Formalities are hugely important when it comes to the sale of immovable property, which is governed by the Alienation of Land Act 68 of 1981. The act states that no sale of land is permitted unless it has been put in writing and contained in a deed of sale – also commonly referred to as an Offer to Purchase – signed by all parties involved.
In the event that an agreement for the sale of land is subject to certain conditions being fulfilled (these are known as suspensive conditions), the agreement will terminate if these suspensive conditions are not complied with timeously. What’s more, if the date on which the condition had to be complied with has passed, it’s not possible to have the date extended – you cannot bring back to life something that is dead. Should the parties wish to “revive” the agreement, they will have to enter into a new sale agreement.
The above formality was of particular importance in the case of Compu-Cool (Pty) Ltd v Silver Dawn Investment 168 CC and others (39651/2020).
In the above matter, the applicant, Compu-Cool, claimed that a written sale agreement entered into between it and the respondent, Silver Dawn Investment 168 CC, was null and void with no effect due to non-fulfilment of the suspensive conditions of the agreement – finance could not be obtained within the stipulated timeframe.
It further claimed that the written “revival agreement” concluded between the two parties did not revive the sale agreement, as the non-fulfilment of the suspensive condition lead to the sale agreement becoming null and void, thus the “revival agreement” had no legal effect.
The court saw the core issue that requires determination as whether the revival agreement complies with the statutory requirements of the Alienation of Land Act, more specifically Section 2(1) of the Act.
The court held that the revival agreement constituted a new written agreement for the sale and purchase of the property, complying with Section 2(1) of the Alienation of Land Act, and as a result it was valid and enforceable.
Although the “revival agreement” was aimed at reviving the transaction between the parties, the wording of the agreement clearly embodied a new sale agreement. It was clear from the terms that the purpose was to conclude a new agreement, still on the same terms contained in the lapsed agreement which was incorporated by reference in the new agreement.
Taking the above into account, it is clear that if a suspensive condition is not fulfilled timeously, the sale agreement will lapse and be regarded as void from the beginning. The agreement cannot be revived. The parties would have to conclude a fresh sale agreement that complies with the Alienation of Land Act.
To prevent sale agreements from becoming void and with no effect, parties should always take contractual principles into account or seek the guidance of an expert property or legal practitioner.
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