Sales and Transfers

LAW AFFECTING PROPERTY SALES AND TRANSFERS

SALE CONTRACTS

In 1969 the Formalities in Respect of Contracts of Sale of Land Act was passed. This act prescribed one simple principle, that all such sale contracts had to be reduced to writing and had to be signed by both parties. Following this in 1971 a more comprehensive act was passed which was known as the Sale of Land on instalments Act which dealt with the commonly-called “deed of sale” contracts whereby a Seller sold a property to a buyer on terms and did not give immediate transfer.

The contract of sale which we know today was brought forward in 1981 and is known as the Alienation of Land Act, No.68 of 1981. It is an important law covering the sale of immovable property and it repealed both the former Acts, incorporating them as one new act. Most of the new act incorporates the Sale of Land Instalments Act and deals with terms “deed of sale” but it also prescribes the basic formalities of any contract of sale.

No property can be transferred without a contract. It is the most crucial and important document used to commence a transfer. The most essential feature of the contract is that it must be signed by the Seller and the buyer before the contract is deemed valid. There is no agreement until both parties have agreed by way of signature to the terms stipulated in the contract. Once this contract is signed it is binding. Should the contract have to be signed by two sellers and only one has signed, the buyer may pull out of the deal by way of written notice, but once both sellers have signed the contract the parties must comply with the conditions stipulated.

A very important question would be who may sign the contract of sale?

  • The Seller or Buyer in person;
  • Any Agent acting with written authority on behalf of either party. This includes a person with a power of attorney.
  • A Nominee for a company, Close Corporation or Trust to be formed. (A good contract will prescribe a certain amount of time, usually 30 days.)
  • A Representative of an existing juristic person , such as a trustee of a family trust, director of a company or a member of a close corporation

Should a trust, company, or close corporation still need to be formed it is important to realise the nominee who signs the contract will be held liable and bound in his personal capacity until formation takes place. The nominee will be held liable for any breach of contract that may take place

THE PARTIES AND THE PROPERTY

It is essential that both parties sign the contract but even more essential that the correct parties sign the contract. The following are necessary features on any contract:

  • Both the Seller and the Buyer must be clearly identified and both must sign the contact;
  • The contract must clearly state the purchase price to be paid by the buyer to the Seller;
  • The property sold to the buyer must be clearly identified.
  • The date of signature of the contract by both parties respectively must be stated on the contract.

It is essential to establish who the actual sellers of the property are. Only the following people can sign the offer to purchase on the sellers behalf:

  • The Owner of the property (or both owners, should there be more than one)
  • Any person who has acquired the property from the owner and has the right to resell it, namely the holder of the right such as any heir of deceased estate, donee, subsequent Purchaser etc.
  • A nominee duly authorised by a resolution for an existing juristic person or on behalf of a juristic person to be formed. Also a person acting under a Power of Attorney actually signed in his favour by the actual Seller.
  • A Trustee, Executor or other person duly appointed to act in his/her fiduciary capacity as such. Note: Such a person cannot sign until officially appointed.

It is crucial that the person who signed the contract sign the transferring documents. If that person is in anyway unable to sign, a power of attorney must be drafted for an appointed person to sign on their behalf.

Yet another crucial factor is that the Erf description of the property be stated correctly. You don't want to end up with the next door neighbour's house!