Buying an executive home: Aspects to consider prior to signing a Deed of Sale


At first glance a deed of sale appears to be a standard and straightforward contract. There are however, multiple aspects that both the purchaser and seller must consider before signing a deed of sale. Below, we shall discuss a few concepts that are sometimes confused and which should be considered, prior to signing a deed of sale.

1. Suspensive Conditions versus Ordinary Conditions

Suspensive conditions and ordinary conditions are materially different from one another. A condition that states that the sale is conditional upon the purchaser obtaining a loan is a suspensive condition. If a loan is not granted within the time period stipulated in the agreement, the entire agreement lapses and is null and void. The parties must be placed in the same position that they were in, prior to signing the agreement. A condition that a deposit must be paid is merely an ordinary condition. The effect of this is that the non-compliant party will be in breach of the agreement and failure to rectify the breach within a time period specified in the notice, given by the innocent party, will entitle the innocent party to either claim specific performance or cancel the agreement and claim damages.

2. Possession versus Occupation

There is an important legal distinction between possession and occupation. Possession is the date that the risks, obligations and rights relating to the property pass from the seller to the purchaser. Occupation, however, is the date that the purchaser occupies the property and enjoys the use of, and benefits to, the property.

3. Value-Added Tax (VAT) versus Transfer Duty

When immoveable property is sold, either VAT or transfer duty is payable. If the seller is a VAT vendor for purposes of that particular transaction, then VAT is payable by the seller. It is important that the deed of sale clearly states whether the purchase price is inclusive or exclusive of VAT. It must be noted that if a seller and purchaser are both VAT vendors and the property is sold as a going concern, it can be a zero-rated VAT transaction. There are however, a number of requirements which must be complied with in order for the transaction to be considered zero-rated. If the transaction is not a VAT transaction, then transfer duty is payable by the purchaser, which is calculated in relation to the purchase price. Currently, the first R750 000.00 is exempt from transfer duty.

In conclusion, there are many aspects that must be considered by both the seller and purchaser before entering into a deed of sale. We suggest that you ask a conveyancer to peruse the deed of sale prior to signing the agreement to prevent any unexpected surprises after the agreement is already signed, when it is possibly too late to rectify the problem. At Goldberg & de Villiers Inc., we have four conveyancers, namely Adri Ludorf, Tracey Watson-Gill, Nicholas Mitchell and Deborah Dean. Please do not hesitate to contact one of our conveyancers, should you require any assistance. Contact: 041 501 9800


Photo Caption: Deborah Dean, BSc (Honours) Property Studies, LLB.