Written for Property Poser
This week’s Property Poser reader may soon find herself without a roof over her head after selling her house and signing an offer to purchase another.
To her shock, her bond application was denied and in the process she realised there was no clause in the contract protecting her from this eventuality.
She contacted the agent, who is doing both deals, asking her why there was no such clause. The agent told her that she never thought that the reader’s bond application would be declined.
The agent said they would simply approach other banks and, if unsuccessful, try to cancel the sale. She advised against trying to include a protective clause at this late stage as she did not want to “wake sleeping dogs”.
The reader says she is aware that she has signed a legally binding contract.
Schalk van der Merwe from Rawson Properties Helderberg says in terms of the Alienation of Land Act No 68 of 1981, an agreement for the sale of land must be in writing and signed by the parties or their agents acting on their written authority.
“It is important that the whole agreement be contained in the sales contract, including the conditions relating to the manner in which the buyer will finance the purchase.”
As with the reader, someone wishing to buy a new property may not be able to purchase it before his or her existing property is sold, says Van der Merwe.
“This may be due to capital being required to finance the purchase. Alternatively, the bank may only grant the finance if the buyer’s existing bond is cancelled.”
Van der Merwe says it is important to include a carefully worded suspensive condition in the offer whereby the transaction is made subject to the sale and transfer of the buyer’s current property, and/or that the buyer succeeds in obtaining a bond.
“If the wording is vague, it may lead to different interpretations between the contracting parties.”
Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says if there is a material difference in the parties’ interpretation of the agreement, a legal dispute may occur and it may even be grounds for having the agreement cancelled or declared void based on misunderstanding, misrepresentation or non-disclosure.
“Even worse than including vague suspensive conditions, is including none at all. This appears to be the case with the reader.”
Geldenhuys says, from the facts given by her, the agreement does not include a condition stipulating that she must succeed in obtaining a bond.
“If this is the case, the agent will have no authority to cancel the sale. This can only be done by agreement between the reader and the seller.
“If the seller does not agree to cancel, the reader will be bound, even if she is unable to raise the necessary finance.”
Geldenhuys says if she does not perform in terms of the agreement, the seller may take legal action against her to either enforce it or to claim damages.
“It is well known that ignorance of the law is not regarded as an excuse and that there is an obligation on a contracting party to inform him or herself of the legal implications flowing from it.”
Send your property related questions here.