Frequently Asked Questions
All Your Questions Answered
Must the spouse of a Purchaser who has married in community of property sign the Offer to Purchase in order for it to be valid and binding?
In terms of the Matrimonial Property Act, either spouse can sign the Offer to Purchase for the acquisition of immovable property and in so doing, bind the joint estate. It is however preferable to obtain the signature of both spouses because the purchase binds the joint estate and the property will be transferred to the joint estate of the two spouses.
However, where Spouses are married in community of property sell their immovable property, either spouse may sign the sale agreement but the written consent of the other spouse must be obtained. Practically therefore, it is preferable If both spouses sign the Offer to Purchase together.
Does a minor selling property have to be assisted by his or her guardian/guardians when signing the Offer to Purchase?
A minor is someone who is younger than 18 years.
Yes, where a minor is sells immovable property, the assistance of both guardians is required. This also applies where the minor is registering a bond over immovable property.
Where a selling price or bond amount is less than R250 000.00, the Master of the High Court must, in addition to the guardians, consent to the transaction.
Where a selling price or bond amount is more than R250 000.00, a High Court must, in addition to the guardians, consent to the transaction.
Can you sign a Deed of Sale in a representative capacity or on behalf of another person or entity?
Section 2(1) of the Alienation of Land Act No 68 of 1981, determines that land may not be alienated unless it is contained in a written Deed of Sale signed by the parties thereto or by their agents acting on their written authority. Therefore, if X is signing an Agreement of Sale on behalf of Y, X must be authorised thereto in writing by Y to do so.
An example of such an authority would be a Power of Attorney, either General or Special.
If a Seller or a Purchaser in an Agreement of Sale is a Company, Trust, Close Corporation or some other legal entity, then estate agents should verify whether the person signing on behalf of the entity has been validly authorised to do so. Most Agreements of Sale have a clause in terms whereof the Seller and/or Purchaser signing on behalf of an entity, warrants his authority to act.
It is important to note that when trusts are selling or buying property, all the trustees are required to either sign the Deed of Sale or one of the trustees must by appointed by all the other trustees of the trust, to act on behalf of the trust, by means of entering into a resolution authorising the sale.
What legal principles determine whether a fixture or fitting is included as a part of the property sold?
The Law states that unless otherwise agreed, all fixtures and fittings form part of the property and may not be removed by the Seller. Sometimes though there is a dispute whether a certain item is a fixture or not. Over years many court cases have been reported with regard to fixtures and fittings. The courts have set guidelines to determine whether something is to be regarded as permanently fixed so that the Seller may not remove aspects that have to be taken into account:
- Does the fixture/fitting accede to the property? By that we mean does it become a part of or add to the property?
- Does it relate to the purpose for which the property is to be used?
- What is the nature thereof?
- On installing it, what was the intention for it to remain or for it to be taken away with the owner in due course?
To avoid uncertainty it is at the end of the day advisable to expressly deal with the tricky fixtures and fittings in the Deed of Sale-specifically!
Where an Agreement of Sale is subject to the Purchaser obtaining a mortgage bond in the amount of R1 million and the Purchaser is granted a mortgage bond of R1,1 million, is an addendum required?
No, unless the clause is worded to the effect that a higher mortgage bond is not acceptable, which would be unusual.
However, if the Purchaser obtains a mortgage bond for only R900000.00, then an addendum is necessary and the parties must sign the addendum before the expiry date for mortgage bond approval. However if the wording of the mortgage bond clause is “…or such lesser amount as may be acceptable to the purchaser˜”, then an addendum is not necessary.
Your client intends renovating his property. He has a grumpy neighbour who he does not get on with and inquires whether the neighbour’s consent to the alterations will be required.
Firstly your client’s builder/architect will look at the zoning and building regulations and title deed conditions. Neighbour’s consent is only required if you are deviating from them with council approval.
What is involved if a Seller or Purchaser wants to have a title deed Condition removed. What is the cost? How long does it take?
There are two options available. Firstly, one can make application to the High Court for a court order that the title condition be removed. In this instance the decision rests with a judge who will hear the application and require that the applicant advertise the intended removal in the Government Gazette and local newspaper. In exceptional circumstances the court can dispense with notice if it deems appropriate. This option is more costly but the quicker option if there are no objections to the intended removal. However, if an interested party who appears to have vested rights objects, that can be fatal to the application as the court will not overrule the objection and it would then refer the applicant to the administrative channels (see below). Advertising in the local newspaper and Government Gazette is a requirement. The whole process through council can take from 6 months up to a year. If there are objections, the local authority has the power to overrule them whereas as seen above, a court is reluctant to do so.
The other option is to make application to the local authority.
Your client who has given you a mandate to sell his property is very ill and deteriorating rapidly. You get an offer on the property. What do you do?
If your client is sane and of sound mind then he can accept the offer; however, if he is mentally incapacitated then an application would have to be made to court for a curator to be appointed. Similarly, if there is a power of attorney in place in favour of a member of his family, then that family member can accept the offer to purchase on his behalf. Provided that your client, although ill, is mentally in a position to comprehend his actions and the consequences thereof. If however your client has become mentally incapacitated since giving the power of attorney, for example fallen into a coma, then an application must be made to court for a curator to be appointed and that existing power of attorney would no longer be valid.
Your Seller is sequestrated before transfer.
The transfer would be put on hold until such time as a trustee was appointed to administer the Seller’s estate.
A Purchaser signs an offer to purchase with an expiry time of 12 pm the following day. The Seller is presented with the offer and makes a counter offer to the Purchaser. Can the Seller withdraw that counter offer before it is signed by the Purchaser?
Yes, the counter offer can be withdrawn before acceptance by the Purchaser unless the expiry clause in the Deed of Sale specifically provides that any counter offer made shall be open for acceptance for “x” hours and be irrevocable until presented to the other party.
If the mortgage bond clause in the Deed of Sale does not state that the approval must be a final approval, then does an Approval in Principle suffice? In other words, is the suspensive condition as to mortgage bond approval met on the date the AIP is issued?
No, a final approval must be furnished on or before the due date.
What happens if your Purchaser’s mortgage bond is approved a day after the expiry period for mortgage bond approval? Can the Seller and Purchaser still sign an addendum accepting the Purchaser’s mortgage bond?
If a mortgage bond is not approved within the time period agreed to, in the Agreement of Sale, then the Agreement of Sale lapses and becomes null and void. Signing an addendum (extending the date by which mortgage bond approval must be obtained) after the agreement has lapsed, will be ineffectual.
The way to revive the Agreement of Sale, is for the parties to sign a Re-Instatement Addendum and to initial all the pages of the Agreement of Sale, as the Agreement will be attached to the Re-Instatement Addendum.
How far can you build from your side and street front boundary walls?
This also depends on the zoning and building regulations, and title conditions.
A property is sold subject to the Purchaser selling his property and obtaining a mortgage bond. There is a 72 hour (RAT) clause in place in favour of the Seller. The Seller receives another offer which is subject to a bond but is not subject to the Purchaser selling his property. Can the Seller accept that new offer even though it is also subject to the Purchaser getting a bond?
Should the Purchaser of the second Offer to Purchase obtained mortgage bond approval, then the Purchaser of the first Offer to Purchase must be informed by means of a Letter, that there a second offer, of which all the suspensive conditions have been met and that he has 72 hours, to also fulfil his suspensive conditions. Should the first Purchaser not fulfil his suspensive conditions, then the Seller may proceed in accepting the second offer.
Discuss whether a Seller has to provide the Purchaser with an electrical clearance certificate. How long is a clearance valid for once issued?
Depending on what is stated in the Offer to Purchase, the Seller has to provide the Purchaser with an Electrical Wiring Certificate, on date of registration.
The Electrical Wiring Certificate is usually valid for a period of 2 years.
A Purchaser makes an offer to purchase a property and the offer expires at 12 pm the following day. The Seller wants to accept the offer but is not available until 2 pm the following day. If the Purchaser verbally agrees to an extension until 2 pm, is that in order or must the extension be signed by the Purchaser?
In most Deeds of Sale there is a clause to the effect that no variations shall be of any force or effect unless reduced to writing. Therefore, it is not in order for the expiry time to be extended verbally although this is common practice by estate agents.
Banks often make the mortgage bond approval subject to certain conditions. Such as, the sale of the Purchaser’s property and cancellation of his existing bond, unlimited suretyship by a third party, building repairs etc. Is the Purchaser obliged to accept these conditions? Can it be argued that the Purchaser’s mortage bond has been approved and that the condition in the sale agreement has been met and that therefore a valid and binding Agreement of Sale come into existence?
Most Deeds of Sale specify that the agreement is subject to a mortgage bond being granted “on the bank’s normal terms and conditions. ”Normal conditions” are not defined but would include:
Where the Bank requires a suretyship by the member or director of a CC or Company that has applied for a mortgage bond; or If a 62 year old man is applying for a mortgage bond and the financial institution grants the mortgage bond but the term of the bond taking into account his age is to be 10 or 15 years; However, if a mortgage bond is granted but is made subject to a condition that the roof of the property must be replaced by the Seller before registration, (and assuming the roof problems were patent defects accepted by the Purchaser) then the Purchaser is not obliged to accept that mortgage bond from the particular bank. This in turn means that the Seller cannot claim that the condition has been met thereby keeping the purchaser bound to the agreement.
Similarly, a condition requiring that the Purchaser’s existing mortgage bond over another property be cancelled, is not a standard bond grant condition.
Suspensive Condition (mortgage bond clause) versus Ordinary Condition (deposit clause)?
The mortgage bond clause is suspensive whereas the deposit clause is not. The Agreement of Sale is conditional on the Purchaser obtaining the mortgage bond timeously. If the mortgage bond is not obtained timeously, the Agreement of Sale lapses automatically. Similarly, where an Agreement of Sale is subject to the Purchaser selling his property by a certain date and that does not happen, then the Agreement of Sale with also automatically lapse.
Compare with a cash offer. There is no waiting for a condition to be fulfilled. If the Purchaser does not then pay the deposit when required to do so, the Purchaser is in breach of contract and the Conveyancers will have to put the Purchaser to terms to perform, failing which the Seller will have an election whether to sue for specific performance or cancel the sale.
Is a guarantee from an overseas bank acceptable?
It is better to provide for the Purchaser paying the purchase price into the Conveyancer’s trust account on an agreed date or into a local account opened and a guarantee issued against the funds in that account. Guarantees are costly though and therefore it is better for the funds to be transferred straight into the Conveyancer’s trust account and interest earned form that date.
A pool pump is working on the date of sale and breaks just before transfer or a geyser bursts after sale but prior to transfer.
The property is at the Seller’s risk until possession passes which is most often on transfer. Therefore the Seller is responsible for repairing the pool pump or geyser, UNLESS the Seller can prove that what caused the problem was a latent defect that existed at the time of sale.
At what stage of the transfer process can the Seller request guarantees from the Purchaser?
This depends on the wording of the Agreement of Sale. If the Agreement specifies a date on which guarantees must be furnished, then the Purchaser is obliged to furnish guarantees by that date. The date must be clearly determinable. Compare the following: “The Purchaser shall furnish guarantees within 7 days of request by the Conveyancers.” With “The Purchaser shall furnish guarantees on 1 December or within 7 days of signature of the Agreement of Sale”.
In the first instance the date is not a set date whereas in the second and third instances it is. If a set date was not agreed upon in the Agreement of Sale then guarantees need only be furnished as and when the Conveyancers are in a position to lodge the deeds at the deeds office.