U5 part 1 Flashcards
What is the primary purpose of providing security?
To ensure debtors fulfill their obligations, guarantee payment, and prevent creditor loss.
Name the two main forms of security.
Real security and personal security.
Define “right of security” in legal terms.
It is an accessory right, dependent on the validity of the principal debt, which terminates once the debt is paid.
Which Act regulates security in addition to common law principles?
The National Credit Act 34 of 2005.
What is a mortgage bond?
It is real security registered over immovable property to secure a debt.
What is foreclosure?
A legal process allowing a lender to recover money by selling the property if the borrower defaults.
How does Section 26 of the Constitution affect foreclosure?
It protects the right to adequate housing, preventing arbitrary property attachment and sale.
Under what condition does Section 88 of the Insolvency Act limit a creditor’s preferential claim?
If the debt originated more than two months before mortgage bond registration, unless a “kustingsbrief” is present.
What is a covering bond?
A bond securing future debts that can apply to both movable and immovable property.
Define “pledge” as a form of real security.
It is a security over a debtor’s movable property, transferred to the creditor without the right to use the property.
What is a parate executie clause?
A clause allowing immediate sale of pledged property without court approval.
What is the difference between a special notarial bond and a general notarial bond?
A special notarial bond provides a real right over specific movables, while a general notarial bond does not.
What is cession in securitatem debiti?
It involves transferring incorporeal property rights as security for debt, such as shares or claims.
What are two types of security cession?
Out-and-out cession and cession by way of pledge.
What is a tacit hypothec?
A right over lessee’s property, arising automatically when rent for immovable property is overdue.
