Five Things to Check in a Deed of Sale Before You Sign
A deed of sale is binding from the moment both parties have signed and any suspensive conditions have been met. Once that point is reached, backing out is not straightforward and can have serious financial consequences. Yet many buyers sign deeds of sale without reading them carefully, sometimes because they feel pressured to move quickly, and sometimes because the document was prepared by an estate agent or the other side’s attorney and looks standard.
These five areas deserve close attention before any deed of sale is signed.
1. Suspensive Conditions: Read Every Word
Most residential property sales are subject to at least one suspensive condition, usually bond approval. The sale only becomes unconditional once the buyer obtains a home loan from a financial institution within the timeframe stated in the deed of sale. If the bond is not approved in time, the sale lapses.
The problem is that poorly drafted suspensive conditions create disputes about whether the condition has been met. A suspensive condition that requires bond approval of a specific amount, from a specific institution, within a specific number of days, with no room for ambiguity, protects both parties. A vaguely worded condition creates fertile ground for disagreement.
What buyers should look for
Check that the bond amount stated in the suspensive condition reflects what you actually need, not just the purchase price. Check the timeframe and confirm it is realistic given your financial institution’s turnaround times. If you are buying subject to the sale of your existing property, make sure that condition is clearly recorded with its own deadline.
2. The Voetstoots Clause and What It Means for You
Voetstoots is an Afrikaans term meaning the property is sold as it stands. A voetstoots clause in a deed of sale limits the seller’s liability for defects in the property, both visible defects and hidden ones. For buyers, this is one of the most important clauses in the agreement.
The Consumer Protection Act limits how the voetstoots clause can be applied where the seller is a developer or acts in the ordinary course of business. For private sales between individuals, the clause has broader effect, but sellers are still required to disclose defects they know about. A seller who conceals a known defect cannot hide behind the voetstoots clause.
Practical advice for buyers
Commission an independent property inspection before signing if you can. Where defects are found, negotiate whether they will be repaired before transfer or whether the purchase price will be reduced accordingly, and record whatever is agreed in a special condition in the deed of sale.
3. Occupation Date and Occupational Rental
The deed of sale should clearly state when the buyer takes occupation of the property. This is often, but not always, the date of transfer. Where the buyer moves in before transfer, or the seller remains in the property after transfer, an occupational rental applies.
Disputes about occupation date and occupational rental are among the most common sources of conflict in residential property transactions. The clause should specify the monthly amount, who pays what rates and utilities during the occupation period, and the process for resolving any dispute about the occupational period.
4. What Is and Is Not Included in the Sale
The standard position in South African law is that items permanently attached to the property are included in the sale. Items that can be removed without damage are not. This sounds straightforward but in practice it leads to disputes about light fittings, curtain rails, garden structures, solar panels, and any number of other items that fall somewhere between permanently fixed and clearly moveable.
A properly drafted deed of sale lists the items included and excluded specifically. If you are a buyer who wants the outdoor furniture, the solar installation, or the pool equipment included, have it written into the agreement. If you are a seller who intends to take your stacked stone feature wall, that should be recorded before you sign.
5. Default, Cancellation, and the Deposit
Every deed of sale should address what happens if one party does not perform. The relevant clauses cover the notice required before the agreement can be cancelled, the period the defaulting party has to remedy their breach, and what happens to the deposit if the sale is cancelled.
Forfeiture of deposit clauses, where the seller keeps the deposit if the buyer cancels, are common and can be legitimate, but the terms need to be proportionate and clearly stated. A buyer who signs without reading this clause and then needs to exit the transaction can face a significant financial loss.
Getting Legal Advice Before You Sign
Estate agents are not attorneys. The deed of sale they present to you was drafted to close the transaction, not necessarily to protect your specific interests. Having an attorney review the agreement before you sign is not expensive relative to the value of the transaction and relative to the cost of problems that a poorly drafted deed of sale can cause after the fact.
Legal Services Cape Town reviews deeds of sale for buyers and sellers in the Western Cape. If you are about to sign a property sale agreement and want to make sure the terms are right, contact us before you sign.
