Your sale agreement: there's many a slip ...
“There's many a slip 'twixt the cup and the lip” (old proverb) In other words, even when things seem certain, they can still go horribly wrong. And that’s particularly true of immovable property sale agreements, because of our law’s formal requirements relating to them.
Yet another warning to have your sale documents professionally checked before you sign them comes from a recent High Court case (Yonda Investments CC v Rohr and Another (29235/2009) . ZAGPPHC 130) where an agreement of sale for a sectional title unit was held to be invalid for two technical reasons –
- There was no evidence that the person who signed the sale agreement for the seller (a Close Corporation) had the necessary authority in writing from the CC to do so, and
- The buyer was married in community of property, but had signed the agreement without the required written consent of his spouse. Interestingly, a seller has some protection in this regard to the extent that consent will be deemed to have been given if the seller “does not know and cannot reasonably know” of the non-compliance. In this case however the seller’s employee had known of the marriage prior to the sale and the defect was held to be fatal.
The message here is clear – fail to comply strictly with our law’s formal requirements and you will sink your sale.
This article first appeared in LawDotNews and is republished with authority from LawDotNews
In terms of section 15 of the Matrimonial Property Act 88/84 a purchaser who is married in community of property does not have to be assisted by his/her spouse unless it is a sale in more than two instalments over a period of longer than a year. A cash purchase is not an alienation and I cannot for the life of me see why this was deemed fatal!
I agree with Allen West. In terms of the MPA Sec 15(2)g consent is required for the entering into of a contract as defined in the Alienation of land Act, which refers to "a deed of alienation under which land is sold...in more than two instalments over a period exceeding one year". What puzzles me further is that Judge Baqa held that the sale was void as the agreement was not signed by the CC as seller or by an agent acting on their written authority in terms of the Alienation Act.
The sole member signed the agreement and in terms of the Close Corporations Act is a statutory agent of the CC and has statutory authority to bind it unless the power to do so is excluded (Sec 54). As such no written authority should have been necessary. The message of this judgement, with respect, is far from clear.
I agree 100% with Alan West regarding the fact that the consent in terms of section 15(2) is/was not required when acquiring immovable property through a cash transaction. I do however not follow the reasoning of Nick Livesley. The judgement states that the sale agreement was signed by Tanya Erasmus on behalf of the plaintiff CC. Tanya Erasmus is not a member. On Tanya Erasmus' own version under oath neither a written nor informal authority ever existed as it was not even discussed between her and the sole member of the CC (Mr den Dunnen). I would think that even the sole member of a CC would be required in terms of the ALA to appoint a representative in writing, isn't that correct?
The signatory was not the sole member of the CC. She had no written authority.
The commentators overlook section 15(2)(a) which expressly prohibits a spouse from alienating immovable property without the written consent of the other spouse where they are married icop. That entails any alienation, including a cash sale or purchase, or one financed through a bond. Section 15(2)(g) deals with sales in installments only. That is a specific type of alienation. Moreover, the contract was not signed by the member of the selling CC, but a an employee of the selling CC. In such event, written authority is required.
With regard to the last comment, an acquisition of land can never qualify as an alienation (see section 15 (2) (a) and (b)).
I do submit that from reading the full judgement the Judge seems to be frustrated by the way that the matter was presented in court as he yet again explains cross examination reasons and techniques and seems to be frustrated that the Plaintiff did not testify etc etc etc. If anything this yet again proves that Conveyancing is a specialised field in law.
My comment regarding the authority of the agent acting for the CC is incorrect. Because Ms Erasmus was not a member she would have had to have written authority. However all of the judges (and apparently counsel) seem to have overlooked the fact that consent of a spouse is only required when entering into a contract AS DEFINED in the Alienation of Land Act in terms of which "land is sold...in more than two installments over a period exceeding one year", and not for the purchase of a property in terms of a contract of sale in the ordinary legal sense. (or in terms of a "deed of alienation" as defined in the Alienation of Land Act.).
Legislation is so often misinterpreted because of not reading applicable sections to the end, referring to applicable definitions and having regard to other sections which may be relevant. Had the legislature intended to require the spouse's consent in regard to all contracts of sale there would have been no need for Section 15(2)g, and Section 15(2)b could have simply been amended to refer to the acquisition of immovable property. In my humble view the provisions of the legislation have been misconstrued by the Courts.
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