THE DEED OF SALE OF IMMOVABLE PROPERTY

The sale agreement of immovable property often takes on the form of an offer to purchase.  The purchaser makes an offer to the seller to buy the seller’s property. This offer must be made and accepted in writing and signed by both parties to comply with the Alienation of Land Act 68 of 1981. The offer to purchase becomes the sale agreement on acceptance and this contract regulates the legal relationship between the seller and purchaser regarding the sale of the property.

The contents of a particular contract depends to a large extent on the requirements of the parties.  However the type of immovable property will also determine the legal requirements and practical considerations that must be taken into account when concluding the contract. For example the terms of the sale of a townhouse will differ from that of the sale of agricultural land.

The contract has to contain the following essential terms:

• The parties (suitably identified by names, identity numbers and marital status of natural    persons or name and registration number of a legal entity);
• Description of the property;
• Purchase price.

Other material terms that should be considered may include:

• The method and time of payment of the purchase price;
• Transfer of ownership;
• When the risk of damage will be taken over by the purchaser;
• The pointing out of beacons;
• Occupation and possession date and occupational rental payable, if any;
• Improvements or alterations to the property before transfer;
• Which party will be liable for the legal costs;
• Whether the transaction will attract  VAT or Transfer Duty;
• Suspensive clauses,  for instance the requirement that the purchaser must obtain a bank             loan for the purchase price before the contract is binding;
• Clauses regulating defects, voetstoots and restrictions on the property;
• Provisions regarding compliance certificates for the electrical system, electrical fence and          gas reticulation or appliances;
• Payment of sale commission to an estate agent, if applicable;
• The breach clause;
• The cooling-off right of the purchaser, if applicable.

This is by no means a closed list of all material terms and the circumstances and/or the requirements of the parties and the property will dictate what the parties will need to include in the contract.

The parties must record all the material terms agreed upon in the contract. A contract of sale of immovable property is null and void if a material term was agreed upon, but omitted from the written contract.

Although convenient,  great care must be taken on completion of so-called pre-printed contracts before signature. Typically these contracts have blank spaces that the parties must agree upon and complete.  Should an essential term be left blank the contract is invalid.  If a material term is left blank and it is clear that the parties must still agree on the term the contract will only become binding once agreement is reached, however if consensus was reached but the space was left blank for some reason the contract is invalid. If a contract is signed without completing any of the blank spaces there is no contract even though the spaces are completed at a later stage. To avoid disputes it is advised to leave no blank spaces on the contract and if the term is not an essential term or not material to the parties that the clause must be deleted.  It is further advisable to initial next to all completed blank spaces and deletions.

All amendments of the material terms of a contract of sale of land must be reduced in writing and signed by the parties.

It is sensible to consult with a property lawyer before agreeing to any of the terms on a contract of sale of immovable property.