select
|

Property Contracts: Make sure your wording is correct

There are occasionally instances where a tenant wants to buy the property he is renting and asks that this option be written into the lease.

This is usually done to ensure that he has first option if the time comes that the property is put on the market or the tenant finds he is in the financial position that enables him to purchase it.

It is very important to consider the actual wording of the contract, so that the details of the property being sold is correct, says Lanice Steward, managing director of Knight Frank Residential SA.

A case recently mentioned in a Smith Tabata Buchanan Boyes property law update, Lombaard v Droprop CC, in which the tenant wanted to buy the land he was renting in terms of an option that was written into his lease. The owner argued that the whole property was not included and that only a smaller portion would be sold to him.

Lombaard's case was that the agreement referred to the whole of the property instead of a portion of it, and Droprop sought to rectify the agreement or, as an alternative, an order declaring the offer void because of a 'unilateral error'.

While Droprop was successful in High Court, Lombaard appealed and the Supreme Court of Appeals found in Lombaard's favour, stating that the description of the property was unambiguous and certain. The SCA could not, however, order the transfer because of the rectification defence in place.

The SCA noted that Lombaard could go ahead with a trial on the rectification matter and the onus was on Droprop to prove that there was a unanimous error in the contract.

'This illustrates the importance of a complete understanding of any additional clauses written into a lease or a sales agreement,' said Steward. 'The person drafting the clause must ensure that it is accurately described and there is no ambiguity whatsoever. If there is ever any doubt, rather check with an attorney as mistakes can be very expensive ones when it comes to property.'

Another instance of a situation where problems can creep in is where a usufruct is granted for a member of a family in the case of the owner dying. What is often forgotten is whether that person actually wants to remain in the home or whether they can afford to maintain and live in that home, said Steward.

'We have come across cases where the wife is bound by a clause in the will and property deed that she has a usufruct rights on the property but never owns it, and later finds that she cannot afford to maintain the property, nor does she want to live in a large house on her own (because in some cases the usufruct falls away if she remarries),' said Steward.

Written agreements take a lot of time and money to unravel and dissolve if they are drafted incorrectly, and the writing up of a contract should always be done with an experienced attorney, if possible, one who might have knowledge of both parties' interests, said Steward.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK