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September 2016

152 75 Prevance - Bridging Finance South Africa

Suspensive Conditions in a Deed of Sale: Know Your Obligations

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Imagine signing a deed of sale for your dream house and later discovering that the contract lapsed because you obtained bond approval one day too late. The situation could be worsened if the Seller receives a better offer for the house and accepts that better offer.

If a deed of sale is made subject to a suspensive condition, it will lapse if such condition is not fulfilled in time. This was confirmed in the case of Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C) (hereinafter referred to as “the Marais case”). There is then no contract for the sale of the property between the two parties and the Seller can sell the property to another purchaser.

Examples of suspensive conditions are obtaining bond approval before a certain date, or the sale of the Purchaser’s current property before a certain date. It is very important for both the Seller and Purchaser to take note of the wording of these conditions and ensure that they understand them.

The following is an example of the wording of a suspensive condition relating to a bond, also sometimes referred to as a “bond condition”:

This Deed of Sale is subject to the Purchaser obtaining bond approval from a financial institution for the amount of R1 500 000 before 2 December 2013, failing which this agreement will lapse.

In the above example, if only R1 400 000 is approved before 2 December 2013, in other words R100 000 less than the required amount, then the condition is not met and the contract will lapse. Similarly, if a bond is approved for R1 500 000 but only on 5 December 2013, then the condition is not met in time and the contract will lapse, as was decided in the case of Meyer v Barnardo and another 1984 (2) SA 580 (N).

The parties can however agree to extend the time during which the suspensive condition must be fulfilled. Such extension must be in writing and signed by both the Seller and Purchaser as per the requirements of the Alienation of Land Act 68 of 1981. It must also be done before the time limit of the suspensive condition expires. In the above “bond condition” clause example, this would mean that the parties would have to sign the extension before 2 December 2013 to prevent the Deed of Sale from lapsing. In the Marais case the court held that even if the suspensive condition had been inserted in the contract for the exclusive benefit of the Purchaser, the Purchaser would have had to communicate his intention to waive the requirement before it lapsed.

In the Marais case the parties entered into a written agreement of sale with a suspensive condition that a bond in the amount of R10 149 072 needed to be obtained by 15 August 2005. The Purchaser, however, only obtained a mortgage bond in the amount of R9 650 000, which was granted on 2 August 2005. The respondent’s attorneys argued that the suspensive condition had been substantially fulfilled because the shortfall was, in their opinion, only a “minor shortfall” and therefore an insignificant amount compared to the purchase price. The court did not agree with this and found that it could not be said that the parties intended the suspensive condition to be fulfilled in any way other than what was expressly stipulated in the Deed of Sale. The court found that the contract had therefore lapsed.

If a suspensive condition will not be fulfilled in time, rather take the necessary precautions beforehand to avoid a lapsed Deed of Sale. We advise that you contact a professional for advice in this regard.

Reference list:

Kontraktereg, UNISA 2004
Self-Study Conveyancing Course for Attorneys, Gawie le Roux, 2013
Alienation of Land Act 68 of 1981
Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C)
Meyer v Barnardo and another 1984 (2) SA 580 (N)
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

152 75 Prevance - Bridging Finance South Africa

How can I lawfully evict my tenant?

4661c401-3eb2-4001-a88d-5205883fc609You’ve discovered that the tenant renting your apartment has damaged several appliances, including the floor tiles due to irresponsible behaviour. Therefore, you have decided to terminate the lease contract and evict the tenant. Are you allowed to do that and how do you get started?

Firstly, there has to be valid reasons to evict a tenant, such as the example above. Even if you do have a valid reason to pursue eviction, a legal process has to be followed if you want to stay within the law. The first step is to cancel the lease contract with the tenant and let the tenant know that it’s cancelled and the reasons why. After the contract is terminated, the tenant would be occupying the premises illegally. You can then go to a court with an eviction application or “ejectment order”. When you do this you will be required to prove that the contract with the tenant was properly terminated and that the reasons for doing so were valid.

It’s important to make sure the reasons you want to evict the tenant are valid. This is because tenants are protected by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, No. 19 of 1998. You cannot just evict a tenant because you don’t like them.

Other grounds for an eviction

Besides a tenant causing serious damage to a property there are two other grounds for an eviction. The obvious one is the tenant not paying his/her rent after having been told to do so. Another reason is the tenant using the property for anything other than was agreed upon in the contract. A tenant who opens a business in the apartment they are renting would be in breach of their contract if it was agreed to be rented for residential purposes only.

What happens at the court?

The eviction application can be taken to the Magistrate’s Court or the High Court. Court proceedings will follow, which the tenant should be notified about. It’s very likely that the tenant will deny any wrongdoing and say the eviction doesn’t have good grounds. If this is the case, they can inform the court. A dispute and court case may ensue, the outcome of which would depend on the evidence of what happened. Therefore, if you are considering evicting a tenant, make sure your reasons are clear and that there is evidence for the eviction. If the tenant broke property on your premises because of being irresponsible, then that could be solid evidence.

Dealing with the tenant

The tenant may agree that they have done something wrong or simply decided not to oppose the eviction, in which case the court would issue an ejectment order. The ejectment order will force the tenant to leave the property, which will be carried out by the Sheriff of the Court. It’s important to remember that the landlord is not allowed to personally remove tenants from their premises. Leave that to the authorities. Furthermore, the court may order the tenant to pay the legal costs of the landlord.

Reference:

Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Taken from: Visagie Vos

580 105 Prevance - Bridging Finance South Africa

Is an online sale agreement for a house valid?

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“I am in the process of purchasing a house. I recently bought my vehicle by merely signing some online documentation electronicially and it was so quick and easy to complete. I asked my estate agent if you can use the same technology to purchase a house, but he said that the contract won’t be valid if I sign it electronically. Is this true?”

Legally binding electronic transactions and the use of electronic signatures have been increasing in prevalence since the promulgation of the Electronic Communications and Transactions Act of 2002 (“ECT Act”) which regulates electronic transactions in our country. As the ECT Act allows for the use of electronic signatures in our daily business dealings, it is important to understand what an electronic signature is and when such can be validly used and be legally binding.

The ECT Act defines an electronic signature as data (ie. an electronic representation of information in any form) which is attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as his signature in an electronic environment where a physical signature is not possible.

Where our law requires that contracts must be in writing, the ECT Act recognises that a data message may meet the requirements for being “in writing” and that where the signature of a person is required by law and such law does not specify the type of signature, the requirement is met if an advanced electronic signature is used, which establishes a valid and binding agreement.

This does not mean that all electronic transactions will be legally binding. The following exclusions are expressly provided for in the ECT Act:

• An agreement for the alienation of immovable property in terms of the Alienation of Land Act of 1981.
• An agreement for the long-term lease of immovable property in excess of 20 years in terms of the Alienation of Land Act of 1981.
• The execution, retention and presentation of a will or codicil as defined in the Wills Act of 1953.
• The execution of a bill of exchange as defined in the Bills of Exchange Act of 1964.

In your case, the first exclusion relating to the alienation of immovable property (eg. a purchase contract for a house) is applicable as the Alienation of Land Act determines that no sale of land shall be of any force or effect unless it is contained in a sale agreement and signed by all the parties thereto or by their agents acting on their written authority and thus any contract for the sale or purchase of immovable property is specifically excluded from being valid if entered into electronically.

So, although your motor vehicle purchase may have been possible electronically, an electronic agreement for the purchase of a house which you propose to sign electronically is not currently valid in our law.

Van Der Spuy

Head Office : 011-274-1700