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Legal City :: Your Online LEGAL Partner

You and Your Rights

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last updated on 3 Aug 2008
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You and Your Rights

Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.

Deed Of Sale

An offer to purchase property

The sale or purchase of immoveable property becomes a legal transaction only after the buyer and the seller (or their agents) sign a document known as a deed (or agreement) of sale.

In terms of the Alienation of Land Act, 1981, a deed of sale must be in writing for it to be binding.

Until the signatures of both the buyer and the seller (or their agents) appear on the document, neither party will be bound by its terms - irrespective of what they have agreed on orally. Therefore, if the seller of a house has a change of mind about the purchase price and you (as the prospective buyer) still wish to acquire the property, you will have to make a new offer. If the seller accepts this new offer, you will have to draw up a new deed of sale or amend the old one.

Quick Tip - Features of a deed of sale

A deed of sale does not have to be drawn up in any particular language. Nor does it have to be based on a particular type or style of document. In fact, as far as the Alienation of Land Act, 1981, is concerned, a deed of sale could be written in Chinese on a scrap of tissue paper!

Quick Tip - Make sure it's in writing

The words that appear in a deed of sale always take priority over any oral agreement which may have been reached.

In the event of a dispute, a court will usually make a ruling based on what appears in the written document. It is unlikely to enforce terms agreed on verbally but not confirmed in writing.

It is wise to make sure that every term or condition of the sale of the property is included in the written contract or in an amendment to the original contract.

What a deed of sale should contain 

Don't sign a deed of sale unless you understand all its clauses. The main clauses that you're likely to encounter are explained here in the order in which they normally appear on the document.

Buyer, seller and property 

The buyer, seller and property must be properly identified.

BUYER If you're the buyer, your full name and present address must be supplied, together with your identity number and telephone number (if these are required for the transaction).

SELLER The document must contain the full name and address of the seller and identity number (if these are required for the transfer documents).

DESCRIPTION OF THE PROPERTY The property that is being sold must be properly described to avoid any confusion. Any ambiguity or uncertainty in the description could make the sale unenforceable. If, for example, a property is referred to as Erf No 343 in the district of Randburg and it turns out that there are a number of townships in that district, each with an Erf No 343, the property would not have been identified with sufficient accuracy. On the other hand, the courts do not insist on perfect descriptions. Generally, they are satisfied if a reasonably intelligent reader of the contract can identify the property from its written description. In the case of residential property, therefore, it is usually sufficient to give the street name, the number and the suburb of the property. Other means of identifying a property include: 

  • Giving the erf number and the township - for example, Erf 343 in Randburg Extension 10; 
  • Mentioning a building by its name - if it has one - for example, Meredith Mews, or Poyntin Mansions; and 
  • Reference to its present owner - for example, the property registered in the name of George Smith in the Deeds Registry. Ensure, though, that George Smith does not have more than one property registered in his name.

The purchase price 

1. The purchase price shall be the sum of......... payable as follows: (a) A deposit of R.....in cash payable to..............(estate agent or attorney). (b) The balance to be paid by the purchaser to the seller in cash upon registration of transfer. Upon demand the purchaser shall furnish the seller with a banker's guarantee (or any other guarantee approved of by the seller).

The written contract must specify the price of the property sold, or how the price can be determined, without requiring any further or future agreement between you and the seller. If the price is specifically mentioned, for example R190000, there is no difficulty. But if the contract stipulates that the price will be negotiated between you and the seller before transfer of the property, there is no sale.

A determination of the price, for example, could be 'the price contained in the seller's advertisement in the Farmer's Weekly of 26 October 1991' or '200 per cent of the municipal valuation appearing on the municipal valuation roll'. Both of these are valid sales.

Clauses relating to the method of payment must be clearly understood. If nothing is said about the method of payment, the law will rule that payment must be made in cash at the time of transfer. However, most contracts have provisions outlining more than one different method of payment, including:

THE DEPOSIT Usually 10 per cent of the total purchase price, the deposit must be paid as soon as the seller accepts your offer (or within seven days of making it). Normally, the seller requires a deposit as an indication that you are serious about acquiring the property. If satisfied that you really want the property, the seller may dispense with the deposit altogether. Alternatively, you may be asked for a more substantial proportion of the purchase price before transfer if the seller is not convinced about your good intentions.

To protect you against the possibility of the seller absconding with your deposit, or even going insolvent, the money will be held in trust by either an estate agent or an attorney acting on behalf of the seller, until the sale has been confirmed - for example, by the granting of a bond. If you are paying a substantial deposit, try to get the seller to agree to invest it with a bank (with both parties getting a share of the interest) until the seller is entitled to the money. This arrangement will suit the seller's estate agent, whose commission usually comes out of the deposit paid by the buyer. An agent holding the entire deposit in trust will probably deduct commission before passing the balance to the seller.

Some sellers may insist on further reassurance that the buyer will pay the balance of the purchase price on transfer. Usually, a letter from a bank confirming the grant-ing of a loan will satisfy the seller.

Depending on the circumstances, a seller may require an even more formal reassurance - in the form of a guarantee by a bank or other recognised financial institution - that funds are available.

THE BALANCE OF THE PURCHASE PRICE is normally written down as being paid in cash when you take transfer of the property; - that is, when the property is formally registered in your name in the appropriate Deeds Registry.

Expiry date 

This offer expires on.....................(date) and until then is irrevocable by the purchaser.

This is the date by which the seller must decide whether or not to accept your offer. The usual period allowed is 48 hours, but could be as long as several weeks if, for example, it is necessary to obtain acceptance from several co-owners. It should be noted, however, that if the offer is irrevocable until the expiry of the stated period, it is not wise to allow a long period as you might, at the end of the period find that the seller has not accepted your offer, and because the offer was irrevocable, you have been unable to make an offer on another property which you liked.

Warning - When a contract does not appear in writing

The agreement of sale of immoveable property sold at a public auction does not have to be in writing.

In this instance, the terms of the sales agreement are set down as soon as the auctioneer reads the conditions of sale before the bidding commences. Furthermore, agreement is usually concluded when the auctioneer accepts the highest bid.

Quick Tip - Let your deposit accrue interest

If your deposit on a house is a substantial amount of money, you should make arrangements to invest it in an interest-bearing bank account until the seller becomes entitled to it. Discuss the matter with the seller and agree on what will happen to the interest.

Mortgage bond 

The sale is conditional upon a first mortgage bond of R......................being granted in principle by a recognised financial institution within................days from date of acceptance of this offer. The purchaser hereby authorises ......................(estate agent) to apply for a loan on his or her behalf on the terms, conditions and interest rate prevalent at the time.

Before you enter into an agreement of sale, you should check if your bank or recognised financial institution will grant you the necessary funds for the purchase of the property. In most cases, however, financial institutions will give no firm assurances about the availability of funds until they have had the chance to inspect the property - to see that it is of sufficient value and that the money it will lend on security of a bond over that property will be safe. (See mortgage bond.)

If, in these circumstances, you were to enter into an agreement of sale in which you agreed to the unconditional payment of the purchase price of the property against transfer, you may seriously embarrass yourself financially. For, should you be unable to raise the funds, the contract would remain binding and the seller might sue you for the balance of the purchase price against transfer.

To avoid this type of problem, most deeds of sale are made conditional upon the purchaser being able to raise from a bank or financial institution the funds to pay the seller the balance of the price owing. If the bond is not granted, the sale falls through.

Provision is also sometimes made for the seller's estate agent to attempt to raise the necessary money should the purchaser fail to do so.

Effecting transfer 

Transfer of the property shall be passed by the seller's conveyancer and shall be given and taken upon the purchaser having complied with his or her obligations due on ....... (date).

Agreement is often reached about the approximate time that transfer of the property will be taken. It is impossible to predict when transfer will be registered in the appropriate Deeds Registry and you cannot expect the seller to agree that transfer will be passed on a particular date. However, a clause is usually inserted saying that the seller undertakes to pass transfer as close as possible to a certain date.

Many deeds of sale are drawn up subject to the buyer or seller (or their agent) being able to raise a first mortgage bond from a bank or other financial institution. Reference to the words 'other financial institution' should be treated with care. This means that, should a bank refuse to grant the necessary loan, the seller's agent may be authorised to borrow the money from 'other financial institutions' on terms that might not be as favourable as those offered by a bank. It is wise, therefore, to specify which 'other financial institution' may be approached. If you don't, you could find yourself saddled with a large loan at a high rate of interest entered into on your behalf by the seller's agent.

Costs of transfer 

The purchaser shall pay all transfer costs incurred in respect of the transfer of the property, including transfer duty and the costs of this deed of sale.

It is usual, but not a fixed rule, for the buyer to undertake to pay the costs of transfer. This will include the attorney's and conveyancer's fees, state transfer duty and all other costs that are reasonably incurred in the passing of transfer. A scale of conveyancers' fees are set out in the government gazette.

Occupation and possession Occupation and/or possession of the property shall be given to the purchaser by the seller on........(date) and if the purchaser takes occupation before transfer the purchaser shall pay to the seller...........per cent per annum on the balance of the purchase price outstanding or occupational interest at the rate of R...... per month until transfer is effected.

Generally, owners of immoveable property have the right to use that property for their own purposes. (They may, of course, give up the right to occupy it if, for instance, it is let to a tenant.)

Ownership changes hands only once transfer is effected in the Deeds Registry. Most deeds of sale make provision for 'occupational interest' - where you agree that, if you take occupation before transfer, you will pay interest (usually the same as that charged by banks) on the balance of the price still owing to the seller.

It can also be written into the deed that if the seller retains possession of the property after transfer, he or she would have to pay occupational interest.

If no specific date is mentioned in the deed of sale, the seller can continue to occupy the property until he or she has received the balance of the selling price.

Rates and taxes 

The purchaser shall be liable for a pro rata share of all rates and taxes from date of occupation or possession.

This means that you will have to pay a proportional share of the annual rates on the property, calculated from the day stipulated in the agreement. If, for example, the local authority's rates year commenced on July 1 and you took occupation/possession in December, you would be liable for seven months' rates to the end of the rates year, while the seller would pay five months' rates.

Sole risk 

It is agreed that the property shall be at the sole risk of the purchaser from the date of possession.

Under common law, once the agreement of sale is concluded, the risk of damage passes to you even if the seller remains in occupation or possession of the house. However, in the interests of fairness, most standard agreements of sale stipulate that the risk only passes on possession of the property.

Therefore, even if the house is damaged by, say, fire before transfer but possession has passed to you, you will bear the loss. In fact, the seller may force you to pay the full price even if the house is in ruins. If, however, the damage is caused by the seller's negligence, because he or she did not take proper precautions to prevent the damage, the position is reversed. You should, therefore, make sure the home is properly insured when you become liable for 'sole risk'. 

Voetstoots 

The property is sold voetstoots and as it stands, the seller gives no warranty in regard to the buildings and any improvements upon the property. The seller shall not be liable for any defects in the property, either latent or patent.

Most property is sold as it stands, or voet-stoots. Under common law the seller is not liable for latent defect in goods sold. If you buy a house with obvious defects such as broken windows or cracks in the walls which would have been revealed by a reasonably careful inspection of the property, you will have no claim against the seller.

With latent defect, however, the position is different. If the house has defects such as a leaking roof or termites in the wood that are not apparent from a careful inspection, the seller is generally liable for those defects. Depending on the defect, the seller may be called upon to refund part of the purchase price or even cancel the sale.

Because of the reluctance of sellers to have to make good such defects or run the risk of having the sale cancelled, or having to refund part of the purchase price should a serious latent defect become apparent, it is usual in deeds of sale for the seller to exclude his or her common-law liability to make good such defects. This is usually done with the inclusion of a clause stating that the house is sold voetstoots or 'as is'.

If, however, the seller is aware or should reasonably have been aware of a latent defect - for example, if the roof of the house had leaked in the last rains before the sale - the seller may be liable even if a voet-stoots clause appears in the deed of sale. The seller has a duty to reveal all latent defects of which he or she is aware. However, for a claim against the seller to succeed, you would have to prove that the seller was aware of the latent defect and had intentionally failed to disclose it with the purpose of defrauding you.

Existing conditions 

The property is sold as described in the existing title deeds and is subject to all conditions, servitudes (if any) attaching thereto or referred to in the said title deeds or prior deed. The seller shall not be liable for any deficiency in extent which may be revealed on any resurvey, nor shall the seller benefit by any possible surplus.

This clause is designed to protect the seller from any discrepancy between what you (the buyer) believe is the size or extent of the property and the real extent of the property. However, because all banks or financial institutions check the title deeds of the land before granting a bond, your bank should make you aware of any discrepancy. (See servitudes.)

Commission 

The seller shall pay the agent's commission at tariff rate or as otherwise agreed from the initial payment to ............... (estate agent).

This clause is always included on a printed form presented by an estate agent to ensure that the seller pays commission. The amount is usually based on a tariff set out by the Institute of Estate Agents of South Africa. (See commission, estate agent's.)

Fixtures and fittings 

The property is sold inclusive of all existing fixtures and fittings, which the seller warrants to be his or her property and fully paid for. These, together with the following moveable appurtenances, which are specifically included, are sold voet-stoots..........(list).

Although the question of which fixtures and fittings automatically go with a house when it is sold is a frequent cause of disputes and misunderstandings, the law leaves it to the purchaser and seller to make their own arrangements.

However, where no agreement is made, the law assumes that certain items - such as electrical wiring and plumbing - are handed over with the house, and that others - such as stoves and refrigerators - are removed by the seller (except in Gauteng, Northern Province, Mpumalanga and North-West Province, where stoves are usually considered to be fixtures).

Unfortunately, there are a number of fixtures and fittings about which the law is not clear. Mention them specifically when you make your offer to purchase so that you know which items are part of the property. These items should include hanging light fittings, some electrical fittings that are plugged in, including TV aerials and air conditioners, some gas, anthracite or electric heaters, carpets and linoleum of all types, including fitted carpets and venetian blinds.

PERMANENT FIXTURES Items that are usually regarded as permanent fixtures include: 

  • Built-in extractor fans; 
  • Any part of the bathroom suite; 
  • Built-in kitchen units and cupboards; 
  • Wardrobes that have been 'purpose made' (buyers should check when making an inspection of a house to buy that cupboards are, in fact, built in); 
  • Fitted curtain rails and tracks designed to a particular shape; 
  • Fitted bookshelves; 
  • Decorative wall mirrors; 
  • Built-in kitchen appliances, including built-in stoves; and 
  • Structures in the garden with proper foundations. Always make a list of doubtful fixtures when you inspect the house and include them in the agreement of sale.

Electrical inspection 

The seller agrees to produce an Electrical Certificate of Compliance.

This means that the complete installation of the property should be inspected by a reputable contractor registered with the Electrical Contractors Association. The certificate is, according to regulations, transferable, but buyers are advised to insist on a new one if some time has passed since the original inspection was made. Your estate agent may be able to assist in procuring such an electrical contractor.

Beetle inspection certificate 

The seller undertakes at own expense to arrange for all accessible portions of the property to be inspected by a sapca (South African Pest Control Association) registered inspector, and, in the event of any infestation by wood-destroying organisms, the seller shall replace such infested timbers with pre-treated timber at his or her own cost before transfer.

This clause normally applies only to Western Cape, although other insects may be treated under similar clauses in other areas of the country, for example, inland termites may be a problem and it would be advantageous to include a similar clause to cover this type of infestation. Banks and financial institutions will, in any case, usually make the granting of a bond conditional on inspection and replacement of infested timber.

Domicilia 

It is agreed by the parties that their respective addresses set out shall be the addresses to which all notices or other documents may be sent in relation to those present.

You will usually be asked to nominate an address as your domicilium citandi et executandi, which simply means the place at which official notices in connection with the sale can be delivered to you. If you should fail to comply with any of the terms of the agreement, this is the address at which you can be sued.

Breach 

In the event of the purchaser failing to fulfil on due date any of the terms and conditions of this deed of sale, the seller or the seller's agent shall have the right either to: (a) Cancel the sale by registered letter addressed to the purchaser, in which event the purchaser shall forfeit all monies paid to the seller or his or her agent, without prejudice to the seller's other legal rights and remedies and the right to claim damages; or (b) Claim immediate payment of the whole of the purchase price and the fulfilment of all the terms and conditions hereof.

Should you fail to fulfil any of the conditions set out in the deed of sale, the seller has the right to claim the immediate payment of the whole of the purchase price or to cancel the sale and retain any payment made in the form of a deposit. The seller is further protected as far as any other legal right to sue you is concerned, such as a further action for breach of contract.

In sub-clause (b) the seller can force you to pay the entire purchase price, although, obviously, this would be impractical if you did not have the money.

Miscellaneous provisions 

The buyer and seller can put practically any other clause into their agreement - provided it is lawful.

Precisely which clauses go in will depend on their particular circumstances at the time of the sale.

Signing the agreement of sale 

The agreement must be signed by the parties to the agreement or their agents acting on their written authority. All that is required is a mark made by the person to identify the act of entering into the contract as his or her own act.

You can sign by making a mark, or by signing your name in full, or by using your initials. Your signature can be in ink, pencil or even by means of a rubber stamp. The important point is that you should intend that the mark on the paper should be your signature.

You should sign at the end of the contract and initial each page. It is also advisable to initial on the edge of the page alongside any amendments, deletions or handwritten insertions. This will identify the agreement and may prevent disputes at a later stage. Sign with your usual signature - if it is illegible, print your name below. This is not required by law, but it is convenient.

WITNESSES No witnesses are required to enter into a valid contract for the sale of land. But if the signatures on the contract are witnessed, disputes may be avoided should one of the parties deny that a signature is his or hers. You could also ask the witnesses to initial any clauses you have cancelled. The same witness should also sign at the bottom of each page.

Buying by telegram and electronic means 

It is possible to enter into a valid deed of sale by telegram or electronic means such as telex or facsimile. If you make a written offer to which the seller responds by telegraphing acceptance, a valid sale will come into existence provided all the essential terms are in the original offer and are in the telegram. Beware, however, of phonograms.

A seller who goes to the post office to send a telegram will fill in the telegram form and sign it at the end, thereby complying with the requirement that a valid contract must be signed by the seller.

Once this is done, the original offer together with the signed copy of the telegram handed in to the post office constitute the written contract bearing the signatures of both parties.

However, should the seller dispatch a phonogram to indicate acceptance - that is, by simply telling the telegraph operator over the telephone what message needs to be sent to you - there will be no agreement bearing both signatures, and the sale will therefore be considered void.

Take care, too, if you are contracting for the sale of land by telegram, that you go to the post office yourself to dispatch the telegram. If you send someone else, give your authorisation to accept or to make an offer in writing. Alternatively, sign the telegram form yourself at home.

Disclaimer :: You and Your Rights
Although we have gone to great lengths to ensure the accuracy of the information contained in this database, it is important to remember that laws, government departments, interest and taxation rates are constantly changing. If you have a particularly difficult problem you are advised to consult a qualified legal authority. The publishers, editors and their representatives cannot accept responsibility for any act or omission arising from consulting the information contained herein.
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