The appellant municipality sold vacant immovable property to the respondent company subject to the condition that if buildings of a certain value were not erected on the property within three years from the date of sale, ownership of the property reverted to the municipality which could demand retransfer.
It was held that because the municipality did not claim retransfer within three years after the three year building obligation period ended, the debt had prescribed and the property could not be reclaimed.
Despite the wording that the property would ‘revert’ to the municipality, this was not an absolute right. It could only be enforced by proceeding against the purchaser and it was a personal right, not a real right.
Because the municipality did not institute action to reclaim the property within the usual three year prescription period, the claim for return of the property failed.
The right to claim retransfer is the ‘debt’ for the purposes of the Prescription Act and the ordinary three year prescription period runs from the date the debt arises.
Two separate cases dealt with these issues: eThekwini Municipality v Mounthaven (Pty) Ltd and Bondev Midrand (Pty) Ltd v Puling.