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
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    • 20 Feb 2018
      A major shift in the ageing paradigm has precipitated an equally dramatic transformation in the retirement sector, with modern accommodation options worlds away from the conventional model.
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
        
    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