Limited Real Rights and Personal Real rights
You were asked to advise Peter whether he could enforce clauses 1 and 2 against
Susan. The original contract of sale containing the clauses was between Peter and
Jannie and not between Peter and Susan. This question therefore turns on the
distinction between limited real rights and personal rights, as only real rights have
“third party” effect. Thus, you had to establish whether clauses 1 and 2 constituted
limited real rights or personal rights despite their registration.
Distinguish between limited real rights and personal
rights.
Real rights(iura in rem) - Real rights are best understood as legally “parcelled
off” aspects of an owner’s complete control over a thing. They either restrain the
owner of the property from doing something with it, or they give their holder a
right (stronger than the owner’s) to do something with or on the subject property.
Accordingly, in the applicable case law, real rights have been characterised as
“subtractions from the dominium” an owner has over a thing.
Limited Real Rights – A limited real right is a real right held by a non-owner in
the property owned by another and is thus limited (ius in re aliena). Limited real
rights are rights in the property of someone else. Limited real rights are of
particular importance due to the fact that it not only provides a right to someone
else in one’s property, but also limits the rights that the owner has in its own
property. To see whether it is a limited real right we use the subtraction from the
dominium test, if these requirements for the test is not met we see it as a
personal right.
Personal Rights (iura in personam) - If a right created between parties does
not meet both of these criteria, then it is a merely “personal” or “creditor’s” right,
which is only effective against the person to whom it applies.
- If they are real, Peter can enforce them against Susan.
- If they were only personal in nature, Peter would not be able to enforce them
against Susan.
- The fact that they are already registered does not necessarily mean they are
limited real rights, the rights must be real in their nature to be capable of
registration.
- Personal rights can sometimes be accidentally registered (or even correctly
registered with a limited real right such as in Ex parte Geldenhuys); this does
not turn them into limited real rights. They remain personal rights despite
registration. It follows that you must establish whether the rights are limited real
rights or not.
- This is done by applying the subtraction from the dominium test.
THEORETICAL APPROACHES –
, Classical theory – emphasises the difference between the objects of a real right
and a creditor’s right respectively.
- real right: right of a person in a thing
- personal right: right of a person against person
Personalist theory – based upon the ways in which real rights and creditor’s
rights are enforced.
- Way they are enforced
- Real right: absolute - against the whole world (be enforced against anyone).
- Personal right: relative – specific person (enforced against a specific person).
CASE LAW
o Ex Parte Geldenhuys
SUBTRACTION FROM THE DOMINIUM-TEST – courts developed their own
approach apart from the theoretical approaches to deal with the distinction between
real and creditor’s rights, this is known as the subtraction of the dominium test.
In Ex Parte Geldenhuys, De Villiers JP, in characterising
whether a right is a “subtraction from dominium” had this to say –
“One has to look not so much to the right, but to the correlative obligation. If that
obligation is a burden upon the land, a subtraction from the dominium, the
corresponding real right is registerable; if it is not such an obligation but merely an
obligation binding upon some person or other, the corresponding right is a personal
right, or a right in personam, and it cannot as a rule be registered.” (at page 164)
“Subtraction from the dominium” is not the only characteristic of a real right. In
addition, a right is only a real right if the person who creates it intends to bind not
only the current owner of the property concerned, but all his successors in title.
Two Requirements:
1) The intention of the person who creates the real right must be to bind not only the
present owner of the land, but also his successors in title; and
2) The nature of the right or condition must be such that the registration of it results
in a “subtraction from dominium” of the land against which it is registered.”
o Cape Explosive Works
1st condition (real right)
- The court reiterates the tests which was laid down in Ex Parte Geldenhuys.
- The test consists of 2 steps:
1) There must be a limitation of ownership entitlements? One or more of the
entitlements of ownership have to be limited from the to be a subtraction from
ownership. Was ownership limited?
Yes the owner of the land could only use the land to make weapons since
usually ownership boundless within the confines of what the law allows us
(according to labour law) severely restricted because the person can only use
the land for a very specific purpose (1st step in the test is satisfied)
, 2) Here we have to look at the contract the parties have concluded and from this
contract and also from the title deed itself when these conditions were
originally registered it clearly stated that this right namely that the land may
only be used to make weapons this right is applicable to current and future
owners of the land this makes it clear that the land is the object of the right
and not the obligation (both requirements of the test are satisfied) .
So we have a right that is real in nature and must be registered in terms of
section 63 1 of the deeds registry act and was registered therefore the right is
enforceable and binding on de nell as the subsequent owner of the land
The 2nd condition (personal right)
Is was there an intention to bind future owners of the land because if the intention is
just to bind the parties to the contract then it’s a personal right even if it is registered
because the intention of the parties was to create a personal right
Right of re- purchase which cape explosive works reserved for itself and in terms of
this condition whoever is the owner of the land if that person no longer or does not
want to use the land to make weapons that person must offer the land to cape
explosive works the condition also says that if cape explosive works does not want to
re purchase the land then the 1 st condition pertaining to the limitation of use the that
condition falls away so then the owner can decided whether he or she wants to use
the land for any purpose the deem fit or they can decide to sell it to anyone else then
but must first offer it to cape explosive works now the court rules that what we have
here is a purely a contractual right because a right of repurchase is a positive
obligation
Conclusion
This conclusion is not the courts conclusion but Marais conclusion the right of
repurchase is purely a personal right which can never be a limited real right nature
and therefore it cannot be a limited real right it will always just bind one owner of the
land so from this discussion it is clear that this right is a personal right but it was also
registered along with the first condition what now should I change it to a limited real
right? No registering in essence a personal right against the title deed of land does
not change this right to a limited real right however the conclusion the court reaches
the court says the right of repurchase is so intimately related to the 1 st condition the
1st condition does not make sense without this 2nd condition because the owner of
the land cannot free himself of the use limitation without making use of this
mechanism it is an escape mechanism that is what the second condition offers it is a
escape mechanism because it is so closely related to the first condition it may be
registered along with the 1st condition by way of exception section 63 1 of the deeds
registry act allows this exception that a personal right intimately related to a limited
real right may be registered with the limited real right if this is needed for property
understanding the limited real rights in other words if the limited real rights will not
make sense without the right this tells us that the personal right was correctly
registered and it will remain a personal right
Second question
, What about the mistakes made by the registrar of deeds with regards to these
conditions? The court tells us that this refers to the nature of our deeds registry
system the court confirms that we have a negative deeds registration system (South
Africa) which means that the correctness of the information in the register is not
guaranteed this type of systems offers more protection to the holders of the real
rights in land or owners of limited real rights what our law places more emphasis on
the retention of owners of limited real rights the negative registration system entails
in this context is the following the court tells us:
The moment a rights has been correctly registered as we saw in this context as the
conditions have been correctly registered against the land in favour of cape
explosive works the moment that these rights were properly registered they obtained
3rd party effect therefore the 2 conditions that were registered together were valid
and enforceable the fact that subsequent changes to the land through splitting of
certain parts and in others so on due to the fact to these apparinses mistakes crept
into the title deed does not affect the validly of the conditions that were registered
(does not affect the validity of the enforceability of these conditions because we have
a negative registration system where the correctness of the information in the
register is not guaranteed) because of the nature of our registration system this
means that these conditions in favour of cape explosive works even though they
were incorrectly reflected with regards to the big erf and can be enforced against de
nell so for this reason de nell cannot use the land for any reason except for the
making of weapons and if they do want to sell the land they first have to honour the
right of repurchase to cape explosive works- so this is how the subtraction from the
dominium test with regards to its 2 steps are applied in practice
Facts – Condition 1 use restricted – Condition 2 inform and repurchase • Real
agreement (did you know what you bought?/ 2nd condition not transferred/ both
rescinded on some part of the land) – Negative registration system – Omission
does not negate condition
The subtraction test consists of two factors or elements (as laid down in Cape
Explosive Works, Capex) which factors both have to be satisfied for a right to be
a limited real right, namely:
1) Does the right in question result in a subtraction from the dominium? In other
words, does it subtract/limit/diminish any of the entitlements of ownership (such as
use, exploitation, etc); and
2) Is there the intention to bind successors in title? In other words, does the creator
of the right(s) intend to bind only someone in his personal capacity or does he intend
to bind him in his capacity as owner of the land, thus also binding his successors in
title?
Pearly Beach
Facts
Pearly beach trust owns a piece of land in pearly beach and there is a condition that
it wants to register against the titled deeds of the land which the registrar to refusing
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