Can a Verbal Agreement Ever Be Enough to Buy a Home?

One of the first legal principles every property practitioner is taught is that an agreement for the sale of land must be in writing and signed by the parties.

Section 2(1) of the Alienation of Land Act 68 of 1981 (the Act) requires a sale of land to be contained in a written agreement signed by the parties.

But what happens when this is not strictly complied with?

A recent High Court judgment in Dlomo v De Klerk and Others has raised precisely that question.

The facts of the case

The applicants, former spouses, had lived in a house with their two minor children for several years. Although the parties initially signed a written Offer to Purchase, they later cancelled it and agreed orally that the applicants would buy the property for R1 million. They paid the majority of the purchase price, largely using their pension benefits, and continued living in the home.

When the sellers later refused to transfer the property, they relied on the Alienation of Land Act, arguing that the oral agreement was invalid because it was not in writing. The purchasers therefore faced the possibility of losing both their home and the money they had paid.

What did the High Court decide?

The Court found that, in these exceptional circumstances, the Act failed to protect vulnerable purchasers who had already paid for and occupied their homes. It held that this could infringe constitutional rights, including the rights to housing, equality and dignity, as well as the best interests of the children living in the property.

The Court also declared certain aspects of section 2(1) unconstitutional and ordered that wording be read into the Act to recognise certain oral agreements relating to residential property in appropriate circumstances.

Is this now the law?

No.

It is important to understand that it has not yet changed the law. The declaration and the reading-in remedy have been suspended pending confirmation by the Constitutional Court.

For now, the existing statutory position remains applicable: all agreements for the sale of land must be in writing and signed by the parties.

Why is the judgment significant?

This judgment raises an important question: Should the law always insist on certainty, or should it sometimes protect vulnerable people from an unfair result?

The requirement that agreements for the sale of land must be in writing exists to provide certainty and prevent fraud and disputes. However, the Court recognised that strict application of the law can sometimes produce harsh consequences where purchasers have already paid for and occupied their homes.

It is this tension between legal certainty and constitutional fairness that makes this such an important case to follow.

What may happen if the Constitutional Court confirms the judgment?

If the Constitutional Court confirms the declaration of invalidity and the proposed remedy, South African property law could see a significant but potentially limited exception to the usual writing requirement.

It would not mean that oral agreements of the sale of land would automatically be enforceable.

Instead, courts may have to consider questions such as whether an oral agreement was concluded, what its material terms were, whether the purchaser substantially performed the agreement and whether the circumstances justify enforcement.

Conclusion

For now, the position remains the same. Every agreement for the sale of land should still be reduced to writing and signed by the parties.

The judgment should therefore not be understood as creating a general exception to the statutory formalities, but rather as raising the possibility that, in exceptional circumstances, strict application of the statutory formalities may have to be considered alongside constitutional rights and the circumstances of the parties.

Whether this approach will ultimately be confirmed by the Constitutional Court remains to be seen.

Written by: Maret Carroll
Moderated and approved by: Rohula Kgabu-Mnyayi

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