Homeowners gain more muscle on repossessed houses
Recent court rulings make it harder for banks to auction properties at discount prices — but also mean borrowing might get tighter
The courts have called a halt to the iniquitous practice of repossessed properties being sold at auction for far below market value, leaving consumers homeless and sometimes still saddled with bank debt after their houses are sold. Two precedent-setting recent high court judgments have sent a loud signal to the credit industry that they will no longer allow sales in execution (where a property is taken by the bank and sold at auction) without a reserve price being set by the court. Up to now banks have typically put properties on auction to be sold to the highest bidder for any price regardless of whether they recovered what was owing to them. This opened up a can of worms in which property speculators, who buddied up to sheriffs and auctioneers, were alerted to bargain properties coming onto the auction market. In one of the worst cases of its kind, the Cape Town high court earlier in December heard of Mrs M, whose husband bought the family home with a bank loan for just under R39,...
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