K. Special Clauses

Suspensive Conditions

Estates: Master’s Consent

This sale is subject to the consent of the Master of the High Court in terms of Section 42(1) of the Administration of Estates Act No. 66 of 1965.

This clause must be inserted whenever a property is sold out of a deceased estate and the Executor signs on behalf of the estate. The consent will be a formality unless there is some special reason why the Master would not grant it. (For example, the property has been sold way below its market price).

Subdivisions: Surveyor-General’s Approval

This sale is subject to the approval of the subdivision of the property, of which this sale incorporates a portion, by the Surveyor-General within 6 calendar months of signature hereof.

This condition applies when a portion of an existing property is sold, and the diagrams still have to be approved. A land surveyor has to compile them and submit them to the Surveyor-General for approval before the transfer can be finalised. The time period can be changed but must never be less than 4 months.

Subject to first sale lapsing

This sale is subject to the cancellation or lapsing of the prior sale enter into between _______ and _______  which agreement was dated on _______ within ______ days of the date of signature hereof.

Further details can be inserted, such as an exact definition of the parties to the previous sale and its purchase price. The time period can also be changed to fit the circumstances.

Minors: consent of the High Court

As the Purchaser is still a minor this sale is subject to the approval of the High Court of the loan required to make up the balance of the purchase price. The Court’s approval must be obtained within 90 days from the date of granting of the loan, failing which this sale will lapse and become null and void.

This clause only applies when the Purchaser is under 18 years of age and a bond has to be obtained. If the purchase price is being paid entirely in cash, this clause will not apply and can be ignored.

Business consent use

This sale is subject to the granting of consent used by the local authority, to be granted within 60 calendar days of the date of signature hereof, to the Purchaser to use the property for business purposes. The Purchaser confirms that he is aware of the business activities that will be allowed should consent use duly be given as well as activities that will not be allowed.

This clause applies when a residential property is being sold and the Purchaser only agrees to the sale if it can obtain permission to use the property for small business purposes. The time period can be changed but should never be less than 60 days. I recommend that you also include who will be responsible for the cost of getting the necessary consents in place.

Rezoning of the property

This sale is subject to the rezoning of the property for business purposes within 12 calendar months of signature hereof. The Purchaser undertakes to apply for the required consent and to pursue the application to its conclusion at the Purchaser’s consent. The cost of the rezoning would be for the (seller/purchaser’s) account.

This can cover any kind of rezoning, e.g. Residential 1, 2, etc; Light Industrial, Small Business, or whatever may be required. The time period should never be less than 12 months and anything up to 18 months would be fair. I would specify who would be responsible for the cost of rezoning.

Clusters and Sectional Units

No pets allowed on the premises

The Purchaser is aware that no pets will be allowed on the premises of the complex in terms of the Conduct Rules of the scheme and agrees to abide by this provision.

This prohibition has been upheld in law and this clause should be inserted if the Purchaser is making an issue of being allowed to have pets. The same applies to individual satellite dishes for DSTV, etc.

Developer’s right of extension

The Purchaser is aware that the Seller has a right of extension over the scheme in terms of Section 25 of the Sectional Titles Act. The Purchaser nonetheless waives his right to cancel the sale through any ignorance of the right and declares this sale valid and binding in spite of the said right.

This clause must be inserted whenever the sale is directly from the Developer of the scheme and/or whenever he has recorded a right of extension over the scheme. In other words, even if it is a sale not from a developer, if the right of extension has been recorded, then you would include this clause as well.

Exclusive use areas

This sale is subject to the body corporate allowing the Purchaser to continue using the exclusive use area/s granted to the Seller by a written confirmation thereof being filed with the Seller’s conveyancers within 30 days from the date hereof.

In some complexes, the exclusive use areas are not registered as sections or EUAs but are granted by the body corporate. Unlike the former two, in this case, the right to use them does not automatically pass to the Purchaser and must be secured by way of written confirmation from the body corporate.

Vat and Capital Gains Tax

Foreign resident: withholding CGT

The Seller is aware that, being a foreign resident and selling the property for a purchase price in excess of R2 million, it is obliged to pay over 5% of the purchase price to SARS on receipt thereof for CGT purposes. The Seller hereby authorises the conveyancer attending to the sale to duly make the required payment.

Referring to SARS Section 35A:

In short, this section imposes an obligation on a purchaser, who purchases immovable property for a price that exceeds R2 million from a seller who is a non-resident, to withhold part of the purchase price from the seller on registration of transfer, and pay this withheld portion to SARS.

Check the page in this manual for the provisions relating to this requirement. The consequences for the Purchaser can be severe if this obligation is overlooked and the conveyancer pays the full net proceeds to the Seller. The oversight may not be traced for any period up to 18 months after transfer. has taken place.

Zero-rating for VAT purposes

The parties agree that this sale is zero-rated for VAT purposes as both parties are registered VAT vendors, the property is sold as a going concern, and is part of continuing income-producing activity. In the event that SARS correctly determines that this sale cannot be zero-rated, the Purchaser shall be liable for the VAT due.

The last sentence can be changed to make the Seller liable for the VAT depending on the agreement between the parties. If the Purchaser pays it he may be able to recover it after the transfer has been registered.

Payer of VAT due

The Purchaser shall be liable for the payment of any VAT due on this sale which shall be paid to the Seller’s conveyancers prior to the transfer of the property. The conveyancer is expressly ordered to pay it on transfer to SARS as the Vat due on the sale and is not permitted to pay it to the Seller.

Should the agreement be silent as to who’s responsible for the payment of VAT and the transaction attracts VAT, then the responsibility to make payment of the VAT shall be the sellers. The conveyancer is expressly instructed to deduct the VAT amount from the seller’s proceeds and pay it over to SARS.

This clause is rarely inserted in sale contracts but without it, there can be serious complications. If the sale says nothing about VAT or says the purchase price is ‘VAT inclusive,’ the seller will be liable for it. If the purchase price is said to be ‘excluding VAT’ or ‘plus VAT,’ the Purchaser has to pay it.

Company requirements

Resolution and authority

The signatory hereto warrants that he is authorised to sign this offer to purchase on behalf of the purchasing company by way of a resolution signed by all the directors (or, in the case of a close corporation, the members) thereof. In the event that such authority does not exist, the signatory shall become the Purchaser in terms of this agreement and be personally liable for the performance of all its obligations.

Individuals often casually state that they are properly authorised to bind the Purchasing company to the agreement. This is often not the case and this clause ensures the validity of the contract where the agent has been misinformed.

Binding as surety

The signatories for the Purchasing company hereby bind themselves as sureties jointly and severally for the due performance of all the Purchaser’s obligations herein including any requirement by the lender granting the required loan that its directors bind themselves as sureties for the company’s obligations thereunder.

When companies or trusts are the purchasers under the original agreement, its directors or trustees often refuse to sign as sureties for their debts under the required mortgage loan. This clause binds them to those obligations.

Taking over the Company’s shares

If the signatories hereto should choose to take over the shares of the company rather than take transfer of the property into their names, they shall notify the Seller thereof in writing within 30 days from the date hereof and the purchaser shall be liable for any transfer duty/VAT and other costs payable to effect the transfer.

This clause should only be used when the property being sold is not zoned for residential purposes or is being used as a residence. It is only effective when the property is zoned and used for agricultural, industrial, or business purposes. In the past it was also used as a means to save transfer duty or VAT, however, the laws have changed and this is no longer possible.

General matters

Blanket voetstoots clause

The Purchaser is aware that the property is in a generally poor condition and that the purchase price is well below normal market value. The Purchaser waives all rights it may have in law (including the right to claim damages for undisclosed latent defects) and agrees to purchase the property absolutely voetstoots.

The purchaser confirms that he had sufficient time to inspect the property and that he was afforded sufficient opportunity to appoint specialists to inspect the property and that he purchases the property fully aware of the state that it is in.

This clause is essential whenever a property is sold below the price it would normally get because of its generally defective character. Without this clause the Purchaser could still claim damages for any undisclosed latent defects it may discover even though the purchase price was deliberately reduced because of the condition of the property.

OR:  Further to clause 5 in the OTP the Purchaser/s, on taking of early occupation, waives all the rights they may have in law (including the right to claim damages for undisclosed latent defects) and agrees to purchase the property absolutely voetstoets, excluding those identified in clause 5 of this offer to purchase.

Undefined subdivision portion

The property hereby sold is as set out on the sketch plan attached hereto marked Annexure A. The sale will be binding on the purchaser provided the final approved plans do not vary substantially from the attached plan.

This clause is required (and the sketch plan) when the portion to be subdivided has still not been defined. It is vital for the sketch to show the general outline of the portion’s boundaries and measurements of each boundary section.

Existing tenants

The Purchaser is aware that the property is presently let to tenants under a continuing lease agreement and that he will become the new landlord by taking an automatic cession thereof on registration of transfer. The Purchaser confirms that it has made itself acquainted with the terms and conditions thereof.

This clause stops the Purchaser from objecting to the property being let to tenants and alleging he was unaware of that. This clause must be included when the existing tenancy will still continue for a number of months after transfer.

Seller’s right of acceptance

The Seller retains the right to continue marketing the property while the period for acceptance of this offer is still operating and, should the Seller receive a further offer/s during this period, then the Seller agrees to accept the offer which becomes unconditional first.

This clause requires an extended period of acceptance (up to 15 days after the first offer was made) to allow the Seller to accept the first offer in which the required loan is granted or the full purchase price becomes available from another source. It’s a case of first dressed, first served.

Entomologist’s certificate

The Seller shall, at the Seller’s expense, provide the Purchaser with an entomologist’s certificate within 7 days of the date of request from the conveyancer confirming that the buildings on the property are free from woodborer, termite, or other insect infestation or any serious damage as a result thereof.

This clause is usually mandatory in coastal areas, but some purchasers in highveld and bushveld areas also require it in their contracts (usually as a result of some prior adverse experience or because they previously lived at the coast and are familiar with it).

Mora interest

In the event of there being any delay in connection with the registration of transfer for which either party is responsible, the defaulting party undertakes in addition to any payment due in terms of occupational rent (if any), to pay interest on the purchase price at the rate set out in the Schedule per annum calculated from the date that the defaulting party has been notified in writing by the innocent party, CONVEYANCERS or the Agent as being in mora (breach), to the date upon which the defaulting party has ceased to be in mora.

The Prescribed Rate of Interest Act, 55 of 1975 (“the Act”), sets the maximum rate of interest that can be charged on mora interest. Mora is a Latin term which denotes the elapsing of time or a delay. Mora interest accrues the moment the debtor becomes obliged to pay. The obligation to pay interest on the amount owing, therefore, arises from the moment the debtor is in mora. This rate of interest as set out in the Act is also used in court orders relating to damages claims.

If a debtor is late with payment of a money obligation under a contract, the creditor is entitled to claim more interest on the outstanding debt due to the debtor’s failure to make payment on the due date.

The creditor is entitled to claim this interest even without a specific contractual provision to pay interest.

If the contract fixes the time for payment, no demand is necessary to place the debtor in default and interest is payable from the date on which payment was due.

Alien Invasive Species

The Seller does not guarantee or has no personal knowledge of any invasive plants or vegetation on the property, as well as but not limited to be the holder of any required or issued permit or authorisation by any  Government Department for the possession of any protected plant or CITES-listed vegetation and will not be held liable and/or responsible, either to identity these plants (invasive and/or protected) as such and not to remove them from the Property or to obtain any licence or permission for the possession and keep of such plants and vegetation in general.

This clause is used predominantly when selling a plot, farm, or any other agricultural land such as forestry, nursery, etc. any normal residential landowner is only responsible to declare such plants if he is aware of them on his property. If he is not, then the government first has to educate and assist him in the removal of these plants if necessary. Should he then refuse he will become liable for any contraventions of the laws and applicable penalties.

Cycads

The seller confirms that there are Cycads in the garden. He will remove them and take them with him when he vacates the property.  He will remove ___________ (insert number) cycads from the garden. Should the seller be leaving any cycads he agrees to give the purchaser the relevant permits.

Most cycads are a protected species and the owner of such cycads must have a permit to keep them. If there is not permit there as serious legal consequences for the person in possession of the cycads.

Cool off Right

The Purchaser has the RIGHT TO REVOKE this offer to purchase as provided for in Section 29A of the Alienation of Land Act of 1981, which is solely applicable on a purchase price of R250 000 or less.

The cool-off right is applicable only to the purchaser and not the seller. The cool-off right period is 5 (five) working days, excluding weekends and public holidays. It is only applicable to contracts where the purchase price is less than R250 000.00 (two hundred and fifty thousand rand)

This clause must be inserted into the contract as a special condition in such cases.

Plumbing Certificate (the City of Cape Town only)

The Seller shall, at his expense, submit a certificate from an accredited plumber to the City of Cape Town Municipality, certifying that the water supply to the Property conforms with the requirements stipulated in Section 14 of the City of Cape Town: Water By-law, 2010, namely that:-

  1. the water installation conforms to the National Building Regulations and this By-law.
  2. there are no defects that can cause the water to run to waste
  • the water meter registers, and
  1. there is no discharge of stormwater into the sewer system.

The Seller undertakes to submit the said Certificate to the City of Cape Town via fax or email and to furnish proof of such submission to the Conveyancer.

Insofar as the accredited plumber appointed by the Seller to provide such Certificate requires corrective work to be carried out as a precondition to the issue thereof, the Seller will procure such work to be carried out at his own cost and expense.

This clause must be inserted into any sale agreement where the property being sold falls within the City of Cape Town municipal district. This became a municipal bylaw due to the severe water restrictions the City experienced due to drought.

House plans

The Seller warrants that the plans lodged with the local Municipality are correct and are a true reflection of the existing buildings erected on the property.

House plans are connected to SPLUMA and are only a necessity when a particular Municipality requires them. House plans are not a legal requirement unless your contract makes them a requirement.

Surety

I, the undersigned __________________________________________________________ (full name), ID:________________________ ______hereby bind myself jointly as SURETY and co-principal debtor with the Purchaser to the provisions above. I specifically renounce the benefits of excussion, division or error in calculation.

This clause is necessary when the purchaser is being assisted by someone else because they don’t qualify financially with this person’s support or if the purchaser is a minor.  

The capacity of Purchaser – Trusts and Companies

Should the SIGNATORY sign this Agreement in his capacity as a Trustee for a Company to be formed, then the PURCHASER shall be personally liable in terms of this Agreement should a Company not be formed within a period of thirty days of the date of signature hereof or if the Company fails to ratify and adopt this Agreement within a period of seven days of the date of registration or incorporation, by his signature hereto the PURCHASER binds himself as surety and co-principal debtor in solidum with the Company for the due fulfilment of all of the obligations of the Company in terms of this Agreement.

This clause is used when the purchaser plans on owning the property in the name of a company and the company still need to be registered with CIPRO.

Company Representative

Should the SIGNATORY sign in a representative capacity then he warrants that he has the necessary authority to act on behalf of that entity/person. Should he breach this warranty then he shall be personally liable for the obligations set out herein.

This is used in conjunction with clause (m) as well as anytime the purchaser is a legal entity. This clause makes the person signing on behalf of the legal entity personally responsible, and should the company not get a loan or make a transfer, then the representative has to take a transfer in his own name.

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