Send us an email

+27 (0)21 200 0770

+27 (0)21 712 8661

De-mystifying the Sale Agreement

by Michelle Fiorentinos

Whether you are the Seller or the Purchaser, entering into a Sale Agreement is usually an extremely stressful event. Apart from the prospect of moving house, the contract itself can be rather daunting. Therefore, this article attempts to explain a few of the standard clauses in a Sale Agreement.

  1. Sale Agreement vs Offer to Purchase (OTP)

    Technically, when a prospective Purchaser signs a Sale Agreement it is an OTP – an offer to purchase the property from the Seller. Once the Seller has accepted this offer and signed the OTP, it becomes a Sale Agreement. In practice, however, there is really very little differentiation between the two and the terms, as well as Deed of Sale, are often used interchangeably.

  2. Compliance Certificates – do I really need them?

    According to law, if the property being sold is not vacant, in other words, has a building on it, the Seller MUST provide electrical, beetle and plumbing compliance certificates. Should the property also have an electrical fence and/or gas installations, the Seller MUST provide compliance certificates for these too.

  3. What is a suspensive condition?

    A suspensive condition holds an Agreement of Sale in limbo until the condition is fulfilled. For example, should the Purchaser require a Mortgage Bond, there will be a condition giving the Purchaser a certain amount of time in order to obtain a Mortgage Bond. If the condition cannot be fulfilled in the agreed time, the Seller can either elect to allow the Purchaser an extended period of time (this should be in writing and signed by both parties) or to cancel the Agreement in its entirety. If the condition cannot be fulfilled at all, the Sale Agreement will become null and void.

  4. The property is sold subject to all conditions and servitudes attached thereto

    All Sale Agreements should have a clause like this. It protects the Seller should there be any restrictive conditions attached to the property that later prohibits the Purchaser from using the property in such a way as he/she would like. Examples of restrictive conditions are that there is a servitude of right of way over the property or that the property cannot be subdivided. In any event, it is vital that the Purchaser always studies the Title Deed, and perhaps previous Title Deeds as well as the zoning of the property to make sure that there are no restrictions for their intended use of it. The Purchaser could enlist the services of a Conveyancer (property lawyer) for this purpose.

  5. Estate Agent’s fees

    Estate Agent’s fees are negotiable and are not fixed.

  6. Who chooses the transferring attorney?

    Many people believe that the Estate Agent appoints the attorney responsible for the transfer and registration of the property in the Deeds Office. However, traditionally in the Western Cape (it may be different elsewhere in the country), it is the Seller that appoints the transferring attorney. There is, however, nothing to prevent a Purchaser requesting that the Seller allow them to appoint a transfer attorney. In this situation, it is up to the Seller whether to agree to this or not.

10 February, 2015

**Please note that these comments are summarised, may not be applicable to your particular situation and do not constitute legal advice. Please consult your legal professional should you wish to obtain a formal legal opinion.**