Page 12 - Nexia SAB&T Property & Tax Guide 2022

THE DEED OF SALE

A written agreement must be drafted and signed. A verbal sale agreement in respect of immov-
able property is unenforceable and void in South Africa. The following are some important
clauses to be borne in mind:

DESCRIPTION OF THE PROPERTY AND PARTIES
The property and parties must be properly defined, so as to be capable of identification from
the very wording used in the agreement.
UNFAIR CONTRACT TERMS PROHIBITED
In terms of the Consumer Protection Act (68 of 2008), or “the CPA”, unfair contract terms are
to be prohibited in deeds of sale to which the Act applies. Note that it is still ambiguous as
to whether the CPA applies at all to residential property sales, as a seller in these “once off”
private sales, may not be deemed to be a supplier selling goods in his/her ordinary course
of business, as defined in the Act. Where the CPA does apply, each case will be determined
on its merits as to what is deemed to be fair or unfair contract terms. Notwithstanding the
above, the general view is that Section 49 of the CPA should be taken cognisance of in all
cases– and provision should be made that any waiver of liability, assumption of an obligation,
or waiver of a right is drawn specifically to the attention of both parties to the agreement in
a conspicuous manner.

PURCHASE PRICE & PAYMENT
◆ The price offered must be clearly stated, written both numerically and alphabetically.
◆ Sellers normally do and should require the payment of a deposit, which shows good
faith, and the financial ability on the part of the purchaser and also provides security
for the seller to cover its losses should the purchaser breach the agreement. As a
purchaser, it is advisable to stipulate that the deposit be held in trust in an interest-
bearing account, for the purchaser’s benefit pending transfer by the conveyancer [and
dealt with in accordance with Section 86(4) of the Legal Practice Act].
◆ The balance of the purchase price is normally secured by a bank guarantee, usually
coupled with a mortgage bond to be registered over the property. The seller’s
conveyancer must make sure that guarantees are provided timeously, and the
purchaser must ensure that the contract provides sufficient time to arrange finance
and provide guarantees.
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