I mentioned in my previous column that I would attempt to explain in simple terms, the legal meaning and consequences of the most important conditions contained in a deed of sale (contract) relating to the sale of property. Before doing so however, it is necessary to set out some basic guidelines regarding the completing and signing of such contracts. A deed of sale merely records in writing the agreement which has been reached between the seller and the purchaser regarding the sale of a property. There are however certain formalities which have to be complied with to ensure that the contract is binding. As I mentioned in last week’s column, in most cases the agreement between the seller and the purchaser is recorded in the standard contract provided by the agent who negotiated the sale. A number of the paragraphs in these pre-printed contracts contain blank spaces which must be completed including the names of the seller and purchaser, the purchase price, the amount of the bond, the date of occupation and occupational rental payable etc.
Amongst the most important details to be inserted are the identities of the seller and purchaser. If their identities cannot be determined from the deed of sale, then the contract is invalid. This may sound simple but errors do occur when completing deeds of sale. From the seller’s point of view it is important to tell the agent the name of the person in whose name the property is registered. Most commercial properties are registered in the name of a legal entity such as a trust, cc or company. Sometimes residential properties are also registered in the name of a legal entity. In such cases the name of the legal entity must be inserted as the seller. If the property is registered in the name of one or more natural persons, the name or names (preferably the full names) of those persons must be inserted as the seller/s.
From the purchaser’s point of view, it is essential that the purchaser inform the agent of the name or names of the person/s in whose name the property must be registered. If for example the Purchaser wants to register the property in the name of a legal entity (trust, cc or company) then the name of that legal entity must be inserted as the purchaser. If a natural person signs a deed of sale as the purchaser when in fact he or she wants to register the property in the name of a legal entity, then the consequences of such an error are serious. Such a purchaser may find himself or herself having to take transfer of the property into his or her name first before transferring the property into the name of a legal entity. This will result in the purchaser paying double transfer costs!
Here are some additional basic rules which should be adhered to when completing deeds of sale:
- All blank spaces must either be completed or deleted (do not leave blank spaces).
- When a paragraph is deleted, the parties and witnesses should initial next to it.
- Do not initial next to blank spaces.
- Everything that has been agreed upon between the seller and the purchaser must be written into the contract. If the seller and purchaser agree to something verbally but it is not written into the contract, it does not, as a general rule, form part of the contract.
• Any amendment to the contract must be signed or initialed by the seller and the purchaser.
It is also of utmost important to ensure that the contract is correctly signed, otherwise the contract is invalid. The person/s who must sign the deed of sale is determined by factors such as marital status of the parties, whether the party is a legal person or natural person etc.
Here are some basic guidelines:
- Persons married in community of property – both husband and wife sign.
- Persons married out of community of property – only the spouse selling or buying signs.
- Legal entity (trust company cc) – the person who has been property authorised to sign on behalf of the legal entity must sign.
- Married foreigners – preferably both spouses to sign.
- Minors – the parent and natural guardian signs on behalf of the minor.