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Five common mistakes that Sellers make when signing a property sale agreement

Our conveyancing team advises as follows:

  1. In sales of sectional title properties, there often is confusion as to whether or not the exclusive use areas of which the Seller enjoys beneficial use form part of the sale. This depends on whether a formal exclusive use area is registered in the deeds office or whether the rights are “informal”- ”informal” meaning the Seller enjoys the use thereof assigned in terms of the rules of the relevant scheme. In the latter instance, the exclusive use area cannot be included in the property sale agreement as part of the property sold.

  2. Sellers often downplay the importance of making adequate disclosure in the property condition report which is attached to the property sale agreement. At present, it is not a legal requirement for the report to be attached to the sale agreement although it is recommended by the Estate Agents Affairs Board. However, the law is about to be changed shortly to make it compulsory. Either way, it is best to give proper disclosure of the property’s condition in that report, simply because it is honest and the right thing to do. Also, if there is clarity upfront on the condition of the property, later disputes – that so often delay transfer or end in costly litigation – can be avoided.

  3. Sellers should take note that agreements place the liability to ensure that certain prescribed Compliance Certificates are in place on them. These certificates are mostly obligatory and relate, among others, to electric, gas, and water installations on the property. There is a cost for the certificate itself as well as for the reparation work to be done. These costs are for the Seller’s account. Sellers however often forget to budget for this cost which can mount up easily if the current installations have not been regularly maintained.

  4. Where the Seller of a property is an entity (for example, a company or close corporation), it is very important to ensure that the members of the close corporation or directors of the company are in agreement with the sale. A properly drafted resolution is required. The resolution will also appoint a particular person to be the signatory on behalf of the close corporation or company. If the Seller is a trust, similar provisions apply. The provisions relating to trusts are more stringent due to legal differences between trusts on the one hand, and companies and close corporations on the other. It is crucial that the resolution is drafted and signed before the property sale agreement is concluded.

  5. Sellers and buyers alike often have an incorrect understanding of the liability for the expenses in a transaction including a property sale agreement.

For more information, contact our offices on 041 363 6044 for a consultation with one of our Conveyancers.



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DISCLAIMER:

This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.