Mortgage foreclosure under the constitution : property, housing and the National Credit Act

[摘要] ENGLISH ABSTRACT: The forced transfer of immovable property to enforce judgment debts by way of sale in execution has constitutional implications. Firstly, if the property is residential, section 26 of the Constitution (the housing clause) raises the question whether the current legal framework takes sufficient account of the imperative to respect people‟s access to adequate housing. Read with section 36 (the limitation clause), the requirement is that someone‟s home may only be violated if the result is proportionate based on all the relevant circumstances. Secondly, since the home qualifies as 'property for purposes of the section 25 (the property clause), the law that regulates this forced sale may not permit the arbitrary deprivation of property. In other words, it is necessary to also investigate whether the sale in execution of debtors‟ property satisfies the section 25(1) non-arbitrariness test. Therefore, the research problem that this dissertation addresses revolves around the implications of sections 25 and 26 of the Constitution for the 'normal sale-in-execution process. More specifically, the scope of the investigation is limited to forced transfers of residential property as a result of mortgage foreclosure. What makes this perspective interesting is that, in addition to the debtor‟s constitutional rights, the creditor also enjoys constitutional protection by virtue of the limited real right (the mortgage) that is registered over the debtor‟s home. This real security right is also 'property that is worthy of recognition under section 25. To the extent that the National Credit Act places obstacles in the way of creditors‟ right to enforce their debts, this interference may also amount to a deprivation of property, which must satisfy the requirements of the property clause.This dissertation shows that the traditional common law framework of mortgage foreclosure does not give full effect to debtors‟ sections 25 and 26 rights. Nevertheless, based on the subsidiarity principles, I argue that a development of the common law or the creation of unique constitutional defences is not called for. The reason for this submission is that the debt relief mechanisms of the National Credit Act already provide constitutionally appropriate relief for debtors who face the loss of their properties. The available mechanisms – including debt review, debt rearrangement and the right to reinstate credit agreements – are aimed at resolving the root of mortgage foreclosure, namely over-indebtedness. This approach will ensure that mortgage foreclosures have a constitutionally valid and proportionate effect on the rights of both parties to the mortgage relationship.

[发布机构] Stellenbosch University