With many property transactions, what you see, may not always be what you get. It is not uncommon for a purchaser to buy immovable property only to find out that after the sale (usually after registration), there are many defects in the property.
The common law principle of voetstoots is that: if parties to a sale agreement state or contract that the property is sold “as is”, with all hidden (LATENT) and obvious (PATENT) defects, then the buyer needs to accept the property in that condition and cannot demand defects to be fixed. HOWEVER, if the seller knew of latent defects and didn’t disclose them, he/she cannot hide behind this clause.
With patent defects, it is assumed that you should have seen it when you thoroughly inspected the property so there is no recourse.
Some members of the public believe that one can no longer sell a property voetstoots. This is a misconception and this could be why:
- In terms of the new Property Practitioners Act, 2022, a Property Practitioner must provide the purchaser with a mandatory disclosure form (completed and signed by the seller prior to them making an offer). A disclosure form requires a seller to disclose all latent (hidden) defects of which he/she was aware.
This form does not necessarily mean that the purchaser is exempt from thoroughly inspecting the property as the seller may not be aware of some of the existing defects. If a seller was not aware of same (and the burden of proof would be on the purchaser), then the purchaser cannot hold the seller liable and he (the seller) may rely on the voetstoots clause. It is not a blanket legal requirement that in all transactions, a seller has to provide a disclosure form (the onus is merely on a real estate agent to arrange this when they are involved in the transaction). The sale agreements may still have the voetstoots clause therein.
- In terms of the Consumer Protection Act, a person acting in the ordinary course of their business (e.g. a developer) may not sell their new product voetstoots. The snags would need to be attended to and there would be certain warranties in place for various aspects of the property and workmanship. The general public seem to think that this legislation applies to all property transactions which is not the case and thus the notion that one cannot sell a property (second hand) voetstoots is incorrect.
That being said, our advice is to please ensure, as a seller, that you disclose whatever defects are within your knowledge (most especially latent defects) and as a buyer, you thoroughly inspect the property to avoid disappointment and possibly litigation.
If you have any queries please don’t hesitate to contact us.
Author: Kaylean Adimoolum-Sunny
Resolutions where a trust, company or CC is selling or buying immovable property are frequently problematic. Resolutions by a CC or company authorising the sale or purchase of immovable property should preferably be signed prior to signature of an agreement but if that is not possible, it is not fatal as the Company’s Act permits ratification.
There should be a clause in the agreement which binds the signatory personally should the entity not ratify the agreement. The resolution should also nominate a signatory to act on behalf of the company or CC and state what the company or CC has resolved i.e. to buy or sell the property and its legal description.
All members of a CC must sign the resolution, and with regards to a company, all directors must sign. In certain instances the shareholders of the company (where it is the sale of a major asset of the company) must sign a shareholders’ resolution as well. We can assist in this regard.
As mentioned, the Company’s Act, which deals with Companies and CCs, allows ratification after signature but one must be mindful of:
- What if all the directors are not on board and won’t sign the resolution during the process?
- What if the shareholders are required to sign and also don’t agree to the sale?
With regards to trusts, either all the trustees must sign the agreement, or a resolution signed by all the trustees must be obtained PRIOR to the signing of the agreement authorising one or more of the trustees to sign the agreement.
If the resolution authorising the sale or purchase has not been signed prior to the signing of the agreement, the signatory is not authorised, and the agreement will be invalid.
Should you have failed to obtain the necessary resolution prior to having the agreement signed, you must ensure that the correct steps are followed and have the agreement resigned otherwise you will compromise your transaction and put your clients and your commission at risk.
Another important difference between trusts and companies is that a property can be purchased by a company to be formed. Usually the agreement would allow the purchaser a certain period in which to register the company. In the case of trusts however; this is not possible. The trust must be in existence i.e. letters of authority must have been issued for the trust by the Master of the High Court, in order for a property to be purchased by a trust.
We do have some suggestions to deal with this situation and you are welcome to contact us if you need some assistance.
This information is general and basic and does not constitute legal advice or opinion. Please contact us if there is any aspect you require more clarity on.
Author: Sheralee Mullen
We fully appreciate that buying a property and the related steps of borrowing the purchase price from a bank and registering a mortgage bond can be intimidating. Having been nominated by the bank to register your bond, this newsletter serves to explain (in layman’s terms) our involvement in this process.
STEP 1: We receive instructions from the bank to register your bond.
STEP 2: Our bond department will contact you to confirm your personal and other details.
STEP 3: If it is your intention to take up the bond, we will send you an e-mail requesting various FICA documents so that the Attorney/Paralegal can draw up the bond documents. (Paralegals are experienced members of our staff who attend to our bonds and transfers under the supervision of a qualified Conveyancer. A Conveyancer is an Attorney who specialises in property law.)
STEP 4: We contact the attorneys who have been instructed to transfer the property from the seller to you. We will request a copy of the draft deed of transfer as well as their guarantee requirements. These technical steps are necessary to enable us to prepare our bond documents and to ensure that your loan is paid to the transferring attorneys in the manner required by them.
For instance, if the seller has an existing mortgage bond, part of your loan will go directly towards paying off that debt so that the bond can be cancelled.
STEP 5: Upon receiving the FICA and other documents, we will draft your bond documents after which, we will arrange an appointment for you to sign the bond documents before our conveyancer.
STEP 6: At the consultation our conveyancer will explain the bond documents to you and arrange for you to sign them. This appointment typically takes 1 hour. We will then forward bank guarantees (which we are authorised by you to issue) to the seller’s attorneys for their further attention. By this stage, you will be expected to pay our pro-forma account and these monies will be retained in our trust account until the registration of transfer.
Author: Nicola Drinn