A Mitchells Plain home valued at R699 000 attracted an auction bid of just R401 000, despite the owners having secured a private buyer willing to pay R650 000.
Nedbank’s head office in Sandton, Johannesburg. Picture: Gallo Images/Financial Mail/Russell Roberts
Nedbank acted unreasonably by proceeding with the public auction of a Cape Town home when its owners had already found a private buyer willing to pay nearly R250 000 more, the Western Cape High Court has ruled.
The house was put on public auction in May 2025 after Nedbank had earlier secured a default judgment – where no defence is raised – for R782 537.
The property was declared specially executable, meaning it could be auctioned in settlement of the outstanding debt to the bank.
A reserve price of R470 000 was set by the high court in that earlier ruling.
When auction day arrived, the highest bid received for the Mitchells Plain property was R401 000 – well below the court’s minimum selling price of R470 000 and nearly R300 000 below the bank’s own valuation.
Because the highest auction price fell below the reserve, the sale required the court’s approval before it could be completed.
Yet before the auction, the homeowners had signed a private sale agreement for R650 000 with a buyer whose home loan had been approved by Standard Bank.
Ruling
In a judgment delivered on 23 September, Judge Tandazwa Ndita found that Nedbank should have given the owners a reasonable opportunity to supply the remaining payment guarantee rather than pressing ahead with the auction.
The judge said the court rules governing auctions of people’s homes were designed to “guard against unfair disposal of people’s primary residences for nominal amounts during executions”.
This has been a bone of contention in SA for decades.
It was only in 2017 that court rules were changed to allow judges to set reserve (or floor) prices.
Prior to this, homes were being sold at auction for as little as R1 000 and even R10 in what many believe were simulated and not real sales. This left defaulting homeowners with sometimes huge debts to the banks.
The rules were changed in 2017 to protect homeowners so they could recoup something approaching market value, allowing them to benefit from any equity built up in the property and leave them less burdened by residual debt to the bank.
This dispute illustrates what can happen when a bank’s requirements for approving a private sale stand in the way of an offer that would reduce the homeowners’ debt by substantially more than an auction bid.
‘No supporting documentation’ says Nedbank
In response to questions from Moneyweb, Nedbank says the higher offer to purchase was received shortly before the sale in execution, but without supporting documentation.
“In these circumstances, there was insufficient time to properly consider the offer before the sale took place. The sale proceeded in accordance with the existing court-authorised process,” according to a Nedbank spokesperson (read the full response below).
Nedbank initially asked the court to approve the bid of R401 000, even though it was below the reserve price of R470 000. The homeowners opposed this, pointing to their existing R650 000 private sale agreement.
The difference between the two prices was R249 000.
Nedbank required several documents before it would consider halting the auction, including the sale agreement, confirmation of the buyer’s approved home loan, a breakdown of deductions from the purchase price and a bank guarantee securing payment.
The problem was that the purchaser’s bank had not yet appointed the attorneys needed to arrange the guarantee.
Judge Ndita found the homeowners’ inability to provide these documents prior to the auction understandable.
She also noted that the auction conditions allowed the bank to cancel or postpone the sale before it was concluded.
Rule 46 of the court rules empower judges, after considering all relevant facts, to order the sale of a property to the highest bidder.
The judge further criticised Nedbank’s demands for an acknowledgement of the remaining debt and additional financial information.
The bank already had a judgment against the homeowners, so there was no need for an acknowledgement of debt.
The bank later dropped those requirements.
‘Unreasonable conduct’
“I have found the conduct of the applicant in respect of its continuance with the sale in execution which resulted in the present application whereas it had been made aware of the terms of the private sale to be unreasonable and contrary to the spirit and purporse of [court rules],” reads the judgment.
The ruling was not entirely against Nedbank.
The judge agreed that, once the auction had produced a bid below the reserve price, the bank was justified in returning to court for directions. The auction bidder’s conditional rights could not simply be ignored.
She also rejected the homeowners’ attempt to deduct R50 000 for their own lawyers from the sale proceeds ahead of paying Nedbank. The mortgage gave the bank priority over that claim. Their insistence on the deduction was also unreasonable, she found.
The court directed that the R650 000 private sale be completed, with transfer and payment taking place by 15 November 2026.
If that deadline is missed, unless the court grants an extension, Nedbank may advertise another public auction. Any such auction must take place at the property itself.
Each side was ordered to pay its own legal costs.
“This shows that it is never too late for consumers to act positively by selling the property themselves [in a foreclosure situation], instead of being exposed to a far lower reserve price that will leave them with a bigger shortfall to the bank,” says consumer legal advisor Leonard Benjamin.
“But the sale must be serious and bona fide. It cannot be a sham that is intended only to frustrate the bank.
“It is also a lesson to the banks, who are wont to impose all manner of unreasonable conditions on the private sale, before they will be prepared to stop the execution. This, unfortunately, is a common occurrence.”
Nedbank responds
In response to a request for comment from Moneyweb, Nedbank replied as follows:
Nedbank notes the judgment and is considering it carefully.
It is important to read the judgment as a whole. While the court ultimately directed that the property be transferred pursuant to the private sale, it also expressly found that Nedbank was justified in bringing the application after the reserve price at the sale in execution was not achieved. The court held that, in those circumstances, it was required to determine how the execution process should proceed.
Considering the private sale, Nedbank can confirm that an offer to purchase was received shortly before the scheduled sale in execution, however with no guarantees and supporting information in place (which is the bank’s criteria to cancel an auction). In these circumstances, there was insufficient time to properly consider the offer before the sale took place. The sale proceeded in accordance with the existing court-authorised process.
The judgment further confirmed that the disputed R50 000 legal fee could not be deducted in priority to Nedbank’s secured claim under the mortgage bond.
While some reporting has focused on selected aspects of the judgment, the judgment itself makes clear that the reconsideration application was properly before the court and that judicial direction was required once the reserve price was not achieved.
We recognise that matters involving people’s homes are often difficult and distressing for those affected. Thus, repossessions are at a last resort, and we always seek to work with clients to explore available alternatives to rehabilitate prior to proceeding to a sale-in-execution.
This article was republished from Moneyweb. Read the original here.
