LB Vorster Inc

01/08/2025

10/03/2025

THE RIGHT TO NOMINATE THE TRANSFERRING ATTORNEY
1. Seller’s right to Choose the Attorney:

As the seller, you have the right to select the attorney who will handle the transfer of your property. Neither the buyer nor the estate agent (“property practitioner”) should be permitted to choose on your behalf, as doing so could jeopardize your position in the event of a dispute during the transfer process.

2. Buyer’s Responsibility for Transfer Costs:

Although the buyer is responsible for paying the transfer costs, your right to choose the transferring attorney is rooted in the fact that you assume the greatest risk in the sale and transfer process. It’s advisable not to agree to the buyer’s suggestion of using their preferred attorney, especially when their reasoning involves discounts on transfer fees or personal connections. Such a choice could lead to an unfavourable outcome during the transfer process.

3. Reviewing the Offer to Purchase:

When an estate agent presents you with an offer to purchase (“OTP”) from a potential buyer, have an attorney of your choice review it on your behalf. This ensures you avoid common pitfalls that could delay the transfer process and incur additional costs. It also helps prevent future disputes between you, the buyer, or the estate agent by safeguarding your legal rights as the seller.

4. Impact of Using the Buyer’s Attorney:

If the buyer’s attorney is allowed to handle the transfer of your property, and a dispute arises during or after the process, the attorney may be reluctant to act against their client’s interests. This can lead to the seller seeking independent legal advice, which could have been avoided had the seller initially nominated their own attorney for the transfer. By choosing your attorney, you ensure continuous, dedicated legal support throughout the process.

5. Estate Agent’s Preference for an Attorney:

Similarly, if an estate agent strongly advises you to use a particular attorney—often stating that the attorney is on the agency's “panel” or the “only one they work with”—it’s important to be cautious. In the event of a dispute between you and the agent (which, unfortunately, can happen), this recommended attorney may be reluctant to assert your rights against the agent, given their ongoing relationship. This could complicate matters and result in an unsatisfactory resolution for you

6. Prohibition of Attorney Influence:

Estate agents are prohibited from influencing or persuading you to use a specific attorney. This is mandated by the Property Practitioners Regulatory Authority (PPRA) Code of Conduct. If you request a recommendation, the agent must provide at least two attorney options, from which you can make your own selection.

7. Importance of the “72-Hour Clause”:

The “72-hour clause” allows for a second, potentially better offer to replace the initial offer if it is contingent upon conditions like bond approval or the sale of the buyer’s property. This emphasizes the importance of having your OTP reviewed by your own attorney to ensure it includes the necessary clauses for continued marketing and the option to accept a higher offer for your property.

13/10/2021

THE RECKONING OF TIME FRAMES IN OFFERS TO PURCHASE/DEEDS OF SALE

It is essential for parties to a deed of sale in respect of immovable property to have absolute clarity as to the exact date of expiry of any period of time stipulated therein.

Limits are normally placed on the time periods within which:

• an offer to purchase has to be accepted by the seller in order for it to become a binding and enforceable deed of sale;
• a deposit has to be paid by the purchaser;
• the requirements of F**A have to be complied with by both parties without which it is virtually impossible to prepare the transfer documents;
• a company or close corporation has to be registered that will be taking transfer of the property purchased (in the event that a signatory is acting as a trustee or agent on behalf of such an entity still to be registered);
• a purchaser has to register as a VAT-vendor (for example, in order to ensure that the transaction is considered by SARS as one to which a zero VAT rate will apply);
• a mortgage loan has to be procured by the purchaser in order to comply with the suspensive condition, failing which the deed of sale will merely lapse and become null and void;
• guarantees have to be furnished by the financial institution that has granted a mortgage bond to the purchaser or, alternatively, the time within which payment of the purchase price by the purchaser has to be effected;
• a purchaser’s property has to be sold and/or transferred (if the deed of sale is subject to such a suspensive condition);
• the transfer documents have to be signed (by both parties) and the transfer costs paid (by the purchaser);
• registration of transfer has to be effected by the transferring attorney;
• any breach of the agreement has to be remedied to prevent the aggrieved partly from cancelling the deed of sale.

In the event that a deed of sale provides for “continued marketing” of a property (in anticipation of a purchaser applying for a mortgage loan or trying to sell his/her other property in terms of the suspensive conditions contained in the deed of sale) proper directions should be provided in such a deed of sale as to the effective application of the so-called “72-hour clause” which in practice is normally being treated as a 3-day clause. If that is the case, then rather refer to the time allowed as 3 days (instead of 72 hours) and provide an explanation as to how exactly the 3-day period is to be calculated. Experience has shown that trying to determine or prove the exact starting time of the 72-hour period is very difficult.

The above list does not purport to be exhaustive, but it should be quite clear that the feasibility of a deed of sale depends entirely on due performance by either of the contracting parties within specified periods of time. A deed of sale that does not clearly stipulate the periods of time within which certain actions should take place is extremely difficult and often impossible to enforce which will, of course, contribute to unnecessary time being wasted and costs being incurred in order to approach a court to provide the relief that the deed of sale was supposed to provide, or at least properly regulate, in the first place.

In the absence of clearly defined time limits in a deed of sale, the party who wishes to enforce compliance by the defaulting party will have to allow a ‘reasonable time” for such action/s. What is “reasonable” according to the seller might not be reasonable to the purchaser, and vice versa. Ultimately the parties may have no option but to approach the court for a ruling as to what would be reasonable in the circumstances.

Therefore, when preparing an offer to purchase (which upon acceptance by the seller will constitute a deed of sale), it would be wise to stipulate specific dates on which certain conditions should be complied with and suspensive conditions be fulfilled, instead of referring to a number of days, weeks or months. Alternatively, the deed of sale should at least stipulate the manner in which any period of time contained therein has to be calculated.

The reckoning of time periods can otherwise become a vexed exercise as our law recognizes several methods for the reckoning thereof.

For example, where any period of time in a deed of sale is referred to in days, Section 4 of the Interpretation Act states that the time period shall be reckoned exclusively of the first and inclusively of the last day, unless the last day falls on a Sunday or on a public holiday, in which case the period shall be reckoned exclusively of the first day and also of every such Sunday or public holiday. Consequently, every Saturday has to be included in the calculation. (However, bear in mind that Section 4 will not apply if the deed of sale specifies how the time periods are to be calculated.)

In cases where contracts have been silent on the method of reckoning time and Section 4 of the Interpretation Act did not apply, our courts have in the past (depending on the unique circumstances in each case) used a number of methods to calculate time periods. These methods are:

• The “ordinary civilian” method whereby the first day of the period is included and the last day excluded;
• The “natural” method whereby the time is reckoned from the hour, or even minute, of an occurrence to the corresponding hour or minute on the last day of the period;
• The “extraordinary civil” method whereby both the first and last days are included;
• The “clear days” method whereby both the first and the last days are excluded.

Therefore, in order to avoid the technicalities surrounding the calculation of time periods and the entailing waste of time and accumulation of costs in the absence of clearly defined time frames, it is advisable to word an offer to purchase/deed of sale in such a way there can be no doubt as to the exact way of determining the expiry date of any period of time contained in such a document.

(This article is merely a general information sheet and should not be used or relied on as legal or other professional advice. No liability is accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information contained herein. Always contact your legal advisor for specific detailed advice or contact us for further assistance.)

16/03/2021

BUYING IMMOVABLE PROPERTY FROM A SELLER WHO PASSES AWAY PRIOR TO TRANSFER // BUYING FROM A DECEASED ESTATE

A simple property transaction can become fairly complicated if, for example, the seller dies during the transaction, i.e. prior to transfer of the property to the purchaser having been effected at the Deeds Office.

SALE PRIOR TO DEATH

An agreement of sale that was entered into prior to the death of either the seller or the purchaser and in respect of which transfer has not yet taken place, remains valid and enforceable in all respects. However, the death of either party will inevitably cause delays.

In the event of the death of a seller, for example, the transferring attorney/s will have to obtain a “Power of Attorney to Pass Transfer” from the executor of the estate of the seller. However, before that can happen, the executor needs to be formally appointed by the Master of the High Court by virtue of Letters of Executorship. This, unfortunately, can take some time as a number of documents have to be completed and signed by the nominated executor which, together with the original will and copies of various supporting documents, have to be submitted to the Master for due consideration.

This may give rise to frustrating delays in the transfer process that otherwise would have been completed within 2 to 3 months from date of acceptance by the seller of the purchaser’s offer. It also means that had the parties already signed their respective transfer documents at the time of death, all those documents will become obsolete and will have to be replaced by freshly prepared and signed transfer documents that will reflect the demise of the seller and that the estate of the latter is now being represented by the duly appointed executor.

In addition, the “Power of Attorney to Pass Transfer” will have to be endorsed by the Master of the High Court which can cause further delays. The Master will only endorse the said power of attorney in terms of section 42(2) of the Administration of Estates Act once it has satisfied itself that all its documentary requirements have been met.

In the event of the death of the purchaser, on the other hand, it might be entirely impractical to proceed with transfer as, for example, the one who has applied for a mortgage bond in order to finance the transaction is no longer available to comply with the bank’s requirements thereby rendering the transaction virtually impossible to be proceeded with.

SALE AFTER DEATH

An executor can only sell and transfer immovable property (prior to having acquired the Master’s formal approval of the liquidation and distribution account) with the consent of all the heirs to the deceased estate, unless the property has to be sold in order to settle the debts of such deceased estate.

(Transfer of immovable property to the heirs can only be effected once the liquidation and distribution account has been formally approved by the Master of the High Court and it has lain open for inspection by the public for 21 days at the Master’s Office and the Magistrate’s Office of the district in which the deceased had normally resided, without any objections having been raised against the account.)

In the event of the sale of immovable property by the executor with the consent of all the heirs, an application will have to be submitted to the Master of the High Court for its endorsement of the “Power of Attorney to Pass Transfer” of the property in terms of section 42(2) of the Administration of estates Act. Such an application is made by the executor by completing form JM33 and annexing thereto all the required documents such as, for example, a copy of the deed of sale and the consents of the respective heirs.

From the above it is quite clear that extreme care should be taken when preparing an offer to purchase immovable property where a deceased estate is involved. The entailing process is to be adequately explained to all the parties to such a sale agreement. In particular they should be alerted to the inevitable delays that will be experienced while the executor and/or the transferring attorney will be complying with the provisions of the Administration of Estates Act and the Deeds Registry Act, respectively.

(This article is merely a general information sheet and should not be used or relied on as legal or other professional advice. No liability is accepted for any errors or omissions, nor for any loss or damage arising from reliance upon any information contained herein. Always contact your legal advisor for specific detailed advice or contact us for further assistance)

16/03/2021

TRANSFER DUTY OR VAT?

Whenever immovable property is being transferred from A to B (irrespective of whether the parties are individuals or legal entities), the transaction will be subject to taxation by SARS, either in the form of transfer duty or value added tax (“VAT”).

1. At what rates are transfer duty and VAT calculated?

1.1. The former distinction between individual purchasers and legal entities as far as the transfer duty payable by a purchaser is concerned, no longer exists and all purchasers are subject to the same rates. If the purchase price is R1 000 000 (one million rand) or less, no transfer duty is payable.

1.2. From R1 000 001 (one million and one rand) upwards, the transfer duty is calculated as follows:

1 000 001 – 1 375 000 3% of the value above R1 000 000
1 375 001 – 1 925 000 R11 250 + 6% of value above R1 375 000
1 925 001 – 2 475 000 R44 250 + 8% of value above R1 925 000
2 475 001 – 11 000 000 R88 250 + 11% of value above R2 475 000
11 000 001 and above R1 026 000 +13% of value exceeding R11 000 000

1.2. The current rate at which VAT is payable by individuals and legal entities, is 15% (fifteen percent).

2. In what instances will transfer duty be payable and in which instances will VAT be payable?

2.1. Normally, and in the majority of cases, transfer duty will be payable as explained in 1 above.

2.2. The mere fact that a seller of immovable property is registered as a VAT-vendor in terms of Section 23 of Act 89 of 1991 (the “VAT Act”) does not necessarily mean that the sale of his/her/its property will be subject to payment of VAT. Only if, for example, in the past the seller had claimed “input VAT” in connection with the property, “output VAT” will be payable on the sale thereof. In such a case no transfer duty will be payable. This is in line with the principle that a single taxable transaction can only be taxed once.

2.3. It thus follows that if the seller has never claimed VAT in respect of a property, he/she/it may choose to either treat the sale thereof as a “VAT transaction” or a “transfer duty transaction”.

3. Who is responsible for payment of TD or VAT and when will either be payable?

3.1. Our law does not prescribe whether the seller or the purchaser is responsible for payment of transfer duty. The only concern of SARS is that the relevant transfer duty is paid by one of the parties to a transaction within 6 (six) months from date of last signature of the deed of sale (normally the date of acceptance by the seller of the Offer to Purchase). However, the practice has developed that the purchaser of immovable property normally pays the relevant transfer duty as part of the transfer costs. Nothing prevents the parties from stipulating in the deed of sale that the seller will be responsible for payment of transfer duty but it seldom, if ever, happens.

3.2. As far as VAT is concerned, the “VAT Act” stipulates that the seller is responsible for payment thereof. In practice, the seller will merely add the relevant VAT to the price that is required for the property. Consequently, the purchaser normally ends up paying the VAT as part of the purchase price but in lieu thereof he/she/it does not have to pay any transfer duty.

4. Is it possible to structure a sale transaction in such a way that neither transfer duty nor VAT will be payable?

Yes, it is possible. Provided that:

4.1. the seller of immovable property is registered as a VAT-vendor in terms of Section 23 of the VAT Act; and
4.2. the purchaser is similarly registered as a VAT vendor, or will at least be registered as such prior to the date of “supply” (transfer); and
4.3. the fixed property forms part of an enterprise that is being disposed of as a going and income-earning concern, together with the assets that are necessary for carrying on business.

The transaction will then attract VAT at a zero-rate. Consequently, and whereas a single taxable transaction can only be taxed once, neither VAT nor transfer duty will be payable.

This is normally the case with guest houses and commercial properties. However, if a private property is exclusively being let as a holiday accommodation, or in terms of a long-term lease, it is also deemed by SARS as an enterprise that is capable of being disposed of as a going concern.

The wording of the deed of sale will be of utmost importance and will have to clearly reflect the parties’ intention of qualifying the transaction as a zero-rated one.

(This article is merely a general information sheet and should not be used or relied on as legal or other professional advice. No liability is accepted for any errors or omissions, nor for any loss or damage arising from reliance upon any information contained herein. Always contact your legal advisor for specific detailed advice or contact us for further assistance.)

16/03/2021

BUYING IMMOVABLE PROPERTY FROM A NON-RESIDENT

On 1 September 2007, section 35A of the Income Tax Act, No 58 of 1962 (“the Act”), came into operation.

1. In terms of Sec 35A of the Act all purchasers of immovable property (including non-residents) are burdened with a statutory duty to withhold a certain percentage of the purchase price for payment to the South African Revenue services (“SARS”) if:

1.1. the seller is a non-resident;
1.2. the purchase price exceeds R2 000 000.00.

2. A purchaser is then compelled to withhold an amount equal to:

2.1. 7,5% (seven comma five percent) of the purchase price if the seller is a natural person;
2.2. 10% (ten percent) if the seller is a company (presumably also if the seller is a close corporation – the Act only refers to a company);
2.3. 15% (fifteen percent) if the seller is a trust.

3. The amount withheld by a purchaser in terms of the Act has to be paid to SARS:

3.1. within 14 days from the date on which the amount was withheld, if the purchaser is a resident;
3.2. within 28 days after the date on which the amount was withheld, if the purchaser is a non-resident.

4. In the event that a purchaser fails to pay any required amount to SARS within the period allowed for payment, he/she/it will be liable for payment of:

4.1. interest at the prescribed rate on any amount outstanding, and;
4.2. a penalty equal to 10% of the amount outstanding.

5. A purchaser who knew, or who ought reasonably to have known, that a seller is a non-resident and who have failed to withhold the required amount, will be personally liable for payment of such amount to SARS on a date not later than the date on which payment should have been made if the amount had in fact been withheld.

6. In the event that:

6.1. an estate agent, who is entitled to commission in respect of the sale of a property, and/or
6.2. a transferring attorney, who is entitled to a fee for professional services rendered in connection with the registration of transfer of a property,

knows, or should reasonably have known, that a seller is a non-resident, and fails to notify the purchaser in writing thereof (and that Section 35A of the Act may apply), the purchaser will be relieved of the sanction as explained in paragraph 5 above.

7. An estate agent and / or a transferring attorney who fails to notify a purchaser of the fact that the seller is a non-resident, will be jointly and severally liable for the payment of the amount which the purchaser is required to withhold and pay to SARS, but their liability will be limited, respectively, to the amount of the estate agent’s commission and / or the professional fee of the transferring attorney.

8. A purchaser, estate agent and / or transferring attorney will be entitled to claim from a seller any amounts that they were compelled to pay to SARS following their failures referred to in paragraphs 5 and 7 above.

9. It is important to note that a seller is entitled to apply to SARS for a directive that no amount, or a reduced amount, be withheld by a purchaser.

The insertion of Section 35A into the Act was necessitated by the fact that effective recovery of tax (including capital gains tax) from a seller is often impossible if the latter moves abroad once a property is sold. It is much easier for SARS to recover the tax from a purchaser who will be holding the immovable property upon completion of the transaction.

(This article is merely a general information sheet and should not be used or relied on as legal or other professional advice. No liability is accepted for any errors or omissions, nor for any loss or damage arising from reliance upon any information contained herein. Always contact your legal advisor for specific detailed advice or contact us for further assistance.)

07/11/2020

THE COMSUMER PROTECTION ACT AND THE “VOETSTOOTS”-CLAUSE

In a previous article the difference between patent and latent defects was discussed. The way in which the owner of immovable property would protect him/herself against a claim by a purchaser based on defects not disclosed to the latter is to have a “voetstoots”-clause inserted in the agreement of sale.

Contrary to popular belief the introduction of the Consumer Protection Act (CPA) in 2011 has not entirely nullified the protection available to a seller of immovable property in terms of the “voetstoots”-clause.

Section 55(2) of the CPA stipulates that every consumer has a right to receive goods that:

1. are reasonably suitable for the purpose for which they are generally intended;
2. are of good quality, in good working order and free of any defects;
3. will be usable and durable for a reasonable period of time, having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply.

However, the CPA only applies to transactions in terms of which a supplier (the seller) supplies goods to a consumer (the purchaser) in the ordinary course of the supplier’s business. Therefore, when a property developer or investor sells immovable property it is likely that the agreement of sale relating to such property will be subject to the CPA as they will be deemed acting in the ordinary course of their business.

However, if the same developer (or investor) would sell his/her own home, such a transaction would not be subject to the CPA as the developer would not be selling his/her home in the ordinary course of his/her business. A private sale of property is a transaction that does not fall within the ambit of the CPA as it is not a transaction concluded in the ordinary course of the seller’s business.

It is therefore clear that in most instances the CPA will not apply to day to day immovable property transactions. A once-off transaction between two individuals for the sale of a house would not likely be a supply of goods in the ordinary course of the seller’s business and consequently the deed of sale relating to such a transaction may contain a “voetstoots”-clause as the parties and the agreement do not fall within the ambit of the CPA.

In the event that the CPA does apply to a transaction, a “voetstoots”-clause cannot be included in the agreement relating to the transaction and such a clause can most certainly not be enforced. The parties are also not entitled to agree to a waiver by the purchaser of his/her rights in terms of the CPA as such an agreement will be limiting the rights of the consumer (purchaser) and therefore be considered unreasonable, unfair or unjust.
Importantly, not all purchasers in transactions that are subject to the CPA will benefit from the protection provided by the said Act. In terms of section 5(2) of the CPA it will not apply to a transaction if the purchaser is a legal entity (company, close corporation or trust) with an asset value or annual turnover exceeding R2,000,000 (two million rand). In such an event the agreement of sale may contain a “voetstoots”-clause as the transaction does not enjoy protection under the CPA.

(This article is merely a general information sheet and should not be used or relied on as legal or other professional advice. No liability is accepted for any errors or omissions, nor for any loss or damage arising from reliance upon any information contained herein. Always contact your legal advisor for specific detailed advice or contact us for further assistance.)

07/11/2020

“CONTINUED MARKETING” AND THE “72-HOUR CLAUSE”

The acceptance by a seller of an offer to purchase that is subject to fulfilment by the purchaser of a suspensive condition, i.e. among others, the acquisition of a mortgage bond and/or the sale of the purchaser’s existing property, within a certain time frame, effectively means that the property is taken off the market in anticipation of fulfilment by the purchaser of such condition/s.

This may happen during a time that the demand for properties are high and taking the property off the market entirely, may later be regretted if a suspensive condition is not fulfilled and a number of golden opportunities to dispose of the property to a third party may have been missed altogether.

Failure on the part of the purchaser to fulfil any one or more of the suspensive condition/s on or before the cut-off date will simply render the agreement of sale of no further force or effect. It will also be incapable of being revived unless extended by agreement between the parties prior to the stipulated date of fulfilment.

That is why, in the pre-printed “Offer to Purchase”-forms of most estate agencies and many Deeds of Sale, provision is made for the “Continued Marketing” of the seller’s property in anticipation of fulfilment by the purchaser of the suspensive condition/s.

In the event that a second, better offer is received as a result of such continued marketing, which the seller intends accepting, the latter will be entitled to give written notice to the purchaser who had made the first offer, to either fulfil the suspensive condition/s or to waive them within 72 hours (or 3 days).

In the event of fulfilment, or a waiver, of the suspensive conditions within say 3 days, the first offer to purchase will become unconditional and the transaction will be proceeded with. In the event of failure on the part of the first purchaser to either fulfil or waive the suspensive condition/s within 3 days, the seller may consider the first offer to purchase as obsolete and of no further force or effect. The seller is then free to accept the second offer which would normally be an unconditional offer but not necessarily so. The transfer process can then immediately be commenced with.

THE IMPORTANCE OF SPECIFYING A DOMICILIUM ADDRESS THAT WILL EXPEDITE EFFECTIVE DELIVERY

It speaks for itself that a 72-hour (or 3-day) notice needs to be capable of swift and effective delivery. Unfortunately, many pre-printed Offer to Purchase-forms/Deeds of Sale still stipulate that the parties choose their respective residential addresses as their chosen domicilia. (A domicilium-address is the address where a party prefers to receive any communications or notices in terms of, or relating to, the Offer to Purchase/Deed of Sale in order to constitute effective delivery).

It would be wise to make use of e-mail addresses instead. In such an event delivery will be effected within a matter of hours if not instantaneously. Otherwise, in the event of having to forward a 72-hour notice to a residential address by registered mail and allowing say 4 days for delivery, the 72 hours (3 days) procedure actually becomes a prolonged and frustrating exercise. There is also a chance that the addressee might never receive a notice which later on may give rise to arguments and may even entail costly and time-consuming litigation. Parties are of course always entitled to effect personal delivery by hand but due to various factors that is not always possible.

By using e-mail addresses as their chosen domicilium-addresses, parties to an Offer to Purchase/Deed of Sale ensure the swift and effective delivery of important notices.

The above is a simplified explanation of the effect of a 72-hour clause, the wording of which is extremely important due to the technical nature of its implementation and the correct ex*****on thereof. It is therefore advisable that parties obtain appropriate legal advice before making or accepting an offer containing a “72-hour” or “continued marketing” clause.