A Notarial Tie Agreement is a notarial deed entered into by two or more parties, in terms of which a condition is registered against the title deeds of the relevant properties, which condition provides that the properties cannot be “separately sold, leased, alienated or otherwise disposed of”. This means that the properties will be treated as one and cannot be dealt with separately from each other.
For example, you own two properties, property A and property B. A Notarial Tie Agreement registered over the properties will mean that you can’t sell, lease, or register a mortgage bond over property A without including property B. Property A and property B will need to be dealt with together and essentially treated as one property.
The notarial deed forms the agreement between the parties and is registered in favour of an enforcing party, typically the Local Authority (the City).
A Notarial Tie Agreement is usually entered into when the owner, or owners, of the properties wish to either construct a building or structure; or open a sectional title register over more than one property.
A notarial tie is an alternative to an application for consolidation. It offers more flexibility – the properties do not need to be adjacent to each other and do not need to be owned by the same party.
Should the properties be subject to a mortgage bond, the bondholder’s consent will be required for lodgment in the Deeds Office. The bondholder consents to the registration of the notarial tie over the properties free from the bond.
Circumstances in which a Notarial Tie Agreement can be entered into
- Plan approval for constructing a building or structure over more than one property
If a Notarial Tie Agreement is entered into as part of a building plan application, Section 50(1) City of Cape Town Municipal Planning By-Law (as amended) will be applicable. This provision provides that:
“A person may not construct a building or structure that straddles the boundaries of two or more contiguous land units unless the owners of the contiguous land units have either taken legal steps to the City Manager’s satisfaction, to ensure that such land units cannot be separately sold, leased, alienated or otherwise disposed of or the City has approved the consolidation of the land units.”
Section 50(4)(a) further provides that:
“no building plan may be approved in terms of section 7 of the National Building Regulations and Building Standards Act in respect of a building or structure contemplated in subsection (1), until a conveyancer provides written proof that the consolidation or the documentation arising out of the legal steps has been lodged with the Registrar of Deeds for registration.”
The Parties intention to enter into a Notarial Tie Agreement is disclosed during the plan approval process and the City is kept up to date on the progress of the registration of the Notarial Tie Agreement.
While the above by-law is only applicable to the City of Cape Town, most Municipalities have enacted similar provisions, and regard will need to be had for the by-laws relevant to the municipality in which the Properties are situated.
- Opening a sectional title register over more than one property
Where the Owner (Developer) wishes to open a sectional title register over more than one property, the provisions of Section 4(2) of the Sectional Titles Act 95 of 1986 (as amended) will be applicable. This provision provides that:
“A scheme may relate to more than one building situated, to be erected or being in the process of erection on the same piece of land, or on more than one piece of land whether contiguous or non-contiguous: Provided that the building or buildings to be divided into sections shall be situated only on one such piece of land or on two or more such contiguous pieces of land registered in the name of the same person and which have been notarially tied.”
In this instance, the Developer enters into a Notarial Tie Agreement in favour of the City, which will allow the Land Surveyor to prepare the sectional title plans over more than one property.
A Notary Public prepares a draft Notarial Tie Agreement, which is submitted to the City’s legal department for approval along with the Special Power of Attorney authorising the appearer to sign the notarial deed before the Notary Public.
The notarial deed will refer to the parties, the properties forming part of the Notarial Tie Agreement, the reason for the Notarial Tie Agreement and a provision in which the properties are tied together.
Once the City approves the notarial deed, the documents are sent to the City’s authorised representative for signature.
While the City considers the notarial documents, the draft documents are sent to the bondholder for their consent. If the bondholder is happy with the documents, they will instruct attorney’s to prepare the necessary consent for lodgment in the Deeds Office.
Once the parties have signed the notarial documents, the appointed appearer will sign the Notarial Tie Agreement in the presence the Notary Public.
It takes 4 to 6 weeks from instruction for the Notarial Tie Agreement to be registered in the Deeds Office. However, this time frame depends on the turnaround for the necessary approvals from the City and the bondholder (if applicable).
Cancelling a Notarial Tie Agreement
A Notarial Tie Agreement can be cancelled by a bilateral notarial deed entered into between all the parties (the Owners and the Enforcer) to the Notarial Tie Agreement, in terms of which the parties agree to the cancellation of the Notarial Tie Agreement.
Alternatively, a Notarial Tie Agreement can be cancelled by the Enforcer (usually the City) by a unilateral notarial deed.
The Notarial Deed of Cancellation is lodged in the Deeds Office and the title deeds of the properties will be endorsed to note the cancellation of the Notarial Tie Agreement.
If you are considering a notarial tie agreement or looking for an alternative to consolidation, feel free to contact one of our Notary’s who can provide you with information on the best way forward for your matter.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).