Written for YourProperty

This week the Property Poser panel considers a property transaction, which has come to a halt due to the seller’s sudden reluctance to sell.

The prospective buyer writes that he concluded an agreement of sale with the seller for R1.6 million. It has since transpired that the outstanding mortgage bond on the property is R1.58 million and that there are outstanding rates of R80 000.

The seller’s monetary obligation thus exceeds the amount that would be realised from the sale of the property. However, she refuses to pay a cent more than the selling price, which is hampering the transaction.

The reader is keen to proceed and besides his contractual obligations such as attaining an approved mortgage bond and paying a deposit, he has also obtained the electrical certificate of compliance, which is usually the obligation of the seller.

Because of the seller’s refusal to pay the required amount, the rates clearance, which would allow the transfer to go through, has not been issued.

The reader has furthermore demonstrated his eagerness to proceed with the transaction by offering to cover the outstanding amount required for the rates clearance.

This would be subject to the seller signing an acknowledgement of debt and making arrangements to repay the loaned monies to him in time. However, the seller is unwilling to enter into such an arrangement.

The reader would like to know what his rights are in this situation. He has taken a look at the agreement of sale and suspects that his remedy is to claim specific performance.

Specific performance is a remedy that a party can use to enforce the terms of a contract, says Schalk van der Merwe from Rawson Properties in Somerset West, Cape Town.

“It is intended to make a defaulting party comply with his or her obligations. The remedy follows the maxim pacta sunt servanda, which means agreements must be kept.”

While one could understand why the seller would be reluctant to sell from a commercial point of view, Van der Merwe says she should not have concluded the agreement without considering the consequences.

“It seems a little unlikely that the seller would only have become aware of the negative financial repercussions after signing the agreement of sale.”

Grant Hill of Miller Bosman Le Roux Attorneys in Somerset West says an agreement of sale would usually oblige the injured party to put the offending party on terms before the remedy of specific performance could be pursued.

“Putting the seller on terms must be done in accordance with the provisions of the agreement.”

This is usually by way of a written notice stating that the seller must comply with the provisions of the agreement within a specified period, says Hill.

“Failure to comply would result in the injured party pursuing a contractual remedy.”

Hill says the other remedy usually mentioned in an agreement of sale is that of cancellation, with or without the option to claim damages.

“Our reader clearly wishes to proceed with the transaction so claiming specific performance would be the appropriate remedy but putting the seller on terms should precede this step.”

To ask a property related question, click here.