Whilst people remain at home under the Government lockdown, they might be tempted to buy and sell, lease and rent properties online, on a do-it-yourself basis: without having to have face-to-face meetings and without inspecting the property.
Typically, a tenant may decide to purchase the property, he already rents from his landlord.
So then the obvious question is: is a contract for the sale of immovable property by means of WhatsApp, SMS and email, valid and watertight?
Sales of Immovable Property by WhatsApp, SMS and email are NOT legal
No! Not at all. A sale created online will not be valid and binding. The legislation specifically prohibits online sales of immovable property. Oral sales of immovable property are also not allowed.
The sale of Immovable and Sectional Title Property must be in writing and signed by all parties.
The Alienation of Land Act 1981; stipulates that all contracts for the sale of immovable property must be “contained in a document and signed by the parties thereto.”
Therefore, any exchange of online messages purporting to be an agreement for the sale of immovable property or any sectional title apartment, will be completely null and void; because this arrangement has not “been reduced to writing and signed by both parties.”
So, one would expect to see signed Offers to Purchase documents, being scanned from house to house to create a valid sale.
We are all familiar with this process. Print out a blank Offer to Purchase document. Complete the document in handwriting or by typing content: such as names, price and property description. Then handwrite or sign your signature, together with a witness’s signature, at the end of the document. Scan or fax, the signed document to the seller. If the seller agrees to exactly what the offer document provides, then the seller and witness would countersign it, creating a valid sale. The seller would then scan the finally countersigned document to the purchaser and to his chosen conveyancer to get started.
“Electronic, or Advanced Electronic Signatures” cannot be used for the sale of immovable property, because they do not show any handwritten signature; as is required by the current legislation.
So what do we do where there is no printer nor scanner?
The legislation still requires an old-fashioned signature in handwriting, to validate a contract for the sale and purchase of immovable property. That is the bottom line! If you want it watertight – seller and purchaser have to sign the document.
Hopefully one might try and find a neighbour’s printer and/or scanner to use.
Subject to a final contract document, signed by both parties.
In any event, there is nothing to prevent negotiating by email or WhatsApp, with a view to concluding a finally signed contract document.
One must avoid contradictory proposals, vagueness and backtracks. Therefore, it is very wise to label each electronic message with the heading: “Subject to a final contract document, signed by both parties.”
Offer to Purchase: “Subject to physical inspection and approval.”
If a purchaser wants to purchase; but wishes to postpone his subsequent inspection and approval of the property, till after the Lockdown, then we recommend inserting the following clause :
“Subject to the suspensive condition that the purchaser is able to physically view the property and then submits his/her written approval of the purchase, to the seller, within 10 calendar days, after the Corona Lockdown has been withdrawn.”
Most “Other Commercial Contracts” may be created by an exchange of online messages.
Incidentally, most other commercial contracts can be validly concluded online.
The Electronic Communications and Transactions Act 25 of 2002: (“ECT”), specially provides that other contracts may be concluded online, and will be valid and binding on the parties. The only proviso; is that each message must contain an Electronic Signature which essentially is cyber data attached to other data intended to be his signature, by the user. An email normally formats this information at the top and bottom of the message.
But when it comes to sales of Immovable Property, Wills and Electronic Signatures: these are specifically prohibited from being validly created online; by virtue of Section 4(4) of ECT read together with Schedules 1 and 2; which are found at the very end of the ECT Act.
However, to the contrary, a rental lease concluded by an exchange of online messages will be valid.
Of course, the content must be comprehensive and specific, to avoid disputes. Also, a rental agreement reached by discussions and an oral agreement is valid and binding. But still, to avoid disputes, a witnessed document signed by all parties is recommended.
Transfers and bonds being delayed by the Lockdown.
What are the rights of seller and purchaser, whose registration of transfer and payment of the selling price has been unexpectedly delayed? In the past, the courts have adjudicated on conveyancing delays, where these delays could not be avoided.
The courts have always held that where both parties could not have foreseen a delay beyond their control, the resultant delay would not be deemed to be un-reasonable. (Young v Land Values: also Nel v Cloete). The law has always held that property transfers should be registered within a reasonable time, after the sale agreement was signed. And therefore, especially seeing that the Deeds office is closed for three weeks, a short Lockdown would not be regarded as an unreasonable delay.
Most conveyancing Firms and Home Loan offices are continuing to work remotely from home during the Lockdown. We have been told to expect that new Home Loan Mortgage Bond instructions will continue to be downloaded and must be attended to remotely.
So a lot of work is being done to draft the files, in preparation for sign-up by the parties, once the Lockdown has been withdrawn.
In conclusion, most conveyancers should be available to assist with offers to purchase agreements and will process conveyancing paperwork whilst the Lockdown is in place.
Denoon Sampson is the Director at Denoon Sampson Ndlovu Inc, currently ranked the ‘number 1’ top performing conveyancer by First National Bank Limited. He has 30 years of experience as a conveyancer, specialising in the full spectrum of property-related law and is often called upon to give talks or contribute content on related matters.