Class action tackles sale prices of repossessed homes
An affidavit filed in support of the R60bn class action suit brought by Lungelo Ditokelo Human Rights Foundation against the major banks, based on a sample of about 12 000 repossessed properties, found that these properties were sold for 50-60% of their proper value, mainly through sheriff’s auctions.
The class action suit, which is being defended by the banks, seeks to recover billions in lost home equity as a result of this practice, says a Moneyweb report.
‘Our South African banks sell property about five times more than the international average as a percentage of the total number of outstanding bonds and 20 times more than best practice,’ says Garth Zietsman, a statistician who analysed data from the National Credit Regulator.
Lower valued homes were sold for about 40% of their market value, against 81% for the higher valued ones.
The evidence shows dozens of properties were sold for less than 1% of their market value. Of the 200 worst cases, all were sold for less than 17.2% of their market value.
The banks have yet to file their replies to the case.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
