Page 8 - Nexia SAB&T Property and Tax Guide 2024

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.
LEGAL PRACTICE ACT
Section 86(4) of the Legal Practice Act (28 of 2014) allows legal practitioners to invest client monies in a separate
trust savings account where there is an underlying transaction with an explicit mandate from the client to do so.
5% of the interest earned will automatically be paid monthly to the Legal Practitioners Fidelity Fund by the bank
(which has been approved by the LPFF). In addition, the Act requires an attorney who receives written instructions
from a client, to set out the intended scope of the engagement with clarity and in writing, including estimated costs
for the services to be provided.
FATCA
In order to invest funds, the requirement of disclosure of world-wide tax registration is required in terms of the US
Foreign Account Tax Compliance Act, and an Inter-Governmental Agreement (IGA).
OCCUPATIONAL INTEREST
Where occupation takes place on a particular date and transfer takes place after the date of occupation,
occupational interest is paid at an agreed amount for the period of occupation until transfer. In most cases this is
paid by the purchaser, who may take occupation prior to transfer being registered. The terms should be stipulated
in the deed of sale. In some cases, it is the seller who is the one who has to stay on in the property he or she has
sold and where transfer has been registered. In this case, the seller will be required to pay occupational interest to
the purchaser. In general, on occupation, risk passes to the purchaser. Clauses dealing with occupational interest
and risk (who is at risk while the purchaser is in occupation) should be included in the deed of sale.

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