The short answer
A home loan provider can't repossess your property without trying to reach an agreement with you.
The whole question
My father bought a house in Khayelitsha. The financial services company he was working for paid 50% of the house and he was paying the outstanding amount in instalments. However, he lost his job and did not finish paying the house, and a couple of years later he received a letter about new owners that bought the house. We don't understand how it all happened. I am willing to pay the outstanding amount, we cannot let the house go as it is not easy to get a house.
The long answer
Thank you for your email about how you can keep the house your father was paying off in Khayelitsha before he lost his job and stopped paying the instalments.
In 2015 the courts found that the home-loan provider can’t foreclose on your debt and repossess your property without trying to reach an agreement with you on restructuring the loan so that you can keep your home. The home-loan provider can only get a court order to sell your house if it can prove that it has taken steps to negotiate with the home owner on restructuring the loan so that the house is not sold.
Section 129 of the National Credit Act sets out how credit providers must deal with those who are behind in payments, ie defaulting debtors. It reads: “If the consumer is in default under a credit agreement, the credit provider … may draw the default to the notice of the consumer in writing and propose that the consumer refers the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date.”
This may involve entering debt review or, if you are heavily over-indebted, debt counselling, in which case the debt counsellor may negotiate agreements with your credit providers.
From your letter it sounds as if a couple of years went by without payments being made, before your father received a letter from the municipality saying the house had been sold. If payments aren’t made, generally the bank or other financial institution will send a letter to the homeowner after one to six months, asking for a commitment to make the payments. This is where they must try to negotiate and reach agreement with the defaulting homeowner. It’s not clear from your email whether your father received such a letter or if he simply did not respond to a letter - which many people do when they can’t pay.
If payments are still not made three times in a row, the bank will go on to give 30 days notice that payments must be made, or that they will start legal proceedings. This means that they will ask the homeowner to sign a Power of Attorney in favour of the bank, to allow it to sell the property, or that he arrange to sell the property independently. If this doesn’t happen, the bank can take further legal action to blacklist him and repossess the property.
A summons from the court has to be delivered to the homeowner personally, or the court will delay the order to sell. The court does not want to grant orders to sell the house if there is a chance for the homeowner to keep the house.
Perhaps you should start off by asking Legal Aid for help to investigate how the sale could have gone on without his knowledge, and also if there is a way you can make up the back payments to keep the house.
Here are their contact details:
Legal Aid Justice Centre
Old Klipfontein Rd
021 697 5252
Answered on July 3, 2019, 9:53 a.m.