Bank on it, banks: selling a house for R1,000 on auction is not OK
The original owner of the property was left with a home loan of R1m to pay off, until the ombud stepped in
The case studies the Ombudsman for Banking Services (OBS) includes in its annual report are always revealing, except when it comes to naming the banks in question, unfortunately.
The 2019 report, released by video conference on Wednesday, revealed that even though it’s been illegal since December 2017 for banks to have the homes they repossess put on auction without a reserve price, as recently as last year the OBS dealt with a case of a house selling for just R1,000, leaving the previous owner with a home loan of more than R1m to pay off.
The bank was off the hook legally, because the sale happened before December 2017, but, the OBS said, “this office could not ignore the considerations of fairness and the subsequent developments in the law. Selling the property at auction for an amount of R1,000 was neither fair nor reasonable.”
Understatement of the year. You’d battle to find a decent pair of leather shoes for R1,000.
Bear in mind that the OBS only opens formal cases after first sending the consumer’s complaint to the relevant bank for possibly settling and, as a result, many cases end there. But not this one.
The OBS recommended that the bank write off half of that outstanding balance on the home loan, “having a similar effect to that if the property was sold at reasonable market-related price at auction”, and that’s what happened. It would be good to know which bank needed the ombudsman to tell it that it wasn’t fair to do what it did in that case.
Then there’s the case the OBS called “If it seems too good to be true, it probably is”.
And given how many people succumb to the temptation to spend money that lands in their bank account, despite their knowing it had to be a mistake, it’s worth sharing.
“The complainants received an unexpected payment into their account. They did not know who had made the payment and contacted their bank to ascertain this.
“Despite numerous follow-ups, the complainants’ bank was unable to advise them who had made the payment and referred them to the paying bank. The paying bank was also unable to assist.”
So they tried, at least, but none the wiser about that money, they started spending it.
And then the inevitable happened.
“A month after the payment had been received, the paying bank contacted the complainants and advised them that the payment had been made in error, by the paying bank itself. But they couldn’t, because a good chunk of the undisclosed amount had been spent.
“The complainants had the use and enjoyment of the funds which they were not entitled to and the paying bank was legally entitled to repayment of the amount in question,” the OBS said.
But the bank was not entitled to add interest and fees, it said, which is what it wanted to do.
“The payment was made in error and the paying bank cannot benefit from its error. The bank agreed and requested the complainants to enter into a payment arrangement for the repayment of the amount that was paid in error.”
Moral of the story, according to the OBS: “If you utilise funds that were not due and payable to you, you will be held liable for the repayment of those funds.”
A cautionary tale for those of the “if-it-lands-in-my-account-it’s-mine” mindset.
I get a steady stream of e-mails from people who have mistakenly gifted a stranger, an individual or a company, and then been unable to get them to return the money.
The banks can’t get involved, so that leaves the courts, and legal action usually only happens in the case of very large amounts.
It’s easier than most people think for such mistakes to be made — transpose two digits in a bank account number and if that number is a valid account at the bank you’ve selected, the transfer will be successful.
In other cases, the payer clicks on the wrong beneficiary.
Mulalo Tshimange of Ṱhohoyandou, Limpopo, wrote to me to say he’d meant to pay his children’s school fees, but paid a company he used to do business with by mistake and, perhaps because of the lockdown, he hadn’t been able to engage with the company.
In passing, he mentioned the company used to be called Jacklin Enterprises.
I had dealings with that company’s MD, Mike Jacklin, years ago, so I e-mailed him to ask for his help, realising it was a long shot.
Jacklin told me he’d sold the business and retired, but offered to try to help.
He came back to me to say Tshimange had paid R5,680 into a Nedbank account which he had closed a while ago.
He then took the considerable trouble, bless him, to liaise with the bank and get the money transferred out of the closed account and into Tshimange’s.
“I have the money,” the father told me last week. “I can’t thank you enough for what you have done for me.”
I didn’t do much at all. It was mostly luck and a retired businessman’s willingness to put things right.
At a time when it’s never been harder for me to “fix” things for people, that story made my week.