SALES FAQ - TPN Wiki

A mandatory disclosure is a mandatory (compulsory) document when the where the Landlord/ Owner discloses to the Tenant / Purchasers any latent (obvious) or patent (not obvious) information regarding the condition of the property which may have a bearing on whether the Tenant / Purchasers makes an offer to rent / buy the Premises.

A mandate agreement cannot be accepted unless the Mandatory Disclosure Form is completed and signed by the landlord. This is regulated by section 67 of the Property Practitioners Act.

The Landlord’s Disclosure does not provide any warranties and does not negate the requirement for completing a joint incoming and outgoing Inspection Document.

Please note: the wording in this document is prescribed in the regulations to the PPA and can be subject to audit and fines if not used as required.

We are aware that the prescribed form only refers to sales, however the latest versions of the form in your Pack has been amended to suit rentals and sales.

Please always ensure you are using the latest version.

This SalesPack contains documentation relevant for the sale of immovable property. Whether you are an estate agent or property owner, ensuring that your interests are protected in the sales process is imperative. The only way to actively do so is to make use of agreements that are drafted and updated to include the very latest in legal requirements and case law.

Visit the TPN Shop or click here for more information.

The Schedule constitutes one of the most important parts of the TPN Offer to Purchase. It serves as an itemised record of all the material facts agreed upon between a seller and purchaser.

The Supreme Court of Appeal in the Fraser v Viljoen case reminded us of the importance of ensuring that Deeds of Sale of immovable property cannot contain any blank spaces and that the insertion of material terms after delivery of an incomplete Deed of Sale will render the agreement void due to non-compliance with Section 2 of the Alienation of Land Act 68 of 1981.

Save for the Additional Terms and dating of the Offer to Purchase, there are no other blank spaces to be completed other than in the Schedule; it is easy to understand and prompts the parties to consider and agree upon all possible material terms relating to the sale and purchase of immovable property.

When the Schedule is used as a guide to ensure all the material terms have been agreed upon and recorded, the catastrophe of having the agreement declared void is avoided with ease.

The TPN Offer to Purchase provides for 2 possible events in terms of which the execution of the terms of the sale will be suspended until the happening of certain events. These 2 events can plainly be described as either:

the granting of a loan to the purchaser for the payment of the full purchase price or a part thereof; or
the sale of a property registered in the name of the purchaser.

In both instances, the clauses are inserted for the benefit of the purchaser. It provides the purchaser with the security that should he not obtain a loan to pay the purchase price or sell his property, there will not be any adverse repercussions on the side of the purchaser.

Suspensive conditions need to be complied with in the timeframe agreed upon, and if not fulfilled within such a period, the Deed of Sale will lapse in all its entirety, it will be rendered void and as if there has never been an agreement between the parties. Important to note is that should the purchaser wilfully cause the suspensive condition to lapse, with the intent of not continuing with the Deed of Sale, he can be held to the terms of the agreement, notwithstanding the non-fulfilment of the condition(s).

Should the suspensive conditions be removed, the Offer to Purchase, once accepted by the seller, will be rendered unconditional and any failure to perform in terms thereof will constitute a breach of the agreement. Once a party has been placed in breach for non-performance, the innocent party can cancel the agreement if such a breach is not rectified within the period granted and claim damages. It is therefore important to ascertain from the onset whether the purchaser needs to be afforded the benefit of the agreement being suspended and what period of suspension will be reasonable in the circumstances and towards the seller.

Since the promulgation of the Consumer Protection Act (CPA) in 2008 it has become important to ascertain whether the CPA will be applicable to the sale agreement. There are 2 focus points when this determination is to be made, namely:

that the CPA will not apply where a purchaser is a juristic person whose asset value or annual turnover, at the time of the acceptance of the Offer to Purchase by the seller, is equal to or exceeds the threshold value currently set at R2 000 000,00; and
whether the sale agreement falls in the ordinary course of business for consideration of the seller. It is important to note that should an estate agent be the reason of the agreement being concluded, it will be regarded as in the ordinary course of business.

Should the Consumer Protection Act apply to the agreement of sale:

Direct Marketing:

If the purchaser signed the Offer to Purchase as a result of any direct marketing, the purchaser may cancel the agreement in writing within 5 (Five) days of the date on which this agreement was concluded without reason or penalty.
Direct marketing will be any instance where a supplier or its duly authorised agent, either in person, by post, or electronically, contacts a potential purchaser for the purpose of advertising the property.

Since the promulgation of the Consumer Protection Act (CPA) in 2008 it has become important to ascertain whether the CPA will be applicable to the sale agreement. There are 2 focus points when this determination is to be made, namely:

that the CPA will not apply where a purchaser is a juristic person whose asset value or annual turnover, at the time of the acceptance of the Offer to Purchase by the seller, is equal to or exceeds the threshold value currently set at R2 000 000,00; and
whether the sale agreement falls in the ordinary course of business for consideration of the seller. It is important to note that should an estate agent be the reason of the agreement being concluded, it will be regarded as in the ordinary course of business.

Should the Consumer Protection Act apply to the agreement of sale:

The voetstoots sale of the property:

Numerous opinions have been written regarding a voetstoots clause being inserted in an Offer to Purchase and the validity thereof when the CPA is applicable to the sale agreement. The effect of the CPA on the voetstoots clause must be considered by referring to the following sections of the CPA, namely:

Section 56 of the CPA imposes an implied warranty of quality of the property, given by the seller when he accepts and signs the Offer to Purchase;
Section 55 (2) of the CPA lists 4 requirements that the property must comply with –

it must be reasonable suitability for purposes generally intended;
it must be of Good quality, in working order and free of defects;
it must be useable and durable for a reasonable period; and
it must be compliant with standards under the Standards Act.

It is reasonable to therefore derive that if the CPA is applicable, including a voetstoots clause will likely not be enforceable by the seller.

But with this said, the parties can expressly agree that the purchaser has been informed that the property is bought in a specific condition and the purchaser expressly accepts the goods in that condition. The TPN Sales Pack makes provision for this to be agreed upon by the completion and signature of the disclosure form.

A request by a purchaser to be granted occupation of the property prior to the completion of the transfer process and registration of the property in the Purchaser’s name should not be taken lightly and never be granted without due consideration of all relevant factors.

The risk of an agreement of sale being terminated for whatever reason can never be eliminated nor can a transfer be guaranteed until such transfer is actually registered in the relevant deeds office. The terms of the Offer to Purchase will provide guidance on whether it is wise to grant occupation prior to the transfer being registered and some of the most important terms to consider will be:

has the purchase price been secured, partially paid or paid in full to the Conveyancer;
have the parties agreed on the amount of occupational rent;
has an affordability study been done on the purchaser and have the Purchaser’s history of rentals been considered;
are there any factors that will delay the registration of transfer, for example in the case of deceased sales; and
the reason for the purchaser requesting early occupation.

Should the agreement of sale be terminated for whatever reason, and the purchaser refuse to vacate the property, the onerous and extremely costly procedures of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act needs to be instituted by the seller.

On registration of the transfer, the purchaser will become the owner of the property, duly entitled to vacant occupation of the property, unless otherwise agreed upon between the parties in writing. The TPN Offer(s) to Purchase therefore makes provision for either vacant occupation or occupation subject to tenancy to be given to the purchaser on the date of registration.

The seller should be aware of the importance to notify the purchaser whether there are existing tenants occupying the property as it could have the effect of placing the seller in breach or worst-case scenario have the agreement rendered voidable by the purchaser should the seller fail to provide vacant occupation. In practice the pro rata rental received, in the month of the transfer being registered, will be calculated by the Conveyancer and subtracted from the proceeds of the seller to be paid to the purchaser.

In the instance where the seller remains in occupation of the property after the date of registration of the transfer in the Purchaser’s name, he will be liable for occupational rental to be paid to the new owner. The amount of occupational rental and the period of occupation needs to be agreed upon between the parties and it will be best to conclude a written lease agreement to regulate this relationship between the parties.

The formalities concerning signature of the Offer(s) to Purchase.

Section 2(1) of the Alienation of Land Act No 68 of 1981, stipulates that no sale agreement shall be of any force or effect unless it is contained in a deed of alienation signed by the parties to it or by their agents acting on their written authority. From these 3 requirements can be derived:

The Offer to Purchase needs to be in writing;
The Offer to Purchase needs to be signed by the purchaser and seller; and
If an agent represents any party, the agent needs to be authorised in writing and he/she needs to sign the Offer to Purchase.

The first uncertainty to dispel of is whether or not an electronic signature will constitute due compliance with Section 2. Unfortunately, the Electronic Communications and Transactions Act explicitly stipulates that agreements concluded in terms of the Alienation of Land Act cannot be signed by virtue of an electronic signature. An electronic signature and the electronic transmission of a sale agreement should not be confused as a sale agreement can be signed in writing and sent via electronic transmission to the other party for signature.

The second uncertainty will be whether an agreement of sale will be void if not signed by witnesses. It is not a legal requirement that a sale agreement be witnessed when signed by either party nor will it be invalid if not witnessed. But the TPN Offer(s) justifiably makes provision for the signatures of witnesses as a witness can give evidence as to identity of the parties who signed the agreement and also as to the time and place of signature of the agreement by the parties, should this event be brought into dispute.

It is important to note that where an agent acts on behalf of any party, the agent needs to be authorised in writing for his or her signature to bind a party. This is considerably more important when a natural person authorises a representative in terms of a Power of Attorney or one trustee is authorised in terms of a Resolution by the other trustees, as should it not be in writing the agreement of sale will rendered be void.

The common law currently regulates the signature of representatives of private companies and close corporations, but the TPN Sales Pack also caters for these events by the addition of Resolutions by private companies and close corporations which should be signed prior to the signature of a representative.

The TPN Lease Pack and Sales Pack make provision for POPIA in the Mandates and in the Lease agreements. Signing additional documents or policies is not required.

If you are signing an agreement with a new vendor or supplier you would need to check the documentation carefully to ensure POPIA is adequately covered.

If you are unsure, ask for the new Vendor/ Supplier to sign the Information Privacy Policy that is published on the TPN POPI Portal.

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