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Summary Security notes
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In depth security notes for A2S2 of Merc law.
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UNIT 5: SECURITY> ensure that debtors fulfil their Obligations creditors demand form of
TO can some
security .
There are forms of i
two
security
REAL 2 PERSONAL SECURITY
SECURITY
Debtor 's third undertakes fulfil the debtor 's
1 property serves as > A
party to
security for payment of debt obligation If the main debtor fails to do so .
E. G.
mortgage =
registered on
debtor 's house 1 creditor
The merely obtains a personal right against
who undertook to provide
the person security .
> Once a debt = secured by real
security the creditor obtains a , personal security = a weaker form of security
limited real right
i. If debtor fails to make
payment ,
the creditor can have
the house attached ( in the
case of )
a
mortgage
> Real security = the best form
of security
In both cases the right of security
,
= an
accessory right
i. the right is dependent on the
validity of the principal debt (
obligation ) which it secures .
'
If the principal debt =
void s the right will also be void .
Void Or
> If the right Of Security Is later on cancelled without the principal obligation being
satisfied ,
the principal Obligation will continue to exist > BUT as an unsecured obligation .
NOTE the would happen if the object of the was destroyed
; same real
security .
The National Credit Act 34 Of 2005 also all aspects of credit provision
regulates security as it
regulates .
, REAL SECURITY
C )
'
Forms of real
Security :
mortgage Bond over immovable property
l )
' '
Real
security over movable
property
liii ) of law
Security obtained by operation
The bond
accessory obligation bond confers on the
mortgage an A
mortgage creditor a
=
mortgage
-
which IS dependent on a valid principal debt . limited real right in the immovable
property which serves
,
• to ensure of the debtor 's
as
security payment mortgage -
'
A
mortgagor retains the ownership debt .
In ,
as well as the use of , the
property
1 The real right =
acquired through registration in the
'
until the mortgage bond is foreclosed Deeds Office subsequent to the parties agreement .
or cancelled - >
If the property is sold ,
the Registrar of Deeds will
not register the transfer of ownership unless the
mortgage bond is first cancelled or the
r
It is possible to register more MORTGAGE BOND OVER property is released from the
mortgage
than one over one
IMMOVABLE PROPERTY bond by written permission of the
mortgage
of (s )
property without the consent mortgagee .
( first )
the mortgagee .
A
If the debt paid , the mortgagee In terms Sec 88 Of Act
is not
may of the
insolvency ,
if the
'
foreclose on the mortgage bond and have debt origenated more than two months prior to
the mortgaged property sold in execution registration of the mortgage and the debt was
to the outstanding secured before registration of the
satisfy debt not mortgage
.
h
Mortgage regulated bonds bond , the creditor have a
pr ef erential will not
=
participation bonds = well -
established by the National credit claim , except in the case of so -
called
"
&
"
forms of investment where investors Act Its provisions have
Kllstlngs brief
lend
money to an investment comp to be complied with before
.
"÷
" "
Which in turn lends money to a a mortgage bond can be registered A Kllstlngsbrief = a
mortgage bond
3rd party .
registered simultaneously with the
>
mortgage bonds can be registered registration of transfer of land to the
over
existing debts & future buyer to secure the balance of the
debts purchase price
'
covering bonds secure future
debts
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