April 16, 2022

What Is Required for the Conclusion of a Valid Agreement of Sale of Land


With regard to the first element, the land sale agreement, it was also generally accepted that, in the event that the land sale agreement was erroneous or invalid for a specific reason, the transfer of the land could not be effectively established. However, recent decisions of our courts have shown that we may need to review what we thought we knew about the transfer of real estate. The essential elements of an agreement on the sale of real estate are: the parties (buyers and sellers); Price (purchase price); object of sale (real estate); the prescribed formalities (the agreement must be in writing and signed by the parties). An example would be when a company sells a property without the person signing the land sale contract being authorized by resolution to enter into the land sale contract. Obviously, the validity of the contract for the sale of land can be questioned in such a case, but in the event that a decision has been made entrusting the person signing on behalf of the company with the power to take care of it before registering the property in the office of the deed, a valid intention has been formed before the registration of the transfer and the actual agreement is valid, despite the ineffectiveness of the agreement on the sale of land. As such, the transfer of ownership could actually be affected by the registration in the office of the deed, and the validity of the actual agreement would protect the transfer of ownership from attacks on the grounds that the contract for the sale of land is invalid. There is no legal prohibition on entering into a contract for the sale of real estate on a Sunday. In Legator McKenna v. Shea et al.

2010 (1) SA 35 SCA, the Court concluded that the abstract theory was applicable in South Africa. As such, the court confirmed that, if the parties to a contract for the sale of land intended to transfer the property from one person to another, once such an actual contract had been concluded and the registration of the transfer of the property had been registered in the office of the deed, the transfer of the immovable property had actually been established. In addition, in cases where a land sale contract may be invalid due to other defects in the land sale contract, such as . B the purchase price that cannot be easily determined or an inadequate description of the property, the mere fact that the contract for the sale of land is invalid does not necessarily invalidate the subsequent transfer of ownership in the office of the deed. In any case, it must be checked whether the parties intend and whether a valid real contract has been concluded before the transfer is registered at the deed office. Consideration is what a party “pays” to enter into the contract. Payment is a vague term when it comes to defining consideration in a contract, because what a party receives to sign the contract is not always money. So while a real estate contract might say the property changes hands for $1 million in return, a tenant can get a place to live to consider improvements to the property while living there. The Legator McKenna case confirms that the formation of a valid intention at the conclusion of the land sale agreement to transfer ownership from one party to another is the absolutely essential element in entering into a land sale agreement.

In the event that the registration of the transfer of ownership has taken place in the register of the deed and the contract for the sale of land is deemed defective or invalid for any reason, the transfer of ownership remains valid provided that the actual agreement between the parties is based on a valid intention to complete the transfer of ownership. Acceptance is exactly what it looks like: the person who receives the offer accepts the terms of the offer. Acceptance must be voluntary. This means that a person who signs a contract when a firearm is pointed directly at them is legally unable to accept the offer because they are under duress. As regards the theory of causation, notwithstanding the fact that the transfer of property was registered at the registry office, if a contract for the sale of immovable property was found to be erroneous or invalid, the transfer of ownership of that immovable property could not have been effectively demonstrated. Therefore, the validity of the transfer of ownership from one person to another depends entirely on the conclusion of a valid land sale contract. With regard to the abstract theory, in the event that the parties to a contract for the sale of land intended to transfer ownership from one person to another (the so-called “real contract”), and the registration of the transfer of the property was registered in the office of the deed, the transfer of the immovable property was effectively established and ownership was transferred from one person to another, that the contract for the sale of land has been found to be defective or invalid for any reason. The above scenarios could also be applied if a spouse who is married in a community of property and enters into a contract for the sale of land without the consent of his or her spouse.

Obtaining the consent of such a spouse before registering the transfer in the office of the deed constitutes a valid intention before registering the transfer and the authentic contract is valid despite the nullity of the contract for the sale of land. This requirement for a contract refers to the intent of each party. Often, friends and family members come to a vague agreement, but they never intend it to be legally binding, that is, they do not intend that one person can sue the other if someone does not do what they have said. This type of agreement is not a valid contract because there is no legal intent. The five prerequisites for preparing a valid contract are offer, acceptance, consideration, jurisdiction and legal intent. In South Africa, once you have signed an agreement to buy a property, you cannot lose the property to a better offer made by someone else before registration, unless the transaction fails due to non-compliance with the clauses set out in the agreement. In other countries, you will need to take out “title insurance” to protect your property rights against the rights of other parties. However, pay attention to an “escape” clause for sellers.

A sales contract does not need to be combined into a single formal document. It can be two documents, the written and signed offer and the written and signed acceptance (provided that in both documents, one refers to the other). The acceptance of the recipient (seller) must be communicated to the supplier (buyer) in order to conclude a valid contract. No stamp duty is levied on a contract for the sale of real estate. .

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