Deposit: Part of the purchase price paid upfront, which should be held in an interest bearing trust account. It should be clearly stated who receives the interest on the deposit.
Balance of Price: Normally payable only when transfer is registered.
Transfer: The date on which ownership is to be registered in the buyers name.
Occupation/Possession: The date on which the buyer may actually move into the property, not necessarily the same as transfer date. Once the buyer takes occupation, he/she is liable for payment of rates, water, electricity etc.
Occupational Interest: If the buyer takes occupation before the transfer date, or the seller remains in occupation after transfer, he/she should pay the other party occupational interest from date of occupation to date of transfer (or vice versa).
Mortgage Bond: If the buyer needs a home loan to pay for the property, it must be clear that the sale will not proceed if he/she fails to obtain one (or finds some other source of finance) by a stipulated deadline.
Sale of Property: If the buyer needs to sell his/her existing property to finance the purchase, it must be clear that the purchase wont proceed if he/she fails to do so (or find some other source of finance) by a stipulated deadline.
Fixtures: Any items (e.g. light fittings) which are being sold with the property should be itemised.
Beetle and Electrical: By law, the seller must provide the buyer with a certificate stating that the electrical installations on the property are in good order. Although not required by law it is good practice (and many times required by the bank granting the mortgage bond) that the seller provides a certificate to state that the property is not infested by beetle. The seller should pay for the inspections (and any repairs) needed to obtain the certificates.
Voetstoots: The buyer takes the property as is, with any defects '“ hidden or obvious '“ it might have. It is the buyers responsibility to check for problems beforehand, as there is seldom recourse to the seller afterwards, unless the seller has deliberately deceived the buyer.
Expiry: The buyers offer to purchase should have an expiry date (date and time) for the seller to make up his/her mind. If no response is received by then, the offer lapses.
Contracts relating to immovable property are regulated by the Alienation of Land Act 68 of 1981. In terms of this Act, for an Agreement of Sale of land to be valid, it must:
- be in writing;
- contain a description of the parties to the contract;
- contain a description of the property;
- state the price for which the property is being sold;and
- be signed by all the parties to the contract, or their agents, acting on their written authority.
If a contract is to be legally binding, the parties who sign it must have the legal capacity to do so. Everyone in South Africa has the legal capacity to sign a contract unless he or she is disqualified for one or more of the following reasons:
- he/she is a minor (younger than 21 years and unmarried). Someone under the age of 21 who is married, or who has obtained High Court authorisation, is considered a major;
- he/she is married in community of property and his/her spouse has not given written consent to the contract;
- he/she is insane (of unsound mind);
- he/she is intoxicated or under the influence of drugs or medication;
- he/she is an unrehabilitated insolvent;
- he/she has been prohibited by a Court from entering into a contract without the authority of a curator.
