South African court blocks banks from charging homeowners for botched repossession cases
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The Mpumalanga High Court threw out three unopposed repossession bids by Standard Bank, FirstRand and Nqaba Finance and ordered that the lenders not pass their legal costs on to customers.
The Mpumalanga High Court recently threw out three cases against three different mortgage lenders for the shoddy manner in which they attempted to repossess residential properties without the proper valuation reports required by the courts. The lenders were Standard Bank, FirstRand and Nqaba Finance.
Homeowners can take comfort from the ruling, particularly the court's instruction to the three lenders not to load the costs of the botched court applications onto the customers' home loan accounts. That has routinely happened in previous such cases and has the effect of driving distressed customers even deeper into default, making it more certain that they lose their homes.
Acting Judge HF Fourie raised concerns about the way mortgage lenders arrived in court with a draft order for default judgment already prepared for stamping. Court Rule 46A treats repossession and sale in execution as a last resort and generally requires a detailed valuation report, but valuators frequently claim they could not gain access to a property and default to a desktop or drive-by valuation that lacks the particularity courts require, such as the number of rooms, bathrooms, cupboards and doors.
The judge refused to rubber-stamp the three unopposed applications after identifying serious defects in the valuations submitted to establish reserve prices. He said it would be unfair to a consumer if an erroneous charge were billed against their account, and a copy of the ruling was ordered to be delivered to the Council of Property Valuers.
In one case involving Standard Bank, the court was presented with eight different affidavits relating to the valuation of the property, and Fourie found that not one was sufficiently compliant to be accepted. He also questioned how some affidavits appeared to have been commissioned, including one instance where the documents created the appearance that the same person had sworn affidavits on the same day in towns hundreds of kilometres apart.