When buying or selling property, you (as the buyer or the seller) want to have a written agreement that clearly states what the terms and conditions of the sale will be. You don't
want to find yourself in a situation where the other party makes all kinds of demands, claiming that that is what you agreed upon.
The first thing you want to make sure of is that the buyer and seller are correctly identified in the written agreement. Who is buying the property and who is selling? Including the parties' identification numbers, or a legal entity's registration number, will help the transfer of the property go smoothly. It is just one piece of information less for the conveyancers to fish out.
Indicate the marital status of the parties to the sale. If a buyer or seller is married in community of property, the spouse will also have to agree to the sale of the property and sign the agreement of sale.
If a legal entity such as a company, close corporation, or trust is buying or selling the property, the details of the position or the capacity of the person or persons signing on behalf of the legal entity must be provided.
The second thing you absolutely need to include in the agreement of sale is the property description. The correct street address, or the erf number is enough, but it is always best to include both. in the case of a section in a sectional title scheme, indicate the scheme and door number for the unit, as well as the sectional title number.
Next is the purchase price for the property. Write the amount in digits and words, like in a cheque, so that there can be no confusion about a 2 looking like a 7, or a 3 impersonating an 8.
It is not absolutely nesessary to give a breakdown of how the purchase price will be paid. In a cash sale, the full purchase price will suffice. But any arrangement where the purchase price will be paid at a later date, or if the buyer needs to structure the payments, the terms and conditions of those payments need to be recorded in the agreement of sale as well. This is as much for the protection of the buyer as it is for the seller.
Ask the question: "How will you be paying for the property?"
This should give you the answers you need to set out the terms of payment.
If the buyer needs to arrange for financing and the agreement of sale will be subject to a suspensive condition that will allow him/her to apply for a loan without being bound to the sale (should the loan application be turned down), the amount of the loan and the deadline for loan approval must be set out in the agreeement of sale.
If the seller requires a deposit, or if the buyer wants to pay one, the amount should be clearly stated along with the date of payment of the deposit. Note that a deposit is not mandatory in South Africa. A deposit is a gesture of good faith by the buyer and an indication to the seller that the buyer is serious and in a position to buy the property.
If a deposit is to be paid, the agreement should specify that it is to be held in trust by the named conveyancer or estate agent, and also mention what must be done with any interest such a deposit might earn.
If the sale of the property will be subject to the succesful sale of the buyer’s property, a clear description of the property, the price for which it is to be sold, as well as the deadline for the sale must be included in the agreement of sale.
To dispell any misunderstandings, the agreement of sale should clearly state who should pay all the transfer costs. These costs are usually the responsibility fo the purchaser, but as mentioned before, everything is up for negotiation.
When will the seller vacate the property sothat the buyer can take occupation? The parties to the sale usually have deadlines they set for themselves. Agreeing on a specific date that will suit both parties can be rather difficult, so get it right at the start.
You could specify a date for transfer to take place, but because the transfer process can run into unplanned delays, this date might not be the actual date of transfer od ownership. Conveyancers usually try to register the transfer of ownership as close as possible to the occupation date. If you do specify a date for transfer, allow at least three months for the transfer process to be completed.
Who will be paying municipal rates and taxes on the property once the buyer takes occupation? And will the seller still be paying those municipal charges if he/she is still in possession of the property after transfer takes place? This needs to be cleared up in the agreement of sale.
How much will the party who enjoys occupation of the property pay to the registered owner of the property, for the use of the property? The amount and method of occupational interest or rent that will be payable should be set out in the agreement of sale.
Is the property being sold "voetstoots" or "as is", or is the seller giving a guarantee that the property has no defects. If the property is being sold in the condition the property is found, a voetstoots clause should be included in the agreement of sale.
Remember that the seller has a responsibility to tell the buyer about any hidden defects in the property before hand, so a section where the seller makes a written disclosure about hidden defects he/she is aware of might be a great idea.
Property inspections and surveys aren’t the norm in South Africa, but they can be carried out and their results included as a condition of purchase. So, if you require an inspection to be done, provide for it in the agreement of sale.
In South Africa, the seller usually appoints the transferring attorney, although the buyer will be paying for the transfer. Who appoints the conveyancer is yet again something that the parties con negotiate. It is a good idea to name the conveyancer, who shall deal with the transfer, in the agreement of sale. That way all the parties know who will be responsible for the transfer.
What is included in the sale of the property? Some things in (or attached to) the property can cause dissagreement, but usually the parties find this out too late. So, if you are a seller who does not want to find his/her new property stripped of everything you figuered was part of the property, or if you are a seller who does not want to get sued for taking your treasured belongings with you when you move, a list that specifies all the fixtures and fittings that are included in the sale is a great thing to include in the agreement of sale. Or if the list of things that are not included in the sale is shorter, feel free to include that.
If the property is located near the coast, or in an area where beetle infestation can take place, the agreement of sale should state that a ‘borer-free’ certificate must be obtained to confirm that all accessible parts of the property are free of infestation by designated beetles or details any work required to make the property so. Who pays for the inspection and repairs is once again up for negotiation, but generally the seller pays for it.
An electrical certificate confirming that the electrical installation complies with statutory safety requirements is required for all inhabitable properties in South Africa. Generally the seller pays for any repairs to the electrical installations and for the comliance certificate, but the parties can agree to do things differently, it they choose.
If a real estate agent was involved in the sale of the property, the commission payable to that agent should be confirmed in the agreement of sale. The agent should also sign such a clause in the agreement of sale, to indicate his/her acceptance of the commission.
Once you have an agreement, you don't want the other party to suddenly claim that you agreed to something totally different. People are funny that way - They only remember what they want to remember. You have worked hard to reach agreement, so stay in agreement by clearly stating that no amendments to the agreement of sale shall be valid, unless those amendments are made in writing, and is signed by both parties.
