Get the Sale Agreement and Addendums Right
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It is critically important when selling property in South Africa to ensure that the full terms of the property sale agreement as well as all required Addendums are recorded.
Most offers to purchase today provide that the sale agreement for property (contract) is the entire agreement concluded between the parties and that there will not be any variations of, or amendments to or cancellation of the agreement, unless the same is reduced to writing and signed by both parties.
Although it is obvious, many often forget that this means that any verbal agreement concluded between the parties after the property sale agreement has been signed is not binding on either of the parties.
It is therefore very important for property purchasers and sellers to ensure that each time the sale agreement is varied, that an appropriate addendum is drafted and signed by both the property purchaser and the seller.
Amendments can arise for a number of reasons including the fact that the parties may agree on a different occupation date. One can imagine the chaos which could arise if the parties verbally agree to a property occupation date and do not thereafter have the same reduced to writing and signed by both parties in the property sale agreement. If one of the parties (seller/s or buyer/s) is then difficult and refuses to honour the verbal agreement, the other party will have no claim and could be placed in the difficult situation of having instructed movers to move the furniture to the new property only to find that vacant occupation is not available.
The non-variation clause is particularly important when it is used in conjunction with clauses relating to suspensive conditions particularly if the date by which a suspensive condition has to be fulfilled is varied.
In our next article we will chat about “suspensive conditions” and the fact that a sale agreement which is subject to a suspensive condition automatically terminates if the suspensive condition is not fulfilled timeously and cannot be revived by way of an addendum.
As an example, if the parties intend that the date by which the mortgage bond is to be granted is to be extended but do not reduce this to writing, if the bond is subsequently granted after the date which is reflected in the agreement (but before the date which the parties chose in terms of their oral agreement) then the contract will lapse and will be of no further force or effect even though there was an oral agreement to the contrary.
In the same way, it's also very important that the parties record in the agreement all factors which are important to them because most sale agreements provide that the agreement is the entire agreement between the parties and no representations which are not contained in the sale agreement are binding on the parties.
Thus, once again if the parties had agreed verbally on an item, but have not included the same in the contract, such item would not be binding on the parties. This can often lead to great unhappiness and even sometimes result in one of the parties refusing to proceed with the property sale transaction.
Sometimes the item in dispute can be very small. As an example, if it has been agreed that the pot plants in a certain room are to become the property of the purchaser, it is important that the same be included in the sale agreement for the property because, if it is not included in the agreement, the purchaser has no claim against the seller for the pot plants. Even though the value of the pot plants might be relatively small, this could result in the purchaser, as a matter of principle, refusing to proceed with the transaction even though the property purchaser is legally obliged to do so. It easy to see just how important it is to ensure that all items which have been orally agreed, are in fact included in the property contract.
The general rule therefore is, if you are not sure whether something should be included in the contract for the sale of a property or not – err on the side of caution and rather include it - either in the contract or in an addendum!
Author: Barry Davies