Does a court need to consider if a property was the primary residence of a deceased and his family during foreclosure proceedings against the estate?

The prevailing Covid-19 pandemic with its devastating impact on the economy and causing a dramatic loss of human lives has again shed light on foreclosure proceedings instituted by credit providers against a deceased estate. Since the Supreme Court of Appeal Judgment in the matter of Nedbank v Steyn 2016(2) SA 416 SCA, whereby the Supreme Court of Appeal found that a creditor provider’s right to institute action against a deceased estate is not limited, stayed, suspended or ousted whilst the estate is being administered, a considerable increase in “foreclosure” type of actions instituted by credit providers against deceased estates  have been noticed.

• In the unfortunate event of a person passing away, who at the time of his death had an unpaid home loan secured by a mortgage bond in favour of a credit provider, such credit provider will more often than not institute foreclosure proceedings against the deceased estate by citing the executor in his capacity nomine officio.
• Since the well-known Constitutional Court matters of Jafta v Schoeman (CCT 74/03) and Gundwana v Steko Development CC (CCT 44/10) the issue of judicial oversight by courts during foreclosure proceedings have been cast in stone. More recently the well-known matters of FirstRand Bank Limited v Folscher and ABSA Bank Limited v Mokebe, the subsequent amendments to Rule 46 and the inclusion of Rule 46A to the Uniform Rules of Court reinforced the importance of judicial oversight by the court during foreclosure proceedings. In doing so the question if a property to be foreclosed upon is a “primary residence” of the debtor became a focal point of such oversight by the court. Bearing the abovesaid in mind it then begs the question whether an executor, cited nomine officio, during foreclosure proceedings instituted against a deceased estate will be entitled to raise the issue of a “primary residence” as a consideration to be taken into account by the court in judicially considering the credit provider’s request to foreclose upon the immovable property. In other words, whether the consideration of a “primary residence” will be extended to an executor of a deceased estate in the case of foreclosure proceedings.
• On perusal of the case law and the amended rules referred to supra it should be apparent that a primary residence, forming a pivotal aspect of judicial oversight, in simple terms refers to the home of a debtor. Fisher J by way of her judgment in ABSA Bank v Njolomba and Another (2018) ZAGPJHC 94 stated the following:

“There have, of late, been salutary moves in the statutes, case law, rules and practice directives to introduce a measure of flexibility into the execution process where it is sought to execute against the home of a debtor. These laws and rules emanate from an excepted need to promote the objects of our Bill of Rights and especially the requirement that all relevant circumstances be considered before depriving a person of his or her home. They include the requirement that immovable property not be executed against without judicial oversight being brought to bear thereon and the recent introduction of Rule 46A into the Uniform Rules which requires that the court consider alternative means of satisfying the judgment debt, other than execution against the judgment debt as primary residence.”

Considering all of the abovementioned, it seems that the principle of judicial oversight by the court and as such the consideration afforded to a debtor’s primary residence during foreclosure proceedings simply relate to a judgment debtor himself and the possibility that such a judgment debtor could retain the property after having considered opportunities to maintain a mortgage loan, rehabilitation of the debt or any other means possible. Considerations such as rehabilitation of a debt for obvious reasons fall by the wayside when a judgment debtor passes away. The considerations will only be practical if the judgment debtor is still alive.

Thus, even in our current dispensation, which places a high value on the promotion of the objects of the Bill of Rights, an executor will most likely not be in a position to rely on the issue of a “primary residence” as a consideration to be taken into account by the court when foreclosure proceedings are instituted by a credit provider against the deceased estate. If that is indeed the position the deceased’s family or relatives occupying the erstwhile primary residence will not be given any thought during judicial oversight by the court in foreclosure proceedings against the estate. To date the courts have not yet pronounced on the aforesaid issue and a decision is eagerly awaited. In the meantime, the position regarding the abovesaid continues to remain uncertain.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)