The Western Cape High Court has ruled that Nedbank acted unreasonably by continuing with a public auction of a Mitchells Plain home after the owners secured a private buyer offering almost R250 000 more. The judgment was reported by Moneyweb on 23 September.
Judge Tandazwa Ndita noted that the bank had already obtained a default judgment, a court order that requires payment when no defence is raised, for R782 537. The property was declared specially executable, meaning it could be sold to settle the debt. A reserve price of R470 000 was set by the court at that stage.
When the auction took place in May 2025, the highest bid was R401 000, well below both the reserve price and Nedbank’s own valuation. Because the bid fell short of the reserve, the sale needed further court approval. At the same time, the homeowners had signed a private sale agreement for R650 000, with a buyer whose home loan had already been approved by Standard Bank.
The bank argued that it could not consider the private offer without supporting documentation, the sale agreement, confirmation of the loan, a breakdown of deductions and a bank guarantee. The purchaser’s bank had not yet appointed attorneys to arrange the guarantee, and the court found the homeowners’ inability to provide those documents before the auction understandable.
Judge Ndita criticised Nedbank for pressing ahead with the auction despite being aware of the private sale terms. She described the bank’s conduct as unreasonable and contrary to the spirit of the court rules that protect homeowners from “nominal disposals”. The court ordered the private sale to be completed by 15 November 2026, with transfer and payment to occur on that date. If the deadline is missed, Nedbank may advertise another public auction, which must be held at the property.
Why the 2017 rule change matters
For years, South African courts allowed homes to be sold at auction for as little as R1 000, often leaving owners with large residual debts. In 2017 the court rules were amended to let judges set a reserve or floor price, aiming to ensure that foreclosed homes fetch a price closer to market value. The present case illustrates how those safeguards can be undermined when a bank’s procedural demands delay a more favourable private sale.
Consumer legal advisor Leonard Benjamin said the judgment shows that homeowners can still act positively by arranging a private sale, but the sale must be genuine and not a sham intended to frustrate the bank. He warned that banks may still request additional documentation, but such requests must be reasonable and timely.
For small business owners and entrepreneurs, the ruling highlights the importance of acting quickly when a property is in execution and of keeping all documentation ready for a private sale. Banks, on the other hand, may need to review their internal processes to avoid similar criticism and potential delays that increase legal costs for both parties.
More coverage of foreclosure law and consumer protection can be found in the Regulatory & Policy section.
The bank’s response to the court’s queries highlighted that the higher private offer arrived “shortly before the sale in execution, but without supporting documentation”, a Nedbank spokesperson told Moneyweb, adding that the timing left “insufficient time to properly consider the offer before the sale took place”. The statement underscored the bank’s reliance on the established court-authorised process, even though the private buyer’s loan had already been approved by Standard Bank and the agreement was for R650 000, nearly R250 000 above the auction bid.
Under Rule 46 of the court rules, a judge may order the sale of a property to the highest bidder after weighing all relevant facts, and the auction conditions expressly allow the applicant to cancel or postpone the sale before it is concluded. The judgment noted that, once the bid of R401 000 fell below the R470 000 reserve, Nedbank was entitled to return to the court for further directions, and the bidder’s conditional rights could not simply be ignored.
The court also rejected the homeowners’ request to deduct R50 000 for their own legal fees from the proceeds, emphasizing that the mortgage gave Nedbank priority over that claim. The judge described the homeowners’ insistence on the deduction as unreasonable, reinforcing that any such reduction must be subordinate to the bank’s secured interest in the property.
Both parties were ordered to bear their own legal costs, and the judgment made clear that if the private sale is not completed by 15 November 2026, the court must first grant an extension before Nedbank can advertise another public auction, which must be held at the property itself.
