Class Action By Those Dispossessed Of Homes By SA Banks
- Those whose properties were sold for more than 10% below market value since the Constitution came into effect in 1994;
- Those whose properties were sold by the banks in a manner that was not a "last resort" as required by law;
- Those who remain in debt to the bank after their properties were sold at prices below market value; and
- Those who were overcharged on their bond fees in the course of legal action.
With all the major banks represented, the National Credit Regulator, the Minister of Constitutional Development and the South African Human Rights Commission has also been cited as respondents. The application or class action has been structured that anyone who fits within one of the classes is automatically deemed to be part of the action unless they specifically "opt out."
A legal representative for the applicants stated that the banks use the subterfuge that foreclosure or auctions are the last resort and prefer to work with the clients, rendering thousands of families homeless and deprived of a place to live.
Up to and including the year 2017, the Banks were selling houses at sheriff auctions, without a reserve price, thus leading to substantial losses and the owners still owing large sums to the bank after the auction. In 2018 , the High Courts altered the rules to include reserve prices for properties to be sold by auction by a bank. This move has been met with widespread approval, albeit the major banks have argued that it restricts their ability to reclaim all or a portion of the amount outstanding.
The application follows recent international trends, where both legislatures and judiciaries have begun to alter the approach to sales in executions and have begun to alter their bias to favour indebted consumers rather than massive regional and international banks.
Social activists have stated that the case is vital in order to restore human dignity and have stated that the banks have in the past 25 years acted in a manner contrary to the values that the Constitution of South Africa espouses. The applicants want the court to focus on the following:
"...questions of whether the witness's property was sold for substantially less than value and whether the sale was a last resort and thus whether the bank is liable to that class and to avoid issues extraneous to those issues".
It should be noted that, if the applicants succeed, it would result in a financial windfall and recompensation of their loss and a severe financial knock for the banks.