The importance of a signed OTP

The Alienation of Land Act (ALA) clearly states that the validity of an Offer to Purchase (OTP) depends on the contract for the sale of immovable property being in writing and signed by the concerned parties or their authorised representatives acting on their written instruction. And the importance of signatures on an agreement of sale has once again been highlighted by a recent decision handed down by the Gauteng Local Division of the High Court in Johannesburg.

The ins and outs of subject to bond approval clauses

A closer look at the case

The property in question was bought on auction and the contract was subsequently signed by the buyer’s husband. The buyer did not sign the agreement herself and the seller was not initially aware of her existence. As the buyer then took considerable time to comply with the terms of the agreement, the seller put her on terms. In response, the buyer then made an application to the High Court to enforce the agreement. 

The court felt the issue was the factual question of whether the written agreement was concluded between the buyer and the seller or between the buyer’s husband and the seller. Was the buyer’s husband acting as an agent and not in his own capacity when executing the written agreement? It appeared that the buyer’s husband only inserted the fact that he was acting for and on his wife’s behalf into the agreement at a later stage. It also appeared that he had no written authority to act on her behalf.

The court’s finding

The court therefore found that the claim for specific performance failed on several grounds, including the following.

  • Over and above the requirements of the ALA mentioned above, any introduction of the buyer would have required a written amendment of the agreement due to its terms. The contract clearly stipulated that express written consent was required in the case of session or delegation. 
  • The claim further failed as no case had been made that the seller authorised the substitution of the buyer’s husband with the buyer. The seller contended that they never agreed to any substitution, which proved to be the case, and there was no evidence of any ratification by the seller. 

As this case demonstrates, any party to an agreement must make sure that they personally sign the agreement in their capacity or provide written authority to an agent to sign on their behalf. It’s also clear that should an authority to sign be granted by ratification, the other party to the agreement must consent in writing. 

A note on electronic signatures

The wording of the ALA as it currently reads does not allow for electronic signatures. This was, however, questioned in a recent decision by the Eastern Cape Local Division of the High Court, which found an electronically signed OTP to be valid. This decision must, however, be read and interpreted with great caution, as it will not be binding in any other division until the Supreme Court of Appeal sanctions this finding. The specific merit of the case must also be considered when an argument for the validity of electronic signatures is made.

Want more Snymans Articles? Sign up for our monthly newsletter.

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

Recommended for you

The difference between movable and immovable property
Legislative Guidelines

The AARTO Act: constitutional or unconstitutional?[post_view before=""]

The constitutional validity of the Administrative Adjudication of Road Traffic Offences (AARTO) Act and the Administrative Adjudication of Traffic Offences Amendment (AARTO Amendment) Act was recently challenged in the matter between the Organisation Undoing Tax Abuse (OUTA) v The Minister of Transport and others.

Read More
My name has changed - what happens to my property’s title deed?
Legislative Guidelines

Universal Partnerships: what is required?[post_view before=""]

There is currently no statute in South Africa that regulates the relationships between cohabitees if they are not formally married.

Read More
Minors and immovable property
Legislative Guidelines

CSOS and the courts: where do I take my dispute?[post_view before=""]

Here’s a look at a recent case which dealt with a dispute between the body corporate and residents in a sectional title scheme.

Read More
Your Trusted Partner in Residential and Commercial Property Transfers
Legislative Guidelines

The deal collapsed – is the attorney to blame?[post_view before=""]

The case of Nienaber N.O. and van den Berg (the plaintiffs) versus Nelson and Kitching Attorneys (the defendants) highlights the criteria of the duty of care a conveyancer should be aware of when providing services to clients. In this case, the plaintiffs instituted action alleging that the defendants owed them a duty of care as conveyancers and acted negligently and in breach of such duty. Let’s take a closer look.

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

Court ruling: Sale of immovable property – Alienation of Land Act[post_view before=""]

In the recent case of Potgieter v Village and others, held at the High Court of South Africa, Northern Cape Division, Kimberly, the applicant applied for an urgent interdict to restrain the first and second respondents from passing transfer of a specific property. The application for the interdict was pending action by the applicant to claim transfer of the property. In this case, both parties to the contract were represented by their attorneys.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

The importance of a signed OTP

The Alienation of Land Act (ALA) clearly states that the validity of an Offer to Purchase (OTP) depends on the contract for the sale of immovable property being in writing and signed by the concerned parties or their authorised representatives acting on their written instruction. And the importance of signatures on an agreement of sale has once again been highlighted by a recent decision handed down by the Gauteng Local Division of the High Court in Johannesburg.

The ins and outs of subject to bond approval clauses

A closer look at the case

The property in question was bought on auction and the contract was subsequently signed by the buyer’s husband. The buyer did not sign the agreement herself and the seller was not initially aware of her existence. As the buyer then took considerable time to comply with the terms of the agreement, the seller put her on terms. In response, the buyer then made an application to the High Court to enforce the agreement. 

The court felt the issue was the factual question of whether the written agreement was concluded between the buyer and the seller or between the buyer’s husband and the seller. Was the buyer’s husband acting as an agent and not in his own capacity when executing the written agreement? It appeared that the buyer’s husband only inserted the fact that he was acting for and on his wife’s behalf into the agreement at a later stage. It also appeared that he had no written authority to act on her behalf.

The court’s finding

The court therefore found that the claim for specific performance failed on several grounds, including the following.

  • Over and above the requirements of the ALA mentioned above, any introduction of the buyer would have required a written amendment of the agreement due to its terms. The contract clearly stipulated that express written consent was required in the case of session or delegation. 
  • The claim further failed as no case had been made that the seller authorised the substitution of the buyer’s husband with the buyer. The seller contended that they never agreed to any substitution, which proved to be the case, and there was no evidence of any ratification by the seller. 

As this case demonstrates, any party to an agreement must make sure that they personally sign the agreement in their capacity or provide written authority to an agent to sign on their behalf. It’s also clear that should an authority to sign be granted by ratification, the other party to the agreement must consent in writing. 

A note on electronic signatures

The wording of the ALA as it currently reads does not allow for electronic signatures. This was, however, questioned in a recent decision by the Eastern Cape Local Division of the High Court, which found an electronically signed OTP to be valid. This decision must, however, be read and interpreted with great caution, as it will not be binding in any other division until the Supreme Court of Appeal sanctions this finding. The specific merit of the case must also be considered when an argument for the validity of electronic signatures is made.

Want more Snymans Articles? Sign up for our monthly newsletter.

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