Contract of sale: These clauses could cost you

To reduce risks and avoid any disagreements or negative outcomes, there are a few vital things that should be included in the contract of sale.

Property Blog Articles | Advice | Contractual Matters | Market News

A contract of sale for immovable property can be a daunting document to sign, and understandably so. It binds both the buyer and seller to specific terms and there are significant commitments and undertakings on both sides. This should, however, not put anyone off investing in property, but there are a few things that should be included in the contract of sale to reduce risks and avoid any disagreements or negative outcomes.

Firstly, whether the contract of sale is being drawn up by individuals for a private sale or by experienced estate agents, common law requires certain essential elements to be included in order for the contract to be valid. These elements are:

1. Who the parties to the contract are;
2. The purchase price of the property;
3. The property description.

The contract of sale is the cause of the transfer and in terms of legislation it must be in writing and signed by the parties thereto.

While these are the basic elements that have to be included, there are many additional clauses that are commonly included in a contract of sale and are considered best practice. For example, because of the monetary value of these transactions, most property sales are dependent on a buyer either obtaining a home loan or selling their current home. As such, a clause is often included to this effect, stating that the contract of sale is dependent on these conditions being met. In addition, to protect the seller’s interests, a clause that is frequently included is one that allows the seller to give the buyer a particular time frame (typically 72 hours) within which to meet the conditional clauses, otherwise a subsequent offer from another buyer may be accepted.

Particularly important are two clauses, one relating to occupation and one to breach of the contract.

A contract of sale will often stipulate that occupation of the property by the buyer will take place upon registration. However, because this can be ambiguous due to changes or delays in the process, it is advisable to have a clause that clearly states the date on which the buyer will take occupation as well as a value that will be paid pro rata (occupational rent) for the time of occupation prior to registration. This occupational rent will also be due by the seller if he occupies the property beyond the date of registration.

The breach clause protects both buyer and seller from a situation where one of the parties does not honor the terms thereof. This clause in a contract of sale will give details as to the remedies of each party should this happen, to avoid any uncertainty.

It is worth noting here that should the situation change, and both parties agree that one or more terms of the contract should be altered, it is possible to do so if provided for in the original contract without either party breaching the agreement. The contract can be updated or amended through an addendum that is signed by both parties resulting in the same contract remaining in force with the updated terms.

The key to ensuring a successful property sale is gathering as much information as possible to have the best chance of a positive outcome for all parties. Making contact and working with established and trusted conveyancing attorneys will help streamline the process and make it as smooth and stress free as possible.

Follow Snymans on Facebook for more legal advice, information and news about property.

7057

Recommended for you

Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Appointing multiple executors of a deceased estate

6932

The decision of who should be appointed as the executor of an estate can be made by the testator. While it is common for a single person to be appointed, it is also possible for a testator to appoint more than one person to share this role which can bring with it certain added complications.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

Buying a property with an existing tenant

7278

When purchasing a property with a tenant already in place, certain aspects should always be considered before the offer to purchase is signed.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

The long lease

12449

There has been a great deal of talk about 99-year leases which seems to have many, including Parliament, in a frenzy. What does a 99-lease entail? What happens at the end of the lease? Can your children inherit this piece of land? Below we answer some of the key concerns when it comes to a long lease.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Compliance Certificates and Home Inspections

12439

Before a property is sold and registered in the buyer’s name, it’s important that it is compliant with relevant regulations and that all parties are aware of the condition of the property and what maintenance or repairs might be needed. The buyer and seller each have responsibilities in this regard and it is important that both parties fulfil these obligations.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

4 common mistakes when selling your home

13115

Whether you’re selling your home for the first time or you’ve done it all before, it’s easy to get caught out by a few common pitfalls. That’s why we’ve put together this guide on four common mistakes and how you can avoid them.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Contract of sale: These clauses could cost you

To reduce risks and avoid any disagreements or negative outcomes, there are a few vital things that should be included in the contract of sale.

Property Blog Articles | Advice | Contractual Matters | Market News

A contract of sale for immovable property can be a daunting document to sign, and understandably so. It binds both the buyer and seller to specific terms and there are significant commitments and undertakings on both sides. This should, however, not put anyone off investing in property, but there are a few things that should be included in the contract of sale to reduce risks and avoid any disagreements or negative outcomes.

Firstly, whether the contract of sale is being drawn up by individuals for a private sale or by experienced estate agents, common law requires certain essential elements to be included in order for the contract to be valid. These elements are:

1. Who the parties to the contract are;
2. The purchase price of the property;
3. The property description.

The contract of sale is the cause of the transfer and in terms of legislation it must be in writing and signed by the parties thereto.

While these are the basic elements that have to be included, there are many additional clauses that are commonly included in a contract of sale and are considered best practice. For example, because of the monetary value of these transactions, most property sales are dependent on a buyer either obtaining a home loan or selling their current home. As such, a clause is often included to this effect, stating that the contract of sale is dependent on these conditions being met. In addition, to protect the seller’s interests, a clause that is frequently included is one that allows the seller to give the buyer a particular time frame (typically 72 hours) within which to meet the conditional clauses, otherwise a subsequent offer from another buyer may be accepted.

Particularly important are two clauses, one relating to occupation and one to breach of the contract.

A contract of sale will often stipulate that occupation of the property by the buyer will take place upon registration. However, because this can be ambiguous due to changes or delays in the process, it is advisable to have a clause that clearly states the date on which the buyer will take occupation as well as a value that will be paid pro rata (occupational rent) for the time of occupation prior to registration. This occupational rent will also be due by the seller if he occupies the property beyond the date of registration.

The breach clause protects both buyer and seller from a situation where one of the parties does not honor the terms thereof. This clause in a contract of sale will give details as to the remedies of each party should this happen, to avoid any uncertainty.

It is worth noting here that should the situation change, and both parties agree that one or more terms of the contract should be altered, it is possible to do so if provided for in the original contract without either party breaching the agreement. The contract can be updated or amended through an addendum that is signed by both parties resulting in the same contract remaining in force with the updated terms.

The key to ensuring a successful property sale is gathering as much information as possible to have the best chance of a positive outcome for all parties. Making contact and working with established and trusted conveyancing attorneys will help streamline the process and make it as smooth and stress free as possible.

Follow Snymans on Facebook for more legal advice, information and news about property.

7057