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MRL3701 Study Unit 18 - Claims And Their Ranking -The Order Of Ranking For Payment | Questions And Answers Latest {} A+ Graded | 100% VerifiedR251,45
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MRL3701 Study Unit 18 - Claims And Their Ranking -The Order Of Ranking For
Payment | Questions And Answers Latest {2024- 2025} A+ Graded | 100% Verified
RANKING OF CLAIMS - Estate for purposes of distribution, consists of the proceeds of both encumbered
and unencumbered assets.
Proceeds of each encumbered asset are applied to pay the claim secured by that asset.
Balance remaining after payment of secured creditors is combined with proceeds of unencumbered
assets to pay the remaining creditors.
these funds (free residue) are applied first to satisfy preferant claims (in order of preference) and
thereafter to pay the claims of concurrent creditors.
Where two or more preferent claims rank equally and the amount available is insufficient to satisfy
them in full they abate in equal proportions.
Where balance of free residue remaining after settling all preferent claims is insufficient to pay all
concurrent creditors in full, the claims of those creditors are paid proportionately.
In the rare case of a balance remaining after all concurrent claims have been paid in full, post-
sequestration interest is payable on those claims at a prescribed rate.
ENCUMBERED ASSETS - I.t.o. Section 89 (1) proceeds of each encumbered asset must be applied to the
payment of certain costs before payment of the claim secured by the asset.
Costs are:
1. cost of maintaining, conserving and realising the asset in question (auctioneers commission, sectional
title levy.water, sewerage)
2. trustees remuneration in respect of the asset
3. a proportionate share of the costs incurred by the trustee in giving security
, 4. a proportionate share of the Master's fees
5. if asset is immovable property, any tax which is, or will become due on it
a. for a period not exceeding two years immediately preceding the date of sequestration
b. a period from the date of sequestration to the date of transfer of the property
c. together with any interest or penalty which may be due on the tax.
SECURED CLAIMS - After payment of the above costs the balance of the proceeds of the encumbered
asset, including any interest earned on the price obtained for the asset must be applied to the payment
of all claims secured by the asset, in the proper order of preference.
Interest due on a claim for a period not exceeding two years immediately preceding the date of
sequestration is secured if it were part of the capital sum.
Interest from date of sequestration to date of payment is also secured.
Applicable rate is 8% per annum unless the claim bears a higher rate in terms of a stipulation in writing.
SECURED CLAIMS RANK AMONG THEMSELVES IN THE FOLLOWING ORDER - IMMOVABLE PROPERTY - 1.
enrichment lien
2. special mortgage bonds, in order in which they were registered or recorded
3. debtor and creditor lien
SECURED CLAIMS RANK AMONG THEMSELVES IN THE FOLLOWING ORDER - MOVABLE PROPERTY - 1.
enrichment lien
2. pledge
3. special notarial bonds in the order in which they were registered
4. debtor and creditor lient
5. installment agreement hupothec
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