Extending the lessors tacit hypothec to third parties property
Date
2015-01
Journal Title
Journal ISSN
Volume Title
Publisher
Juta Law
Abstract
In case law the lessor’s tacit hypothec has been extended to cover movable property
belonging to a third party. This extension of the hypothec is reasonably well established,
but there is some uncertainty about the reasons or justifications for it. Two seemingly
contradictory explanations for the extension have been raised in the literature, namely
implied consent and estoppel. Upon closer scrutiny the former reason appears in fact to refer
to (judicially) imputed rather than implied consent. Provided that the consent is judicially
attributed to the third-party owner of the movables on the ground that she should have
been aware of the whereabouts of her property and should have taken the necessary and
reasonable steps to protect it against the landlord’s hypothec (for example by informing the
landlord of her right in the property), this seems to be an acceptable explanation for the
extension of the hypothec. The same can be said for estoppel in cases where the
requirements for estoppel are actually proved, particularly if fault (negligence) is required
and if it is proven that the owner of the movables could have disabused the landlord of the
false impression that the movables belonged to the tenant, but failed to do so. From a
policy perspective, it can therefore be said that the extension of the hypothec to movables
that belong to a third party is justified, provided that the reasons for the extension (either
imputed consent or estoppel) are understood correctly, and the accompanying requirements
are applied correctly and strictly. From a constitutional property perspective, the
deprivation of property that extension of the hypothec brings about when a third party’s
property is affected by the landlord’s right to attach and sell the movables would be
constitutionally unassailable (not arbitrary in terms of s 25(1) of the Constitution) if there
is sufficient reason for the deprivation. Provided the requirements are applied correctly and
strictly, in line with the policy explanations (imputed consent or estoppel) that explain the
extension satisfactorily, the deprivation of a third party’s property that results from
extension of the hypothec should generally speaking not be arbitrary, and thus should be
constitutionally uncontroversial. This conclusion contradicts views to the contrary that
have been expressed in the academic literature.
Description
CITATION: Van Der Merwe, A.J. & Siphuma, N.S. 2015. Extending the lessor's tacit hypothec to third parties' property. South African Law Journal, 132(3):518-546.
The original publication is available at https://journals.co.za/content/journal/ju_salj
The original publication is available at https://journals.co.za/content/journal/ju_salj
Keywords
movable property, lessors tacit hypothec, third-party owner, landlords hypothec
Citation
Van Der Merwe, A.J. & Siphuma, N.S. 2015. Extending the lessor's tacit hypothec to third parties' property. South African Law Journal, 132(3):518-546.