Written for Property Poser
As executor of his late father’s estate, a Property Poser reader posed a question regarding the legality of drawing up a legal agreement for the sale of one of the estate’s properties, without being in possession of the actual title deed.
The family property is situated in a prime area and two urgent buyers are keen on acquiring it. The reader has the title deed number, but is not in possession of the actual title deed and is awaiting rezoning of the land.
The question – which our panel of experts answer here – is whether it will be legal for the executor to draw up an agreement with a prospective buyer, hand over the land to the purchaser (with payment in full) and to only transfer the property once the rezoning is finalised. He also needs to know if both parties would need lawyers in such a case.
Liesel Greyvenstein from Greyvensteins Nortier in Port Elizabeth says it is indeed possible to sell the land before the administration of the deceased estate is finalised and before the rezoning of the land has been approved. “All contracts for the sale of land must be recorded in writing and signed by all parties.”
According to her, the reader must request a conveyancing attorney to assist in drafting the agreement of sale, because a sale of land from a deceased estate must contain specific clauses and conditions, referred to in the Administration of Estates Act.
“It is not required that the buyer must have his or her own attorney,” says Greyvenstein. “If the terms of the agreement are quite straightforward and the parties have reached an agreement on all the essential elements of the sale, the seller’s attorney may draft the contract to record all the terms that the parties agreed to.”
However, she warns that if the transaction is complex and there are certain aspects of the contract that must still be finalised by way of negotiation, it will be in the buyer’s best interest to have his or her own attorney involved.
Jaco Rademeyer from Jaco Rademeyer Estates in PE says the reader does not explain why he is not in possession of the original title deed.
“Normally, when an application for rezoning of land is made to the local authority, a copy of the title deed is submitted as part of the application, not the original. It may be that the original title deed is held with the bank that has a mortgage bond over the property, but if there is no bond registered, the original title deed may in fact be missing,” he says.
This, according to Rademeyer, will not be a problem, because the Deeds Registries Act makes provision for the issuing of a certified copy of the title deed to replace the missing original, at a prescribed fee.
“Even though it is not against the law for a buyer to pay the purchase price of land to the seller before the date of registration of transfer, it could be risky,” he says.
“There may be various factors causing the transaction to be delayed or to even fall through. A buyer who has already paid the purchase price before taking transfer of the property will be in an unenviable position should the seller fail to take the necessary steps to pass transfer of the property to the buyer,” says Rademeyer.
He adds that most people require a mortgage bond when they buy a property. “The guarantee issued by the bank’s attorneys will stipulate that payment of the purchase price will only be made to the seller on the date of registration.
“It is obvious, therefore, that a non-cash buyer will not be able to pay the purchase price to the seller before the date of transfer.
“If the buyer agrees to pay a portion or the whole purchase price prior to the date of transfer, the attorney handling the transaction must clearly inform the buyer of the risks involved and must also advise the buyer of his or her right to obtain independent legal advice from another attorney,” says Rademeyer.
“This will assist the buyer in making an informed decision after weighing up risks and considering possible alternatives.”
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