Divorce Settlement Agreement Relating to Your Property

The general rule in terms of the Deeds Registries Act 47 of 1937 (“the Act”) is that ownership of property is transferred to a new owner by means of a title deed being registered with the Registrar of Deeds. As a practical matter, when a marriage in community of property dissolves and one spouse acquires the property, the Act provides that the spouse’s individual full ownership of the property will be registered by way of endorsement on the title deed of the property (“the title deed”).

It is common for spouses married in community of property (“the spouses”) to dissolve their marriage and upon doing so also conclude a settlement agreement which forms part of the divorce order (“the divorce order”). The divorce order usually sets out how the patrimonial assets of the joint estate will be distributed between the spouses. In most cases, one spouse (“the former owner”) alienates his or her half share of the immovable property in the joint estate (‘the property”) to the other spouse (“the spouse acquiring the property”) whom then acquires full ownership of the property.

If the property is transferred in this manner, the Act provides an exception to the general rule in that the spouse acquiring the property need not obtain a new title deed but that the existing title deed be endorsed to reflect the spouse acquiring the property as having full ownership of the property.

The Act does not provide a time period within which the spouse acquiring the property is required to have the title deed endorsed to reflect the change in ownership. Until such time as the change in ownership has been endorsed by the Registrar of Deeds, the title deed will continue to reflect both the former owner and the spouse acquiring the property to be co-owners of the property by virtue of the marriage in community of property, despite the marriage having been dissolved by a divorce order.

This may lead the spouse acquiring the property to an undesirable position as circumstances may arise where a creditor of the former owner seeks to recover a debt and declare the former owner’s half share of the property especially executable. To settle this dilemma, it must be determined when full ownership of the property passes to the spouse acquiring the property? Is it upon the granting of the divorce order or upon the endorsement of the title deed?

Fischer v Ubomi Ushishi Trading & Others [2018] ZASCA 154 dealt with these critical questions. In this case the spouse acquiring the property did not have the title deed endorsed immediately upon the grating of the divorce order. As a result, a creditor of the former owner sought an order declaring the former owner’s half share in the property especially executable.

The spouse acquiring the property opposed the creditors claim submitting that the former owner was no longer owner of the half share of the property and that full individual ownership of the property had passed when the divorce order was granted some three years ago. Alternatively, that the personal right to full ownership preceded the creditors claim.

The court held that:

–       The agreement to alienate the half share of the property as per the court order is binding on the former owner and the spouse acquiring the property, but it does not by itself pass ownership of the half share to the spouse acquiring the property.

–       Passing of ownership of property to the spouse acquiring the property requires an act of transfer by way of endorsement on the title deed.

–       At the time the divorce order was granted, there was no other greater or competing right to defeat the spouse acquiring the property’s claim. When the creditor sought after the former owner’s half share in the property, it had already been alienated to the spouse acquiring the property. The creditors claim was preceded by the personal right in favour of the spouse acquiring the property.

This case has settled that transfer of property which has been alienated in terms of divorce order does not immediately pass to the spouse acquiring it. For ownership of the property to pass, it is a pre-requisite that the title deed be endorsed by the Registrar of Deeds. As such, if the title deed has not been endorsed, a creditor may seek an order declaring the former owner’s half share of the property especially executable.

The only defence available to the spouse acquiring the property would be to prove that the personal right to individual full ownership of the property preceded the creditors claim.

Situations of creditors seeking to declare especially executable the half share of property acquired through a divorce order must be avoided. Immediately upon the granting of the divorce order, it is advisable to make an application for the endorsement of the title deed so as to reflect the spouse acquiring the property as the full owner of the property.

Should the spouse acquiring the property fail to have the title deed endorsed immediately upon the granting of the divorce order, their right to full ownership of the property will run the risk of a creditor acquiring a half share in the property.