Resolution Trust Company Case Files File #2
Sale in execution of immovable property prior to sequestration The case relates to sales in execution of immovable property prior to sequestration but where transfer has not yet been effected. It is common cause that in terms of Section 20(1)(c) of the Insolvency Act execution of the judgement by the Sheriff is stayed and he cannot continue with registration of transfer. He is obliged to hand over the property together with any funds (i.e. a deposit or full purchase price) to the trustee. It is a general prinviple of Insolvency law that the trustee ‘steps into the shoes’ of the insolvent and acquires the ability to to enforce the insolvent’s rights against third parties. Prior to this judgement it was thought that the trustee therefore enjoyed the right to ratify and continue with a sale held in execution. However, the judgement highlighted the fact that the Sheriff (in conduction a sale in execution) merely acts as a principal. In other words, the sale is between the Sheriff (not the insolvent debtor) and purchaser. Clearly a trustee can never ‘step into the shoes’ of the Sheriff and therefore has no right to ratify and continue with the contract. of sale. Although the case deals specifically with an insolvent estate, the learned judge is of the view that it would similarly apply in the liquidation of a company or close corporation.                                                                                    
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