The COVID-19 lockdown has really focused our attention on how estate agents can continue to get Offers to Purchase / Deeds of Sale signed when buyers and sellers cannot attend meetings and do not have access to printers and scanners at home.
The problem arises because the Alienation of Land Act requires a deed of sale to be signed by both the buyer and the seller, and digital signatures are not sufficient to bring about a binding deed of sale. For a deed of sale to be binding, signatures need to be handwritten.
We have come up with two solutions to this problem. All the buyer or seller will need to implement these solutions is a smart phone, pen and paper:
SOLUTION 1:
Step 1.
Assuming most agents are able to prepare the Offer to Purchase (OTP) on their computers, they email it to the buyer with all the annexures. To avoid having to send counter offers backwards and forwards it would be best to have agreed to all the terms and conditions first.
Step 2:
The buyer writes out the following on a piece of paper, completes AND SIGNS IT:
I ……………………. hereby offer to buy ……………………. (property description) from ……………………. (seller) for the sum of R ……………………. on the terms and conditions as contained in the template offer to purchase as well as any annexures thereto, as are contained in the email from ……………………. (name of agent) to myself, dated ……………………. and sent to me at ……………………. (exact time), contents of which are repeated herein as if specifically set out.
Signed at ……………………. on …………………….
Step 3:
The buyer then takes a photo of this handwritten document, as well as the computer screen containing the email with the attachment/s, and WhatsApps these to the agent, who in turn WhatsApps these to the seller. (There will be two photos to forward.)
Step 4:
The agent emails the completed but unsigned OTP and attachments to the seller.
Step 5:
The seller then writes this out on a piece of paper AND SIGNS IT:
I ……………………. hereby accept the offer to purchase of ……………………. (property description) from ……………………. (buyer) for the sum of R ……………………. as contained in the WhatsApp image received from ……………………. (agent) on ……………………. at ……………………. (time) together with all documents referred to therein.
Signed at ……………………. on …………………….
Step 6:
The seller then takes a photo of this piece of paper and returns it to the agent- who forwards it to the buyer.
Step 7:
The agent then sends the unsigned OTP and attachments, as well the photos of the handwritten documents (which can be sent from WhatsApp to email on any smart phone) to the transferring attorney. These two handwritten documents are then in essence the sale agreement which incorporates all the terms of the unsigned Offer to Purchase by reference. Where the sellers are married in COP, they will still need two witnesses to sign unfortunately.
SOLUTION 2:
This solution relies on the fact that the Alienation of Land Act allows a buyer or a seller to authorise a representative to sign the deed of sale on their behalf. Such authorisation needs to be in writing, but it does not have to comply with the formal requirements of a Power of Attorney. This solution might be better suited when it is only one party who cannot print, sign, and scan the actual OTP. Once again, this will only work if the agent is able to prepare the full OTP digitally, or get it into a digital format to send on. We first deal with the situation where it is the buyer who cannot print and scan the document:
Step 1.
The full OTP is sent to the buyer, with all the annexures. To avoid having to send counter offers backwards and forwards it would be best to have agreed to all the terms and conditions first.
Step 2.
The buyer then authorises a representative to sign the OTP on their behalf. This is done by the buyer writing out a letter of authorisation on a piece of paper and signing it. The suggested wording for the authorisation is less than a page and is set out below. During lockdown it would be easiest for the buyer to authorise the estate agent to sign, but any 3rd party could be authorised to sign. Such a 3rd party would just need to be able to print, sign and scan the OTP, so that it can be sent on to the seller.
Step 3.
Once this is letter of authorisation is written out and signed, the Purchaser takes a photograph of this page and sends it to the agent’s phone. The agent, or the other 3rd party is then able to sign the OTP on the buyer’s behalf.
Step 4.
The OTP signed by the representative is then sent to the seller who can print, sign and scan in the ordinary course.
Step 5.
The fully signed OTP, with the written authority is then sent to the conveyancer to commence with the transfer.
Here is the wording for the authorisation of the buyer’s representative:
WRITTEN AUTHORITY TO SIGN OFFER TO PURCHASE
I the undersigned
_____________________________________________________________ (name)
_____________________________________________________________ (SA ID No. or Passport No. and Nationality)
hereby authorise
___________________________________________ (Insert name of representative)
______________________________________________________________SA ID No. or Passport No. and Nationality
to sign the offer to purchase on my behalf in terms of which I am purchasing property known as:
___________________________________________________________________(property description)
For a purchase price of R_______________________________ on the terms set out in the offer to purchase sent to me
at ______________________ on ______________________________.
(exact time and date on which offer to purchase/deed of sale was sent to the Purchaser/s)
Signed and Dated at _____________________ (Place) on ____________________________ (Date)
____________________________
PURCHASER
If there is more than 1 buyer, this document can be adapted, or each buyer will have to sign a separate authority. If it is the Seller who is the one who is unable to print, sign and scan they can follow the same procedure as was followed by the buyer.
This document giving the written authority, (and a similar document that could be written out and signed by the Seller) is available here:
- Written authority to sign a Deed of Sale as a Purchaser
- Written authority to sign a Deed of Sale as a Seller
Finally, we must point out that we do not recommend these “work around” methods when parties are able to sign in the usual way. These alternative methods add risk to the transaction and might create loopholes which can be relied on to get out of the contract at a later stage. We are however confident that if the procedures are followed correctly, they will give rise to a binding deed of sale.
Feel free to call us if there is anything that is not clear from our article. We would love to help you make a sale during the lockdown.
Keep safe and stay healthy.
Robert Krautkrämer and Deon Welz
Miltons Matsemela Inc
April 2020
Note the following update:
Postitive news regarding bond approvals during lockdown
Since we posted our Newsflash recently, introducing the “Photo Sale Agreement” method, we had a number of estate agents enquiring whether the Banks will accept sale agreements in this manner. Having made enquiries, we were alerted to the fact that the Banks are now all (since last week Thursday) willing to accept UNSIGNED offers to purchase! It also appears that some banks have in the past insisted on witness signatures on all OTPs (regardless of whether sellers were married in COP or not). This is also being relaxed during lockdown. Read more
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