3.1.1 Introduction

This sub-section deals with the solution adopted by South African constitutional property law. In 1981, the Alienation of Land Act was enacted.1 The presumption of this Act was that vulnerable individuals would normally not be able to pay the full purchase price for land at once. Therefore, the Alienation of Land Act aims to strengthen the position of the purchaser who pays the purchase price in installments. One of the provisions that strengthens the position of the purchaser is Section 22 of the Alienation of Land Act. This provision dictates that a purchaser is entitled to receive the title to the immovable property if the transferor has gone bankrupt prior to delivery, on the condition that the purchaser has purchased the land in terms of a ‘contract’ and that the purchaser has made arrangements for the payment of all costs in connection with the transfer of land and several other costs. A ‘contract’ in terms of the Alienation of Land Act is an agreement pertaining to the sale of land in more than two installments over a period exceeding one year.

A few years ago, the scope of this protection was widened by the Constitutional Court in Sarrahwitz v Maritz N.O. and Another. In this case, Ms Sarrahwitz, an unemployed woman, bought a house from Mr. Posthumus and paid the purchase price in full, by borrowing this amount from her former employer. However, as the years progressed, no transfer of the immovable property took place. On 14 April 2006, the estate of Mr Posthumus went bankrupt and Mr Maritz was appointed as the trustee. At common law, both the immovable and the purchase price formed part of the insolvent estate. After several unsuccessful attempts, Ms Sarrahwitz made an application to the Constitutional Court. The Constitutional Court held that the distinction between purchasers that paid the purchase price in installments and ones who immediately paid the full price was not in accordance with Sections 9 (equality) and 26 (right to housing) of the Constitution. The Court therefore applied the remedy of severance and read in, at the end of the definition of a ‘contract’ in section 1 of the Alienation of Land Act, the words “including residential property paid for in full within one year of the contract, by a vulnerable purchaser”. The Court further defined a ‘vulnerable purchaser’ as “a purchaser who runs the risk of being rendered homeless by a seller’s insolvency”. Therefore, under these circumstances, the transferee may acquire the ownership of the immovable property, despite the fixation of assets of the insolvent estate.