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Monday, 14 May 2012 08:20

Amid all the scuttle and commotion in the world of business, there remains a few things that one should appreciate, amongst them… TIME!

This is something that attorneys do not have the luxury of accumulating as one races against the clock with pen, laptop, voluminous documents and a copy of the Supreme Court Act or Rules in tow.

This can be no more evident than in the life of a particularly busy property law practitioner. My facts to my story are simple, and indeed a common occurrence in the sale of immovable property. My client was the purchaser of a house which was sold through a local realty company. At first, the transaction moved smoothly until my client sought to take earlier occupation (as allowed in the contract). Here began a series of complications relating to borer beetle infestation, non-compliance of electrical and plumbing certification, and intermittent damage to the house. It must be said that my client was fortunate not to have moved in before transfer.

Having been astute to the problems arising, my client attempted to resolve the issues through communication with the transferring attorney, realtor and the seller. I pause to add that the seller consisted of 4 individuals who had given authority to one of them to conclude the sale transaction. My client’s attempts of resolution were not successful and the seller’s ‘team’ glossed over the problems raised and was shuffling swiftly to the registration of transfer. At this point, my client decided to seek some legal counsel.

Firstly, we pressed and ensured the compliance of the requisite certification for the borer beetle, plumbing and electrical. Secondly, we delayed the date for the registration of transfer so as to resolve the issues raised. Finally, and after repeated requests, we obtained copies of the relevant authority or Power of Attorney (POA) issued to the seller’s representative. I noticed that the 3 sellers signing the POA did so in South Africa and England respectively.

What is the general law governing these instances?

Section 2 (1) of the Alienation of Land Act 68 of 1981 (the “Act”) states that “no alienation of land shall be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority”. This section expressly states that the parties must have written authority at the time of entering into the sale agreement. It then struck me that the POA signed in England was concluded after the sale agreement was signed. The question begs: does it really matter? I was enjoined to look for further answers.

Professor AJ Kerr, a leading authority on the law of contact and agency, indicates that when a statute specifically sets out that an agent buying or selling land must have written authority, and such agent fails to obtain such authority, the agreement will be void and any subsequent obtaining of the authority will not have the effect of ratifying the agreement.

This intrigued me immensely. I again looked at the Act which does provide, in Section 2 (2) thereof, for a situation where an agreement of sale of land can be concluded by an agent without the necessary written authority. This is however limited to the instance where agents or trustees conclude agreements on behalf of a corporation yet to be formed. This was not relevant to my client’s case.

In looking at case law, a review of the legal position was expressed in the matter of S A I Investments v Van der Schyff N.O. & others 1999 (3) SA 340 (N). The court held that where an agreement to sell immovable property was concluded by an agent without the prior authority, any subsequent authority obtained is not sufficient. The agreement of sale was accordingly void ab initio. This principle was confirmed by a judgment of the Supreme Court of Appeal during 2006 in the matter of B S Thorpe, S Thorpe, A E R Dixon and Another v J A Trittenwein and Another. So, it was not that the act of signing the POA was in question, but the timing of such act.

The case law and commentary on this aspect shows a clear directive: beware concluding a deed of sale for immovable property on behalf of another without obtaining a written pre-authorization to act.

Published in Property
Monday, 16 April 2012 14:21

In the recent judgment of Riverspray Lifestyle Estate (Pty) Ltd v Auby, the Court held that the agreement of sale between the parties was void because the bond was not obtained within the period stipulated in the agreement. However, of specific interest was the reminder that where parties to an agreement include a provision that the seller may extend the bond due date at his own volition, for any period of time, without notice or permission from the purchaser, such provision was void: allowing one party only to exclusively determine whether an obligation was complied with renders the term void for vagueness. 

The facts were briefly that Auby entered into an agreement with Riverspray Lifestyle Estates in terms of which he bought a unit in a sectional title scheme which would be known as Riverspray.  The scheme was still to be erected. The purchase price was R675 000 and a deposit of R15 000 was payable within three days of signature of the agreement by the purchaser.

The agreement provided, amongst other things, that: “This agreement is subject to the purchaser obtaining mortgage bond finance from a financial institution in the amount of R735 000… Such bond to be approved in principle within 21 … days of signature of this agreement by the purchaser, or in any extended period which the seller at its absolute discretion may allow without permission of the purchaser”. A further clause provided that: “Should an amount be inserted at clause … regarding the obtainment of a mortgage bond, then the agreement shall be subject to a mortgage bond of the said amount being granted to the purchaser on normal terms and conditions as laid down by a commercial bank on security of the property or any other acceptable security”.

Auby did not get a bond within the 21 day period as stipulated. When he was advised by the bank that his bond application was unsuccessful, Riverspray’s consultants managed to secure a bond in the amount of R607 500. Because this amount was less than the bond amount in the agreement, Auby signed an addendum which acknowledged the shortfall and in which he undertook to deliver a guarantee or submit a cash payment to make up the shortfall.

Sometime later Auby resiled from the agreement, claiming that it was invalid. Riverspray thereupon approached the Court for an order directing Auby to comply with his obligations in terms of the agreement and to do the necessary to take transfer of the property in his name.

The Court found in favour of Auby, holding that:

  • It was clear that the suspensive condition was not fulfilled because Auby did not manage to get a bond for R735 000 in the stipulated period and the agreement had to fail.
  • In addition, the Court noted that the clauses that purported to allow the seller to extend the bond due date indefinitely and without notice to the purchaser, were void. The reason was that it was a “general principle of our law of obligations that, when it depends entirely on the will of a party to an alleged contract to determine the extent of the prestation of either party, the purported contract is void for vagueness.”

As such, no valid agreement of sale ever came into existence. Sellers and purchasers - therefore do not include any provision in an agreement that allows the other party the exclusive right to determine whether there was compliance with the provisions of the agreement, as such an agreement could be considered void.

Published in Property
Monday, 26 March 2012 11:36

No, never!

Only one of the two taxes will be payable in a transaction. VAT takes preference over transfer duty.

The VAT payable is taken from the seller’s perspective. If the seller is registered for VAT and the property forms part of that seller’s (vendor’s) taxable supply, then VAT is payable and not transfer duty. However, if the seller is not registered for VAT or the property does not form part of that seller’s (vendor’s) taxable supply, then transfer duty will be payable.

Published in Property
Tuesday, 10 April 2012 11:33

When you register a bond over property and the Title Deed has a condition prohibiting alienation of the property without the written consent of the relevant Homeowners Association, a document containing consent to register the bond and waiving the Title Deed condition, must be obtained from the Homeowners Association and lodged at the Deeds Office.

Should this consent not be obtained and lodged with your bond at the Deeds Office, the Registrar of Deeds will not allow for registration to be effected.

Published in Property
Monday, 16 January 2012 14:00

Children owning land?

If land is donated or bequethed to children born or to be born of any person or from any marriage, or is acquired on behalf of such children, transfer of the land can be effected on behalf of such children. In such a case, the land may be registered in the name of a person to hold it in trust on behalf of the children.

Once the identities of the children have been established after their birth the Deeds Office will, upon application, endorse the title deed with their names and the title deed will thereupon be deemed to be in favour of such children, as if the transfer had originally been passed to them in person.

Published in Property
Wednesday, 05 October 2011 14:05

Did you know that the insolvency of one spouse, even in a marriage out of community of property, can affect the status of the solvent spouse? In terms of Section 21(1) of the Insolvency Act the estate of the solvent spouse will also (initially) fall under the control of the Curator.

The deeds office will register an interdict against the personal details of the solvent spouse to the effect that the Curator will first have to confirm that the solvent spouse is free to deal with his or her own estate. This can be problematic where the solvent spouse wants to sell property or purchase property in cash.

Published in Property
Thursday, 15 September 2011 13:53

If you have acquired your ex-spouse`s share of a previously jointly owned property after your divorce, be that by Court order or private agreement, you need to submit a written application to the Registrar to endorse on the Title Deed that you alone are entitled to deal with the property.

Once the Title Deed has been endorsed in this way, you will be entitled to deal with the property as if you had taken formal transfer or cession into your name of your former spouse`s share of the property.

Published in News
Sunday, 04 September 2011 13:43

Many Title Deeds contain restrictive conditions or personal servitudes (such as usufructs or pre-emptive rights) which have already lapsed. The Deeds Office insists that such lapsed conditions be removed from the Title Deed when the property is dealt with in any way, even when you register a further bond over the property.

Be aware of this added requirement and ask your conveyancer to check your Title Deed for any of these conditions to avoid hold-ups when your transaction is lodged in the Deeds Office.

Published in Property
Friday, 26 August 2011 13:27

The deeds office notes a caveat against a property as a reminder to itself and interested parties that some other action is required when next the property is dealt with in any way.For example, sometimes a property is re-surveyed and the property details may change as a result. The Surveyor General will then note a caveat against the property so that when next the property is dealt with, the amended details are noted in the title deed and deeds office database.Should the Title Deed thereafter be found, it must immediately be handed to the Registrar of Deeds.

Published in Property
Friday, 12 August 2011 12:37

Where a property is subject to a condition which stipulates that it may not be sold, alienated or transferred without the consent of the Home Owners Association of which the owner of the property is a member, the Deeds Office will not register the transfer without the said consent being lodged. Some Home Owners Associations are not active and do not hold meetings.

In order to obtain the required consent it will then entail approaching every registered owner who is a member of the association to sign the required consent. If you are a member of such a non-active association you are advised to take the necessary steps to ensure that it becomes operational and starts to meet in order to prevent the onerous requirement of having to approach every owner to consent in the event of the sale of your property.

Published in Property
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