What happens when you want to mortgage a property, but it is already subject to a registered servitude? Can both rights co-exist on the same piece of land, or does a servitude prevent the land from being used as security? In this article, we look at the legality of mortgaging land that is encumbered by a servitude and explain how the two rights interact.
What is a servitude?
Before delving into the impact on mortgages, it is important to understand what a ‘servitude’ is. A servitude is a limited real right that places a restriction on movable or immovable property by restricting the rights, powers, or liberties of the owner either for the benefit of another individual or for the benefit of the owner of another immovable property. Servitudes may either be praedial or personal, depending on the nature of the servitude.
Praedial servitudes
This type of servitude is attached to the land itself and not to a person. Even if the land changes ownership, the right remains in place. An example of this is a right of way, where one property owner is allowed the right to pass over the property of another.
Personal servitude
This is a limited real right granted to a specific individual, rather than a piece of land, for example, the right to use and enjoy another’s property (known as a usufruct). Such rights cannot be transferred or sold.
Now that we know what a servitude entails, it raises the question of whether you may mortgage land subject to a personal servitude. The answer here is “Yes”, you may. The existence of a personal servitude does not prevent the registration of a mortgage bond. Both rights can co-exist in the same title deed.
Before a bond is registered over land subject to a personal servitude, the bank will generally require a waiver of preference from the holder of the servitude. This waiver ensures that the bank's rights as the bondholder have priority over the rights of the servitude holder.
Once a bond is registered, the servitude remains unaffected. It is not replaced or removed by the bond. Rather, the bond is registered subject to the existing servitude, as the registered servitude becomes a condition which is attached to the title deed of the property.
Section 69 of the Deeds Registries Act 47 of 1937 (“Act”) regulates how land subject to a personal servitude may be transferred or mortgaged. Specifically, Section 69(3) provides that the owner of the land subject to a personal servitude and the holder of that servitude may together mortgage the land to the full extent of their respective rights therein.
Furthermore, the Act provides that, in the same bond, the landowner and the servitude holder may mortgage the land or the servitude as principal debtors, respectively, while the other may mortgage the land or the servitude as surety.
As long as proper registration procedures are followed, a bond and a servitude can both validly burden the same property. There is no need to cancel or remove an existing servitude when registering a bond, given that a waiver of preference has been provided. The mortgagee accepts the servitude as part of the property’s registered real rights.
But it must be remembered that if a new servitude is registered after an existing bond, the mortgagee’s written consent is required.
Section 76(2) of the Act clearly states that no new servitude may be registered on land that is currently subject to a bond without the bondholder's written approval. This means that the bank or other mortgagee must give written approval before any new servitude can be registered over the land.
The Act also states that personal servitudes granted after a bond require the mortgagee's written consent. If such consent is not obtained, the registration is invalid and may contravene the terms of the mortgage. The termination of an existing servitude after the bond’s registration also requires the mortgagee's approval.
In conclusion, a servitude does not prevent a property from being mortgaged, meaning that servitudes and mortgage bonds can coexist on the same property. Servitudes registered before the bond remain binding, while those registered after the bond require the bondholder’s consent. These rules ensure the protection of mortgagees' rights while enabling landowners and servitude holders to fully exercise their rights.
