Can A Beneficial Owner Sell Immovable Property In South Africa?

In South Africa, questions about Beneficial Ownership have become increasingly common, especially as the Financial Intelligence Centre (FIC) and Companies and Intellectual Property Commission (CIPC) tighten reporting obligations under section 21B of the Financial Intelligence Centre Act (FIC Act).

But, a recurring point of confusion remains:

If someone is the "Beneficial Owner" of a Property can they sell it?

The short answer is; No. A Beneficial Owner cannot, in their personal capacity, sell an immovable property unless they are also the Registered Owner in the Deeds Office, or hold an appropriate legal authority to act on behalf of that registered owner.

To understand why, it helps to understand what "Beneficial Ownership" really means in law.

Legal Ownership vs. Beneficial Ownership

In South African property law, ownership is a matter of registration. The Deeds Registries Act 47 of 1937 provides that ownership of immovable property passes only upon registration of transfer in the Deeds Office.

This means that the person whose name appears on the title deed, the Registered Owner, is the one with legal capacity to sell, transfer, or encumber that Property.

By contrast, a Beneficial Owner is the person who ultimately benefits from, or exercises control over, the Property, even if it is registered in another name, such as a company, close corporation, or trust.

Examples of Beneficial Ownership

Some common examples include:

• Trusts – The Property is registered in the name of the trustees, but the beneficiaries hold beneficial rights.
• Companies – The Property is registered in the name of the company, but the shareholders are the Beneficial Owners.
• Nominee Arrangements – The Property is registered in the name of a nominee, while another person enjoys the benefits of ownership.

In all of these cases, the Beneficial Owner has an economic or equitable interest in the Property, but no direct legal title.

So, Can the Beneficial Owner sell the Property?

Not without proper authority. Only the Registered Owner (the person or entity on title) has the legal capacity to transfer or sell the Property.

A Beneficial Owner may, however, cause the Property to be sold by:

• " Authorising the Registered Owner (through a company resolution, trustee resolution, or mandate) to effect the sale, or
• " Exercising control over the Registered Owner's decision, if they are a director, trustee, or principal with such powers.

In practical terms:

• " If the Property is owned by a company, the company (via its directors) must sign the sale agreement, not the shareholder.
• " If the Property is owned by a trust, the trustees (duly authorised in terms of the trust deed and Master's Letters of Authority) must act, not the beneficiary.
• " If the Property is owned by a nominee, the nominee must sign the sale, but can only do so in accordance with the mandate granted by the Beneficial Owner.

The Deeds Office will only register a transfer from the Registered Owner to the Purchaser. If a Beneficial Owner purports to sell a Property directly, the sale would be void or unenforceable, as the Seller lacks the legal capacity to transfer ownership.

In addition, Conveyancers are legally required, under the FIC Act and Deeds Registries Act, to verify both the Registered Owner's identity and the Beneficial Ownership structure of juristic persons involved in the transaction.

This ensures transparency, prevents fraud and money laundering, and upholds the integrity of the property registration system.

The Impact of Section 21B of the FIC Act

Recent amendments to the FIC Act introduced section 21B, which compels accountable institutions (including law firms) to identify and verify the Beneficial Owners of clients before establishing a business relationship.

This means that before a transfer can proceed, the Conveyancer must determine who ultimately owns or controls the entity selling or buying the Property and whether any party is acting on behalf of another.

Failure to disclose the correct Beneficial Owner could delay the transaction or result in non-compliance penalties for both client and attorney.

The Barnard Approach

At Barnard we handle these complexities daily. Our conveyancing and commercial teams work closely to ensure that every transaction:

• " Accurately identifies both the Registered and Beneficial Owners;
• " Obtains the necessary resolutions, mandates and trust or company documents; and
• " Ensures compliance with Deeds Office and FIC requirements from the outset.

This approach protects our clients from legal challenges and delays and ensures that every property transfer stands up to scrutiny.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.