4 South African Law and Scottish Law

This section analyses South African and Scottish law with regard to this problem, in order to see how the abovementioned legal gap is filled in other jurisdictions. The legal effect of bankruptcy on the part of the seller is similar in both these jurisdictions. A buyer cannot acquire the ownership of the immovable property, if this property forms part of the insolvent estate.1 If buyers have already paid the purchase price by then, they run the risk that they have to make do with an unsecured claim against the insolvent estate.

However, it is crucial to keep in mind that the legal gap in South African and Scottish law is much wider than the gap under Dutch law. The reason for this, is that in South Africa and Scotland, there is no rule that says that the purchase price must run through a notary’s bank account (or a similar legal practitioner, such as a conveyancer). Hence, a buyer may decide to pay the actual purchase price years ahead of the actual transfer of the immovable property.2 If the seller goes bankrupt in the meantime, there is no intermediary that reimburses the purchase price to the buyer. This particular situation (payment of the purchase price far ahead of the transfer) led to the judgments that the upcoming subsections discuss.

It must be noted that the procedure of transferring immovable property in Scotland and South Africa is to a large extent similar to the Dutch procedure. In both jurisdictions, legal practitioners draft a deed of transfer, and this deed must be registered in the land records afterwards.3