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Does a developer’s reversionary right prescribe?

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It is a common practice for developers to insert a reversionary right in a title deed, stipulating that on the happening of a prescribed event (usually the purchaser must build within a prescribed period), ownership of the property will revert back to a previous owner. Failure on the purchaser’s side to comply with the clause gives the developer the chance to repurchase the vacant stand, in most cases at the initial sale price.

The question arises whether this is a personal or real right for the developer. It is important to determine this since a personal right prescribes within three years if not exercised.

The recent case of Bondev Midrand (Pty) Ltd v Pulling and Another, dealt with this matter and the court found that a reversionary right is a personal right and that it prescribes after three years. A section 68(1) application can therefore be done (after three years) for the removal of the reversionary right from the title deed.

This ruling is in the process of being taken on appeal by Bondev, and MC van der Berg will keep us updated.

Contact MC van der Berg Attorneys on +27 (0)12 660 6000, email info@mcvdberg.co.za or visit their website


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