Any experienced property professional well versed in the Alienation of Land Act (which governs all South African property transactions) can without undue effort help a residential property seller or buyer to get out of 80% of the Agreements of Sale drawn up today by residential property practitioners, says Wayne Albutt, Regional Sales Manager for the Rawson Property Group in the Western Cape. When this happens, he says, it is always a severe blow to the estate agent’s morale and quite possibly to his financial position because he will have spent many hours preparing the property and the sellers for the marketing of their home. He or his agency will also have spent a considerable sum on advertising the property and will have worked hard to get prospective buyers to come for viewings, which often take place after hours. The estate agent will, of course, says Albutt, have been involved in explaining and clarifying the Agreement of Sale to the client in order to conform to current legislation.
The Alienation of Land Act, Albutt said, is by no means ‘reader friendly’ and even the best estate agents are not that familiar with it. Furthermore, since the introduction of the National Credit Act and the Consumer Protection Act, many pre-printed Agreement of Sale clauses have been modified in order to keep up with ever changing legislation.
“Most traditional Agreements of Sale will today have had sections added to them or deleted from them so as to cover fully the agreement made by the signatories and in most cases it is these additional clauses that can be exploited and give rise to problems, making the Agreement of Sale unenforceable in terms of the Alienation of Land Act. Should one of the parties want to get out of the agreement after signing, an astute lawyer or estate agent can often find reasons for making the Agreement of Sale voidable.”
“As indicated,” says Albutt, “most of the reasons given for wanting to get out of sales agreements are trumped up. They are often due to buyers’ or sellers’ remorse and not to any real fault in the documents.”
Sadly, said Albutt, the estate agent will nevertheless usually be held responsible for the cancellation of agreement and his reputation will suffer.
Giving examples of cancelled contracts, Albutt mentioned a case in which an Agreement of Sale was concluded, but the owner then discovered from other agents that there were more potential buyers who were prepared to pay above the initial asking price. The seller then managed to have the initial agreement deemed void on the grounds that the agent had made several legal errors. The agent, needless to say, was highly embarrassed and the initial purchaser was far from happy on being told that he no longer had a valid Agreement of Sale.
In another case, said Albutt, the deal was cancelled because the offer had in fact expired a day or two earlier than the date on which the seller accepted it – a situation which under normal conditions can easily be rectified.
Another case saw a deal rendered null and void because the consenting spouse, who had been married in community of property, had not got the obligatory two witnesses to attest to the agreement. Where a legal entity is involved, said Albutt, it is sometimes possible to prove that the signatory was not duly authorised and this, too, has resulted in sales falling through.
As many as 5% of signed Sales Agreements are cancelled due to buyers or sellers finding loopholes...http://t.co/qkUh39FGX5 #property
— RawsonPropertyGroup (@RawsonGroup) November 5, 2013
“There are many ways of escaping from an Agreement of Sale that appears to be legally binding and watertight,” said Albutt. “Fortunately most people do not want to do this, but the simple truth, which has to be recognised, is that estate agents and certain parties to sales have suffered severely as a result of this on-going practice.”
