The recent judgment in Shaik & others v Pillay & others  JOL 20893 (N) is a valuable alert to pitfalls that real estate practitioners may encounter when dealing with contracts for the sale of members' interest relating to immovable property. Although the court concluded that no valid agreement came into existence as the parties clearly intended that both their signatures were necessary for a valid agreement, the comments by Maryna Botha STBB's training and operations manager are worth highlighting:
Where an individual instructs an agent with the view to purchasing a property, receives an agreement, signs it, pays a deposit timeously, furnishes guarantees to the seller's conveyancers on the due dates as well as relevant documentation on request, he/she should have been reasonably able to assume that everything was in order and that the transaction would result in transfer.
There are lessons in this case for attorneys, conveyancers, estate agents and purchasers, among others:
- Estate agents should not instruct attorneys to transfer property (or cede shares in property owning entities) until they are certain that a valid and binding agreement has been reached between seller and purchaser. • Conveyancers/attorneys should always check signature clauses in agreements, and should follow up if any uncertainty exists. • Potential purchasers should, after making an offer, never assume acceptance. There should always be insistence on obtaining a copy of the signed agreement or, if a verbal agreement, on written confirmation of acceptance (or at least on verbal confirmation in the presence of reliable witnesses) by the seller.
- Real estate practitioners sometimes tend to treat cession of shares/members' interest agreements as if they are mere variations of ordinary property transfers.
This is undesirable. Instead, one should remember that section 2 of the Alienation of Land Act (obliging a written agreement) does not apply to sales of shares/members' interest, and that there are subtle but vital differences between the legal structuring of the two types of transactions. Although the legal objective is similar, the process to be followed in a cession of shares/members' interest differs markedly from the process of a transfer of immovable property.
Pam Golding Intellectual Property Magazine