Ricochet News

Cancellation of agreements of sale for immovable property

By Tracey Watson-Gill (B.Proc, Adv. Tax. Cert.) - Dec 1, 2017
Cancellation of agreements of sale for immovable property

Agreements of sale for immovable property must always be in writing and signed by all parties in order for them to be valid and binding.

If the agreement to be cancelled is not recorded in writing and signed by all parties, then cancellation is not necessary, as no binding agreement is in force.

The offer to purchase (which becomes an agreement of sale on acceptance by the seller) contains all the terms and conditions pertaining to the sale and suspensive conditions, if any, which need to be met in order to make the offer to purchase binding and enforceable. Upon fulfilment of all the suspensive conditions contained in the offer to purchase, the entire agreement becomes enforceable.

The most common suspensive conditions that may occur relate to the manner in which the purchase price should be paid, for example, a suspensive condition subject to the approval of a loan for a specified amount before a particular date. Another suspensive condition that may occur is one which is subject to the sale of the purchaser’s property on or before a specified date. Should any one of the above-mentioned suspensive conditions not be fulfilled within the specified periods, the entire agreement shall automatically lapse and be no further force or effect.

It is important to note that if you are the purchaser and the sale is subject to the suspensive condition that you obtain a mortgage bond or sell your existing property, you are obliged to do whatever is reasonably possible in order to obtain such mortgage bond or sell your property, and cannot rely on the lack of fulfilment of the suspensive conditions in order to withdraw from the sale.

Once the suspensive conditions have been fulfilled, and a valid and binding agreement of sale has come into existence, then cancellation would need to take place if you no longer want to proceed with the sale.

Most agreements of sale have a breach or default clause, which allows for cancellation of the agreement if a party does not perform in terms of that agreement. Usually, the innocent party would notify the defaulting party in writing of the breach, and would give them a certain number of days (as per the clause in the agreement of sale) to remedy the breach, failing which they would then be entitled to cancel.

Unlawful cancellation may bring about a damages claim, and entail lengthy and costly litigation, so it is always a good idea to get advice from a property lawyer / conveyancer if you consider it necessary or desirable to cancel your agreement of sale.

For information and advice, contact us at Goldberg & de Villiers Inc on 041-501 9800.