Ordinary people won a huge victory in the High Court in Johannesburg last week, with the ruling that repossessed homes must be sold with a reserve price in all but exceptional circumstances.
This will bring to an end the iniquitous practice of “bid-rigging” by syndicates at sale-in-execution auctions.
This resulted in repossessed homes selling for a fraction of their value – as little as R10 or R100. The court ruling came after a hard-fought legal battle by the Lungelo Lethu Human Rights Foundation, which defends people against eviction.
From now on, in Johannesburg at least (although other courts will be under pressure to apply the same standards), when banks bring legal action against defaulting clients, the money judgment and sale-in-execution order must be issued at the same time.
Only in exceptional cases will a judge not set a reserve price.
The action was challenged in courts by the banks, which argued that setting a reserve price for a property would deter potential buyers and also that the separation of the money judgment and the sale-in-execution order served as an “incentive” to clients to pay up.
Sometimes, consumers feel battered on all sides. It’s nice to know the law has still got our backs.