “the effect of rehabilitation of an insolvent is to restore him fully to the marketplace and, more importantly, to the obtaining of credit. The Court is accordingly as concerned with the probable future behaviour of the applicant as it is with his past”.
Can I buy property while being in the process of rehabilitation?
Section 20 of Insolvency Act 24 of 1936 (“Insolvency Act”) states that an insolvent will be divested of his estate as soon as their estate has been sequestrated. The estate of the insolvent is then vested in the Master and then later vested in the appointed trustee. Thus, before the completion of their rehabilitation process, an insolvent’s estate shall remain vested in the trustee for the purposes of realisation and distribution thereof.
With reference to section 20 of the Insolvency Act, an insolvent will need the consent of the trustee to enter into transactions and agreements. Thus, if the insolvent wishes to purchase immovable property after their sequestration, but before the completed rehabilitation process – they may do so subject to the consent of the trustee.
When an insolvent wishes to purchase immovable property with a loan from a bank to finance the transaction – a consent disclaimer will have to be lodged by the trustee at the deeds office along with the registration of the mortgage bond. The disclaimer will have to state that the trustee consents to the acquisition and passing of the mortgage bond; that the property will not form part of the insolvent estate; and that said property “may be dealt freely by the insolvent” in the future.It is definitely possible for an insolvent to acquire immovable property subject to the consent of the trustee. However, it is very seldom that a trustee will give consent to an insolvent to acquire property if they are still in the process of being rehabilitated.