AGREEMENTS OF SALE OF IMMOVABLE PROPERTY
Category Shepstone & Wylie Attorneys
ARTICLE : AGREEMENTS OF SALE OF IMMOVABLE PROPERTY
In today's modern world where most people have access to the internet, it is easy to obtain a template of a sale agreement for immovable property. However, certain legalities have to be complied with in order for the agreement concluded between the parties to be valid and binding. If you do use one of these template agreements, you must ensure that the document complies with South African law.
In terms of Section 2 of the Alienation of Land Act (No. 68 of 1981), in order for an agreement relating to the sale of immovable property to be valid, it must be in writing and signed by both parties (ie the seller and the purchaser). If the agreement is not in writing or signed, it is null and void and, therefore, of no force and effect.
At the very least, the agreement must contain a description of the seller and the purchaser, a description of the property being sold as well as the purchase price. These are known as the essential terms of the agreement.
But that is not the end of the matter. Additional terms which are material to the sale must also be recorded in the agreement. These material terms are not easy to define but one must bear in mind that if a material term has not been finally agreed upon and is left open for further negotiations, there is no valid agreement. When dealing with the sale of immovable property, examples of material terms include the following: the manner of payment of the purchase price, the time within which the purchase price must be paid, the suspensive conditions and any other special conditions, as well as the occupation date and any occupational rental which may be payable.
The method or manner of payment of the purchase price must be clearly set out as this is a material term. In a pre-printed agreement, any options not exercised must be deleted as any defect may render the agreement void. The parties must set out if a deposit is payable and when it is payable. If the purchaser requires mortgage finance to buy the property, then the amount required as well as the date by when the finance must be approved must also be clearly set out. If these dates or time periods are not provided for in the agreement, the agreement is unenforceable.
The sale of immovable property usually includes the fixtures and fittings. These are items that are permanently attached to the structures or buildings on the land. In order to determine whether an item is a fixture and/or fitting, three aspects must be considered, namely, the intended purpose or nature of the item when it was attached, the manner in which an item was attached and the owner's intention when attaching the item. There are some ambiguous areas, namely structures such as sheds and wendy-houses, items used in conjunction with a fixture such as garage door remotes and batteries for solar power systems. Should the purchaser wish to include these types of items in the sale, the clause setting this out needs to be as specific as possible. It is difficult to enforce verbal agreements in this regard.
A suspensive condition is a material term and therefore must be in writing and clearly set out in order to avoid uncertainty. The sale being subject to the purchaser obtaining mortgage finance is a standard suspensive condition. If the event does not occur, ie the purchaser does not obtain bond approval, no agreement comes into existence.
A special condition is also a material term of the agreement and the same rules apply regarding certainty. A special condition does not suspend the agreement and it is a contractual obligation that can be enforced. An example of a special condition is where one of the parties has to do something specific relating to the property (eg the seller has to provide the purchaser with approved municipal plans). The following should be considered: who must do what, when must it be done, how it must be done (not always applicable), and what are the consequences if a party fails to perform.
The parties must also be aware of the compliance certificates that must be obtained before a transfer of property is registered and make provision for these in the sale agreement. Compliance certificates in respect of the electrical installation, electric fence installation and gas installation on the property are required in terms of the Occupational Health and Safety Act and the parties cannot contract out of this or agree to waive the requirement. A "pest" certificate certifies that the property is free from certain wood-destroying beetles and in Cape Town the seller must obtain a plumbing certificate.
It is important to make sure that all blank spaces in the agreement are filled in or crossed out. If there is no consensus between the parties in respect of something that has not been filled in, there is no agreement.
If in any doubt as to whether your agreement is valid and binding, consult with an attorney specialising in property who will point you in the right direction.
Author: Barbara van Rooyen