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Mmabatho Dooka: Group 12

This essay will be establishing the difference between a real security right and a personal
security right, through different case law and legislation, it will particularly utilise the two-
fold test or the subtraction to dominium test established in cases to differentiate between the
two rights.

A personal security right is a right that is able to grant the creditor a personal right against
someone who is a third party, personally undertakes to settle a principal debt if the person
who is the debtor fails to settle the debt. The personal security right establishes the relation
of the performance that is due and the person through a direct legal relationship1 A real
security right grants the creditor a limited real right with regards to the property of the debtor,
a real right establishes the relations of a thing and a person through a direct legal
relationship.2 Personal security rights are governed of the laws of contract whereas the real
security rights are governed by the laws of property.3 One of the differences of real and
personal security rights rest at the Deeds Registries Act, this is because real rights can be
register with the registrar at the deeds office whilst personal rights cannot be registered.
Section 63(1) of the act states that even real rights that are not referred to in the section may
be registered and prohibits the registration of personal rights unless the condition to be
registered or right is ancillary or complimentary to a real right.4 A real right is considered to
be much stronger as a form of security in comparison to the personal security right, and the
fact that the former is able to be registered at the deeds office while the latter can only be
done so in particular terms is one problematic elements of the security rights.5

The courts utilise the two fold test to clearly differentiate between real security rights and the
personal security rights, the test is in relation to the rights or conditions and obligations that
ought to be registered; in relation to the current owner and the successors in the title deed. 6
The test looks at whether the obligation concerned is regarding the thing or if it relates to the
owner’s personal capacity; if it with the personal capacity of the owner then it is a personal
security right and cannot be registered and if it in relation to the thing then it is a real security
1
Mostert & Pope (eds.) The Principles of the Law of Property in South Africa (Oxford University
Press, 1st Edition) (2010).
2
Ibid
3
Op cite note 1.
4
Deeds Registries Act 47 of 1937 at section 63(1).
5
Op cite note 1.
6
Op cite note 1.
right and can be registered.7This test stems from the Ex Parte Geldenhuys case, which speaks
to the power, control and the rights, it is stated that the right in relation to the thing is what
should be observed over the actual right. In the case that the obligation becomes an obligation
on the land then it becomes a real right and therefore is able registered.8 In the case that an
obligation is in relation to a particular person then the right is not able to be registered and it
is a personal security right.9

The law does not recognise a closed system of real right, this means that more real right could
be determined by the courts, in the case of Lorentz case it was decided by the courts that
when the is an obligation to some else a sum of money it becomes a personal right and not a
real right as this constitutes as a subtraction to dominium and the was intention to do so and
the obligation had no effect to the owner’s physical use of the land.10 The general rule applied
is that the obligation to give someone a sum of money is never a real right the courts in the
Lorentz case held that a contract ought to have a restriction on the owner’s physical use of the
land, the must be a narrow application of the subtraction for dominium, the indention of the
parties in the case was disregarded as it was not the only criteria utilised to decide on the
issue.11 In the case the parties had an intent for the condition to be binding to the successors,
however the courts held that it would not automatically pass unless the successor had agreed
to it, the obligation was not attached to the physical use of the land and therefore it was not
registered correctly as a real right, rather it is a personal right.12 The element of the Lorentz
case that is in contrast to the Ex Parte Geldenhuys is that in the latter case the court finds that
the obligation to pay the money is a subtraction to dominium is terms of power of the owner,
even though it does not limit the owner’s enjoyment in the physical aspect of the property.
Van Der Walt critiques the Lorentz case in stating that the test is restrictive too much, the
courts have a complete disregard of the parties and that the is a suggestion that real rights are
only created in the presence of the subtraction of the use of the property.13

In the Pearly Beach Trust case, the courts decided that the obligations are binding to the
successor because the owners become terminable at the will. Unlike in Lorentz in the Pearly
Beach case the obligation to pay someone a sum of money can create a real right, if the is an

7
Op cite note 1.
8
Ex Parte Geldenhuys 1926 OPD 155.
9
Ibid.
10
Lorentz v Melle 1978 (3) SA 1044 (T).
11
Ibid.
12
Supra note 8.
13
Supra note 8.
intent to bind both the owner and the successors that are in the tittle and if it subtracts from
the owner’s right to be able to dispose the fruits of their land14 The rights affected the owner’s
right to the use and enjoyment of their property more especially with regards to alienate their
property which meant that there was a subtraction from the dominium and it was a limited
real right. The reasoning of the courts came from the fact that the monetary payment came
from the actual land and its fruits.15

In the Cape Explosive Works case, the most important thing was whether of not the
successors that are in the will are able to be held bound by a condition or obligation that are
registered in the title deed. The case states that two test are required in order to establish this,
the subtraction from dominium test and the intention test, in the intention case the courts
states that the intention of the condition or obligation must not only be meant to bind the
present owner of the property but the successor as well therefore the intention of the party’s
must be established.16 The intention of the party who had created the real right must be
looked at and the second requirement in the case is that the nature of the condition or the right
that must be registered that should result in the subtraction from dominium. This case
affirmed the Ex Parte Geldenhuys case in relation to the physical aspect of the dominium test
as the enjoyment and physical use of the property is not only limited to the physical
enjoyment of the property.17

The Ntuli article states that the courts have established different systems and principles for
moveable and immoveable property in terms of the transfer of ownership, he further states
that the extension of the subtraction from dominium to include the physical aspect is
problematic, more so to the obligation to pay a sum of money. 18He further states that he
could have expected the courts to set authority in relation to the obligations and that the
courts had reaffirmed the decision of registering only real right and not personal rights to the
Deeds office.19

In conclusion, the test should be answered in affirmative, the are some real security rights or
obligations that would registered by the owner as they would be beneficial to them or does
not affect the use and enjoyment of their property whilst the property belongs to them,
however they might not be the case with the successor of they might want to utilise the use of
14
Pearly Beach Trust v Registrar of Deeds 1990 (4) SA 614 (C).
15
Ibid.
16
Cape Explosive Works v Denel 2001 (3) SA 569 (SCA).
17
Ibid.
18
Ntusi Mbodla, 'The Test for the Registrability of Rights: What Is the Law after Cape Explosive Works' (2002).
19
Ibid.
the property and enjoy it differently to what the owner had done. As much as the intention of
the owner is part of the test according to the Cape Works case the consent of the successor
should equally be considered whether or not they intend to be bound to the obligation
registered.20 As according to Ex Parte Geldenhuys, the right in relation to the thing, which is
important is important and should be observed and prioritised over than the actual right, the
successor’s right to the thing should be observed and considered in relation to the property.21

20
Supra note 15.
21
Supra note 7.