When Nature Intervenes During a Property Transfer

The recent severe weather conditions across the country, including heavy rainfall, strong winds and widespread flooding, raise an important legal question:

What happens when a property is damaged by a natural disaster after an Offer to Purchase has been signed, but before transfer of the property takes place?

The answer is determined by South African common law, the wording of the Offer to Purchase, and whether the agreement contains a force majeure clause.

What is Force Majeure?

“Force majeure” refers to extraordinary events beyond the control of the parties which may delay, disrupt or prevent contractual performance.

Examples include floods, fires, storms, civil unrest and natural disasters. In property transactions, the force majeure clauses regulate what happens if an unexpected event affects the transfer process or damages the property before registration.

The Legal Position Under South African Common Law

Under South African common law, the risk in a property transaction generally passes to the purchaser once the sale becomes unconditional, even if transfer of the property has not yet been registered.

This means that if a property is damaged by flooding or another “Act of God” after all suspensive conditions have been fulfilled, the purchaser may still carry the risk and remain obliged to proceed with the transaction.

However, the wording of the Offer to Purchase is extremely important, as many agreements specifically regulate:

1. The passing of risk

2. Insurance obligations

3. Cancellation rights

4. Material damage to the property

What is an “Act of God”?

An “Act of God” refers to a natural event that could not reasonably have been foreseen or prevented. Flooding resulting from severe weather conditions would typically qualify.

However, South African law distinguishes between:

1. True impossibility of performance; and

2. Mere inconvenience or financial hardship

Only genuine impossibility may excuse performance entirely.

What Happens if the Property is Damaged Before Transfer?

If the damage is minor, the transaction will usually continue, with repairs being attended to before registration or through insurance claims.

Where the property suffers severe or material damage, the position becomes more complicated and depends on the wording of the agreement, whether risk has passed, the extent of the damage and insurance arrangements.

In some instances:

1. The parties may renegotiate the transaction

2. Transfer may be delayed

3. Insurance proceeds may be used for repairs

4. The agreement may be cancelled by mutual agreement between the parties

Why Proper Drafting Matters

Force majeure and risk clauses are no longer standard “fine print” provisions contained in an Offer to Purchase. With extreme weather events becoming increasingly common, these clauses are essential risk-management tools.

A properly drafted agreement should clearly regulate:

1. When risk passes

2. What happens if the property is damaged

3. Insurance obligations

4. Cancellation rights

5. Delays caused by disasters or infrastructure failures

Final Thoughts

Natural disasters can affect far more than just buildings and infrastructure. They can also disrupt contractual obligations and property transfers.

The recent flooding across the country serves as an important reminder that purchasers and sellers should fully understand the risk, force majeure and insurance provisions contained in their Offers to Purchase before disaster strikes.

For assistance with force majeure clauses, property transfer disputes, or the drafting of Offers to Purchase, the attorneys at Snymans Inc. are available to assist.

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

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