What is Rule 46A and why does it matter?

For a long time a bank could obtain default judgment against a homeowner and have the registrar of the court declare the house specially executable in the same administrative breath. Nobody looked at the arrears, the equity, the family or the alternatives. The house went to auction and was frequently sold for a fraction of its value to a buyer who had no competition.

The Constitutional Court ended that, and Rule 46A is what replaced it. It is the most important protection a homeowner in arrears has, and it is routinely wasted because the person it protects does not respond to the papers.

Where it came from

Two Constitutional Court decisions built it.

In Jaftha v Schoeman the court held that section 26 of the Constitution, the right of access to adequate housing, is engaged when a person's home is sold in execution, and that execution against a home requires judicial oversight rather than an administrative rubber stamp.

In Gundwana v Steko Development the court held that a registrar may not declare a primary residence specially executable. A judge must do it, having considered the circumstances.

Rule 46A, in operation since 22 December 2017, is the procedural machinery giving effect to that. The magistrates' courts have an equivalent rule for matters in their jurisdiction.

What it requires

A separate application. The creditor must apply to the court, on notice to you, for an order declaring the property specially executable. It is not an add-on to the summons and it is not something the registrar can grant.

Disclosure by the creditor. The application must place the relevant facts before the court, including the market value and municipal value of the property, the amounts owing on the bond, the rates and levies in arrear, and whether the property is occupied and by whom.

A judicial decision. The court must consider all relevant circumstances and decide whether execution against this home is warranted, which is a discretion exercised on the facts rather than an entitlement arising from the judgment.

Alternatives. The court must consider whether there are alternative means of satisfying the judgment debt short of selling the home. This is the heart of the rule, and it is the part that requires you to say something, because the creditor is not going to propose alternatives on your behalf.

The reserve price

This is the change that has done the most practical good.

The rule requires the court to set a reserve price, below which the property may not be sold, unless the court determines that setting one would be inappropriate. Where it sets no reserve, it must say why.

In fixing the reserve the court considers the market value, the municipal valuation, the amounts owing on the bond and in rates and levies, whether there is equity in the property, and whether it is occupied.

Before this, homes were routinely sold at auction for amounts that cleared nothing and left the owner both homeless and still in debt. A reserve price prevents the worst of that.

Where the property does not reach the reserve at the sale, the sheriff reports to the court, and the court can then reconsider the position, including lowering the reserve or authorising a sale without one. So a reserve is not a permanent floor, but it forces the question back before a judge rather than letting a sale happen at any price.

What the court weighs

Because the enquiry is about all relevant circumstances, what is put before the court is what decides it. Typically:

The size of the debt against the value of the property. Selling a R1.4 million house to recover R45 000 is the paradigm case of execution that is not warranted.

Whether the arrears can be caught up. A debtor who has resumed payments and can clear the arrears over a period is in a different position from one who has paid nothing in three years.

Alternative assets. Something else that could be attached instead.

A private sale. A homeowner who sells the property themselves almost always realises more than an auction does, which serves the creditor too.

Who lives there, including children, elderly occupants and people with disabilities.

The conduct of both parties. Whether the creditor engaged with proposals, and whether the debtor engaged at all.

Whether the statutory steps were taken, including a valid section 129 notice under the National Credit Act. Our guide on section 129 notices explains why a defective notice matters, because a creditor that skipped it has a problem before it gets to Rule 46A at all.

If you are served with one

The papers will say that an order is sought declaring the property specially executable, and they will give you a period to oppose.

Do not ignore it. This is the single most consequential sentence in this guide. An unopposed application is decided on the creditor's version alone, and a judge who is told nothing about your circumstances cannot weigh them.

File an answering affidavit. It does not need to be elegant. It needs to say who lives in the house, what your income is, what you can pay, what you have already paid, what you are proposing, and why selling the house is not the only way to deal with the debt.

Propose something concrete. "I need more time" is weak. "I can pay R4 200 a month from the first of next month and clear the arrears of R38 000 over eleven months, and here are my last three payslips" is a proposal a court can work with.

Consider a private sale, and say so. Offering to sell the property yourself within a defined period, with the proceeds going to the bond, is frequently accepted because it produces more money for everybody.

Ask for a reserve price and give the court the material to fix a sensible one: a valuation, comparable sales, the municipal value.

Check how the judgment was obtained. If it was a default judgment you never knew about, rescission may be available, and our guide on rescinding a default judgment sets out the routes.

Get help. Legal Aid South Africa is on 0800 110 110, and our free legal help page lists the university law clinics and advice offices that do this work. The cost of not opposing is your house.

What it does not do

Being clear about the limits matters, because the rule is sometimes described as though it prevents repossession.

It does not cancel the debt or the bond. It does not entitle you to stay in a house you cannot pay for indefinitely. It does not apply to property that is not a primary residence, so an investment flat or a second home does not attract the same protection. And it does not stop a sale that a court, having considered everything, decides is warranted.

What it does is force the question to be asked properly, by a judge, with your circumstances in front of them. Our guide on stopping a sale in execution deals with what remains possible once a sale has been authorised.

Worked example

This example is illustrative. A homeowner falls into arrears on a bond after losing work. The outstanding balance is R620 000, the arrears are R74 000, and the property is worth about R1.1 million. The bank obtains judgment and applies under Rule 46A to have the house declared specially executable.

If she does nothing, the application is unopposed. The court has the bank's valuation and nothing else. An order is likely to follow, and although the court will still consider a reserve price, it does so without knowing that three children live in the house or that she started a new job two months ago.

If she opposes, the picture changes. Her affidavit sets out that she has been employed since July, attaches payslips, records that she resumed the monthly instalment in August and has paid it three times, and offers R3 500 a month towards the arrears in addition to the instalment, clearing them in under two years. She points out that there is roughly R480 000 of equity in the property, that three minor children live there, and that if a sale is unavoidable she can market the house privately within six months and will almost certainly realise more than an auction would.

That is a materially different application. A court may refuse the order outright, or grant it but suspend it on condition that the payment arrangement is kept, or grant it with a reserve price fixed near market value that protects the equity.

Every one of those outcomes is better than the first, and the only thing separating them is that she filed something.