The terms ‘agreement of sale’ and ‘offer to purchase’ are sometimes used interchangeably in South Africa, although they aren’t quite the same thing. An agreement of sale is a written agreement signed by both the buyer and the seller (and also by the seller’s spouse if he’s married or subject to the laws of a foreign country), whereas an offer to purchase may be either oral or written. If it’s in writing and signed by the buyer and accepted by the seller, an offer to purchase constitutes a binding agreement of sale, whereas an oral offer isn’t binding.
Note that the payment of a deposit isn’t mandatory in South Africa, but is a gesture of good faith by the buyer and an indication to the seller that he’s serious and is in a position to buy the property.
An agreement of sale should include the following:
- The name, address, identity numbers and marital status of the buyer and seller. If a company is buying the property, details of the position or capacity of the signatory must be provided.
A clear description of the property;
The selling price and the form of payment. If a deposit is to be paid, the agreement must specify that it be held in trust by the named conveyancer or estate agent.
- When the sale is subject to the buyer obtaining a loan, the amount of the loan, the institution applied to and the date by which the loan must be approved;
- When the sale is subject to the sale of the buyer’s property, a description of the property, the amount for which it is to be sold and the date by which it must be sold;
- Confirmation that the buyer must pay all transfer costs, taxes and municipal charges on the property from the date of possession;
- The dates on which the transfer of ownership is to take place and the buyer is to take possession. If occupation is to take place before the transfer of ownership, the buyer must pay interest or rent from that date, in which case the amount and method of payment must be specified.
- That the property is sold ‘voetstoots’ (meaning ‘as is’ or ‘in the condition in which the property is found’), i.e. without a guarantee by the seller that it has no defects (although the seller must tell the buyer about any faults that the seller knows about).
- Property surveys aren’t standard in South Africa but they can be carried out and their results included as a condition of purchase.
- The name of the conveyancer who will deal with the transfer;
- Confirmation that commission is due to a named estate agent and the amount due;
- Whether a certificate has been obtained confirming that all accessible parts of the property are free of infestation by designated beetles (sometimes known as a ‘borer-free’ certificate), who must pay for the inspection – generally the seller – and details of any work required;
- Who will pay for the electrical certificate confirming that the electrical installation meets statutory safety requirements – generally the seller – and details of any work needed;
- A list of fixtures and fittings included in the sale;
- Confirmation that no amendments to the agreement of sale are valid unless in writing and signed by the buyer and seller.