The rights of a home-owner have when the bank forecloses on a mortgage bond?

the house is then sold in execution at a public auction.

These auctions have often resulted in immovable properties being sold for far less than their true market value. Claims of collusion and corruption stemming from these types of transaction have been rife. In one instance, a house was sold for a mere R 10, where the municipal valuation was R81 000,00. In terms of the law, the judgement debtor continued to be indebted to the judgement creditor for the difference between what was sold at auction and the amount claimed by the judgement creditor.

their primary residency was noted and efforts were made to reduce the severe prejudice suffered by the home-owner. In an effort to provide greater protection to the home-owner under forced sale conditions, Rule 46 A was amended late in December 2017 and came into effect in 2018. In terms of Rule 46A, the court has a discretion to set a reserve price for a sale in execution.

The judgement creditor is required to properly serve the notice of the application on the home­owner who can oppose the foreclosure application. Even if the home-owner does not oppose the application he/she can make nevertheless make their own submission on the reserve price.

Once the court has set a reserve price, the auction can then be held. If the auction fails to achieve the reserve price set by the court, the matter would then be brought back to the court for it to make a decision on what price it should accept. The rules also require the Sheriff must provide its report within 5 days of the auction. In February 2022, the Gauteng High Court found four applications brought by SA Home Loans Guarantee Trust to deal with these type of cases through a "rote approach" in chambers to be an irregular step and said they must be heard in open court.

The court said that where the judge had set a reserve price in the sale in execution process which reserve price was not achieved at the public auction, it was not proper for the matter to be dealt with by the judge in chambers. The said that '1he attorney [acting for the judgment creditor] had simply sought orders authorising the sales with reduced reserve prices, or none at all".

The court said that in terms of Rule 46A, the judge is required to take into account the municipal valuation of the property as well as what amount is owed on the bond as well as rates and levies and the prejudice suffered to both the homeowner and the loan provider. The process had to be one where the rights of the home-owner had to be protected whilst at the same time allowing the judgment creditor its right to proceed with the sale in execution of the property as was its commercial right in terms of the home-owners contractual and legal obligations.

The court found that as the court papers were not personally served on the homeowner, nor was there a Sheriff's report provided within the time period allowed in terms of the rules. The court was thus not satisfied that the homeowner was made aware of the proceedings and had to be given an opportunity to be heard.

"If a property is sold at a price which is significantly below true market value, the homeowner is liable to lose the investment made in the property and still be indebted to the bank for more than is fair," the court stated. The court ruled that cases before it did not constitute applications were thus irregular steps. The court also declined to entertain the cases in chambers.

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