Feature

Prescription Period for Debt From Mortgage Bonds is 30 Years

THE few details we have on Nicky Day Anderson’s story – that First National Bank, some ten years ago, auctioned off her house for an amount of around R850,000 and returned ten years later to say there was an amount of R640,000 still outstanding – got me thinking about the prescription period. Here’s her open letter to FNB’s CEO Jacques Celliers http://uncensoredopinion.co.za/open-letter-mr-jacques-celliers-fnb-ceo-please-help-me/

My immediate question was whether the debt had not prescribed? I had always thought the prescription period was three years for any debt….until I did a quick internet search and found the following, courtesy of https://www.legalwise.co.za/help-yourself/quicklaw-guides/prescription

What does prescription mean?

  • Prescription is when a debt (for example, obligation to pay money) is extinguished after a period of time.
  • South Africa has different laws which specify prescription periods, for example, the Prescription Act says that contractual and delictual debts extinguish after three years from the date when it became payable (due).
  • Prescription periods may, in certain circumstances, be delayed or interrupted.

What are the consequences of a debt that prescribed?

  • A person who is indebted (“debtor”) to another person (“creditor”) will not be liable to pay such debt after a certain period of time has passed.
  • This means that the creditor may not institute legal action against the debtor for such a debt.

When does a prescription period start to run?

  • As soon as the debt is due. A debt is due once the creditor can identify the debtor and the facts from which the debt arose.
  • If the debtor prevents the creditor from gaining knowledge of the debt (excluding debts arising from contracts), prescription runs from when the creditor gains knowledge of the existence of the debt.
  • If a debt is related to trafficking in persons, rape, and sexual exploitation of children and mentally disabled persons, the prescription period will not run during a period where the creditor cannot institute his/her claim due to his/her mental or psychological condition.

When will a prescription period be delayed?

  • A prescription period is delayed if one of the following restrictions apply:
    • creditor is a minor, insane, or under curatorship;
    • debtor is outside South Africa;
    • creditor and the debtor are married to each other;
    • creditor and the debtor are partners and the debt arose from a partnership agreement;
    • debtor is a member of the creditor, being a governing body an organisation or business;
    • debt is the object of a dispute in an arbitration; or
    • executor of a deceased estate has not yet been appointed.
  • Such a restriction will stop on, after or within one year before the normal prescription period will end. If this happens, one year will be added after the date on which the restriction stopped.
  • For example: if a debt becomes due on 15 January 2008, it will prescribe within a period of three years; the prescription period will end on 14 January 2011 (“normal prescription period”). On 15 January 2009 the debtor:
    • leaves South Africa for six months. This means that the debtor will return on 15 July 2009, which is more than one year before the normal prescription period will end. The prescription period will not be affected and will still end on 14 January 2011;
    • leaves South Africa for 18 months. This means that the debtor will return on 15 July 2010, which is within one year before the normal prescription period will end. One year must be added from the date on which the restriction has stopped and the new prescription date is 14 July 2011; or
    • leaves South Africa for three years. This means that the debtor will return on 15 January 2012, which is after the normal prescription period ended. One year must be added from the date on which the restriction has stopped and the new prescription date is 14 January 2013.

When will a prescription period be interrupted?

  • The running of prescription is interrupted by:
    • an acknowledgment of debt by a debtor, for example, if a debtor pays part of his/her debt to the creditor before prescription; or
    • a summons served by the creditor on the debtor in order to claim payment of the debt due.

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