Beware the verbal sale of land!
- 05 Feb 2009
Sales of land are only valid when written, and signed by both parties (or their agents under written authority).
Strangely enough however, it is still possible in a practical sense for land to be sold via a verbal contract - if, that is, the land is held by a company, close corporation or trust, and if the sale is not a sale of land by the entity, but rather a sale of the shares or member's interest, or an agreement to change the beneficiaries of a trust. Note that where land is sold out of the entity and the shareholding remains as is, the normal requirement for a written sale remains.
The danger is that verbal agreements are fraught with risk - difficult to prove, hard to interpret, and generally a recipe for long and expensive litigation in the event of any disagreement. Moreover, the sale of an interest in an entity has implications - legal, commercial and tax - very different to the sale of land held by a natural person.
So before buying or selling an interest in any type of land-owning entity: -
1. Make it clear that there is no deal without a signed, written agreement, and
2. Be aware that (as happened in a recent case before the Supreme Court of Appeal) mere conduct may result in your being bound by an agreement that you haven't signed. So don't act as though you have agreed to something if you haven't, and
3. Sign nothing before having the agreement fully checked.
(Reproduced by kind permission of LawDotNews)