For many South Africans the contract of sale of immovable property is a dark mystery, open only to real estate agents and legal practitioners. Actually, a number of real estate agents also have little knowledge of the what, why, when, where and how's of real estate contracts of sale.
A Simple Contract Of Sale
A little sentence like, "Piet Poggempoel hereby sells erf 113, Honeydew, Johannesburg to Jimmy Smith for R 100 000", written down and signed by both parties, would constitute a valid and legally binding contract. It could (but should preferably not) be written on a flattened cigarette box, a blank sheet of paper, or engraved in stone. Well, maybe engraving it in stone would be a little extreme, but the point is: A written document that identifies immovable property, a buyer, a seller and a purchase price, and clearly states the intention of the parties to transfer ownership, is a valid contract of sale. The fact that it is a very short contract of sale that doesn't mention things like occupation dates, mortgage bonds, or fixtures and fittings, does not make it invalid.
The law that governs contracts for the sale and purchase of immovable property in South Africa is the Alienation Of Land Act 68 of 1981. The Alienation Of Land Act requires that an agreement for the sale of immovable property in South Africa must be in writing and be signed by the parties of the agreement, or their authorised representatives.
The document must contain a description of the parties, the property and, of course, the purchase price. Nothing else needs to be discussed in the agreement, or recorded in the contract of sale. The relationship between the two parties, meaning everything that is not mentioned in the written contract, is governed by the South African common law.
Less Simple Contracts
A contract of sale for immovable property in South Africa is usually not just a one-sentence affair, though. The important terms of the agreement, such as the date of occupation and possession, whether the sale is subject to a suspensive condition requiring the approval of a home loan, exactly what is included in the sale, and descriptions of other rights and responsibilities of the parties, are included in most contracts of sale.
Anything that is not addressed in the contract of sale is governed by common law. The principals of South African common law are well established, but not always clear or even logical to everyone. For this reason, it is always best to address all the aspects that may be involved in the sale of the property in the written contract of sale.
These other clauses to the contract of sale are usually where the "mystery" starts for most South Africans. Legal practitioners draw up most contracts of sale, even those used by real estate agents. Unfortunately, "legal-speak" is not really a popular home language in South Africa, and the unfamiliar words and weird sentence constructions attorneys use in some contracts of sale baffles most "normal" South Africans.
Sometimes it takes re-reading a sentence a number of times before understanding what it means. I sometimes wonder if such sentences weren't purposefully constructed to be illegible! The point of the many clauses in a contract of sale is supposed to make it clear to the parties to the agreement what is expected of them, not to confuse them beyond any comprehension!
Many contracts of sale contain easy to understand, every-day language nowadays. Those real estate professionals who draw up easy to understand pre-printed contracts realise that a clear description of both parties' rights and responsibilities in terms of the contract of sale makes it easier for them to comply. Who wants to get into an argument or a legal dispute about the meaning of a few unclear words, in any way?
Contract Clauses
Each clause in the contract of sale should state to whom it applies, what has to be done and by when it should be done. These aspects can be spelled out in names, exact descriptions and specific dates, but as long as they can be reasonably determined, they are valid. So, an occupation clause that states that Jimmy Smith will have the right to occupy erf 113, Honeydew, Johannesburg on 1 May 2050, is great, but an occupation clause stating that the buyer will have the right to occupy the property on the first day of the month after the date of transfer of the property in his name, is also valid.
Another aspect to keep in mind about clauses in a contract of sale is the intended function of every provision. Some clauses simply state what the parties agree. A clause that states that, "the parties agree that the rope swing under the big oak tree in the back yard is included in the sale", is such an agreement clause. But other clauses intend to cancel the sale if a condition is fulfilled. Other clauses may also intend to suspend the contract until specific conditions are fulfilled.
Don't get confused now!
Resolutive Conditions
A resolutive condition is one that intends to cancel the contract if a condition is fulfilled.
"This contract of sale is subject to the resolutive condition that the seller must deliver vacant occupation of the property to the buyer, on or before 1 May 2050", is an example of a resolutive condition. Any condition that states words to the effect that the contract will be null and void if something hasn't happened by a certain time, or something has happened by a certain time, is a resolutive condition.
Suspensive Conditions
A suspensive condition is one that intends to suspend the contract until a condition is fulfilled.
"This contract of sale is subject to the suspensive condition that the buyer obtains written approval for a home loan of at least R50 000, before 1 January 2050", is an example of a suspensive condition. Any condition that states words to the effect that the contract of sale will not be a binding until a certain something has happened is a suspensive condition. A binding contract of sale then only comes into existence once that certain something has occurred.
Contract Of Sale
The interesting thing about contracts of sale and purchase of immovable property, in most areas of the world, is that it can contain absolutely any conditions. Yes, ANYTHING!
If the parties agree that a condition that will cause the buyer to pay R20 000 more for the property, should the Free State win the Curry Cup in two weeks' time, must be included in the contract, they can do so! Yes, anything goes, as long as it is legal.
Now, I'm not up to scratch with gambling laws in South Africa, so don't go sticking that clause in your own contract of sale, it might be illegal. But I do hope the Free State wins this year...
