By Sanette Viljoen
After the last drought Peter needs money to plant maize. He has a farm and leases another farm from John. However, Peter is in arrears with his rental and he tells John that he will pay the arrears rental after the harvest. The bank wanted security before giving him a loan to plant maize and they registered a notarial bond over all Peter’s movable property. Peter gets his money and he plants the maize. However, the drought persists and the crop fails. Peter cannot pay the bank and he cannot pay John the arrears rental. John approaches an attorney and wants to attach Peter’s tractors and implements. However, the bank has a notarial bond over all Peter’s movable property. What gets precedence, the notarial bond of the bank or John’s rental interdict?
The purpose of a bond over fixed property or a notarial bond over movable property is that the mortgagee must be paid first after the executorial auction and the other creditors are paid afterwards.
However, precedence is also involved in a rental interdict. The lessor may attach the assets on the tenement. In terms of our law, each lessor automatically and without registration actions in the deeds office has precedence with regard to the movable assets on the tenement. In legal terms this is referred to as the lessor’s bond.
The question now is who is going to get precedence over Peter’s assets – the bank or the lessor? The answer to this question will in every case depend on the facts of each case. In the above-mentioned set of facts the chances are good that the lessor is going to get precedence over the bank. The reason is simply that the lessor’s right to the assets were established before that of the bank. If the tractors and farming implements are sold in execution, the lessor will first get his money and then the bank.
This is why it is of cardinal importance for a lessor to first sign off his right before a notarial bond over the movable assets is registered.