Lockdown and your Deed of Sale

As we continue to try and grasp the effect of the COVID-19 pandemic, and the subsequent lockdown, on our lives and communities, it is perhaps prudent to have a look at where we stand with the performance of our obligations in terms of the deeds of sale of fixed property that we entered into prior to or during the lockdown.

A deed of sale has clauses with certain timelines for performance. These may include fixed dates and other clauses may require performance within a reasonable time after a certain event.

A common clause in a deed of sale is a suspensive clause that will suspend the operation of the contract until a certain event occurs. Typically, this would be for the purchaser to obtain finance to pay for the property or to sell his/her/its existing property by a certain date. Please revise your existing agreement relating to this clause and consider renegotiating the date on which the suspensive clause must be fulfilled, especially if this date falls within the lockdown period or shortly thereafter. Although banks are essential services the processing of new home loans may not be deemed critical services that will be delivered at this stage. If you have not been contacted by your attorney or estate agent to extend this date with an addendum to the deed of sale, please make contact so that this can be arranged.

The deed of sale has as its main objective the registration of the property in the name of the purchaser within a reasonable time frame. Registration is subject to the conveyancing attorney obtaining certain figures such as the existing bond cancellation figures and municipal rates clearance figures from the cancellation bank and the local municipality, respectively. Due to the lockdown these institutions are not functioning optimally, and it is not possible to obtain the required information, or it takes longer. SARS does correspond electronically, as the transfer duty assessment is done on e-filing, but we do expect delays in processing. However, the Deeds Office is closed, and no registrations or lodgements can take place. This and the other items referred to above influences the expectation of “registration within a reasonable time”. To compound this, we expect a backlog at all these institutions after lockdown.

With regard to the obligations in terms of the deed of sale the lockdown has seemingly created a situation where the parties may be prevented from timeous performance by events beyond his/her or its control, such as vis major or casus fortuitus, that is, an irresistible force or an unforeseeable accident. This may have created a temporary impossibility, that is an impossibility which causes a delay in performance, but does not prevent it altogether.

A force majeure (or vis major) event is an unforeseen and superior force, event or circumstance, which is beyond the control of the contracting parties, and which renders contractual performance impossible.

In Frajenron (Pty) Ltd v Metcash Trading Limited and others [2019] JOL 46364 (GJ) the court stated that not every vis major or casus fortuitous will excuse contractual non-performance. The court further stated that facts specific to a case will determine whether the non-performance should be excused. These would include the nature, terms and context of the contract, the nature of the parties, their relationship and the nature of the impossibility relied upon. No party is allowed to rely on an impossibility caused by its own act or omission. The impossibility must be absolute and not relative, and it must be applicable to everyone and not personal to the defendant, that is it must be objective. The court explained that the reasoning underlying the doctrine of impossibility of performance is that justice requires that the law excuses non-performance where not to do so would effectively be punishing a party that wants to, but cannot, perform its obligations through no fault or neglect of its own, and in conditions whereupon by exercising reasonable and prudent care ab initio it could never have foreseen that circumstances preventing it from performing would come to prevail.

As seen from the above court case, lockdown may have caused temporary delays or impossibility to perform in some instances, but we do not expect any delays in the ability of either of the parties to make payments in terms of their obligations in the deed of sale, if these payments were not subject to the occurrence of an event that is now prevented by the lockdown. Strict adherence should therefore be given to the date for the payment of the deposit and / or balance of the purchase price. We will attend to the investment of the funds in an interest-bearing account as per the stipulations in the deed of sale.

NVS Inc. remains functional and are constantly looking at ways to facilitate at least some of the conveyancing processes. Our staff are working remotely and are contactable via email. Our commitment to offering you service excellence remains unchanged and we will process and answer instructions as we normally do. Please do not hesitate to contact us if you have questions regarding your obligations in terms a deed of sale of property.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)