We have discussed the importance of a deed of alienation (Agreement of Sale / Accepted Offer to Purchase) in Part 1 of the Agreement of Sale publication.

There are still other clauses of paramount importance which we should look out for and be sure to understand, before we sign the contract.

These clauses include the following;

Suspensive Conditions

When a deed of alienation is subject to a suspensive condition, the contract only comes into effect once the condition is met. This can entail a future event such as a deposit payment, securing a loan or the successful sale of the purchaser’s property. Suspensive Conditions are often misunderstood, which can result in little recourse.

According to Mia v Verimark Holdings (Pty) Ltd (522/08) [2009] ZASCA 99:

“The conclusion of a contract subject to a suspensive condition creates ‘a very real and definite contractual relationship’ between the parties. Pending fulfilment of the suspensive condition the content of the contract is suspended. On fulfilment of the condition the contract becomes of full force and effect and enforceable by the parties in accordance with its terms. No action lies to compel a party to fulfil a suspensive condition.

If it is not fulfilled the contract falls away and no claim for damages flows from its failure. In the absence of a stipulation to the contrary in the contract itself, the only exception to that is where the one party has designedly prevented the fulfilment of the condition. In that event, unless the circumstances show an absence of dolus (intent) on the part of that party, the condition will be deemed to be fulfilled as against that party and a claim for damages for breach of the contract is possible.”

In other words, the fulfilment of a suspensive condition is a pre-requisite for a contract to come into force and effect.

Does this now mean that if I purchase a property, subject to an approval of a bond, and I now wish to back out of the deal, I can simply sit back and not co-operate with the bank, which will then lead to them not approving my bond application?

The answer is no. The doctrine of fictional fulfillment provides that if a party to a contract which is subject to a suspensive condition deliberately prevents fulfilment of the condition to avoid being bound by the contract, the condition may be deemed to have been fulfilled.

This would mean that f the purchaser deliberately fails to apply to a financial institution for the bond within the specified time and does not submit the relevant documentation, then according to the doctrine of fictional fulfilment the suspensive condition can be deemed to have been fulfilled and the contract will in this way come into existence and be binding on the purchaser despite the purchaser’s efforts to prevent it from doing so.

Outside Offer

The outside offer normally forms part of the suspensive condition, but can also be a separate clause on its own.

The outside offer enables the seller, pending fulfillment of the suspensive condition/s, to market the property and receive written offers from other prospective purchasers.

If the seller receives a better offer from another potential purchaser, the purchaser will be entitled to  declare the agreement unconditional, or to make an offer that is equivalent to or better than the offer from the potential purchaser. If the purchaser does not do any of the above, then the seller will be entitled to accept the offer from the potential purchaser.

Compliance Certificates

Some of these compliance certificates are required under national regulations, others are required in terms of municipal by-laws, and others by banks before providing finance of have become standard practice.

You will be well-advised in the deed of alienation of your obligation to obtain the required certificates. It is better to get them sooner rather than later if you don’t want to delay the transfer. Some of these certificates include an Electrical Compliance Certificates, Electric Fence Certificates, Gas Compliance Certificates and Beetle Certificates.

Voetstoots Clause

The voetstoots clause is the action of buying something as is, just as it stands in whatever condition it is in. It is essential to all sales of property purchased second hand which may well have deteriorated through normal wear and tear or which may be defective to some extent as a result of its constant use or through natural decay over a period of time. The purpose of the voetstoots clause is to shield the Seller from any action by the Buyer, on discovering any defects he was not aware of when purchasing the property, from doing anything to jeopardize the actual deed of alienation.

A Seller is only excused from liability for latent defects where he himself was not aware of the problem at the time of the sale.

It cannot be stressed enough that before you sign the deed of alienation you have to be certain that you understand each and every clause of the contract. Signing a deed of alienation means that you agree with the contents and terms thereof.

There is a legal expression of “Ignorantia juris non excusat” meaning, ignorance of the law excuses not. Not knowing the law, and not understanding a clause of a contact which you signed will offer you no or very little recourse should any of the parties fail to comply with the terms of the contract.

 

The Agreement of Sale and what to look out for – Part 2