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Information on important clauses in contracts: Purchase price and guarantees: The purchase price is payable in a lump sum on transfer of the property to the Buyer. The guarantees referred to in the contract means that the Buyer furnishes the Seller with a promise from the bank that the price will be paid in full once the property is registered in the Buyers name. It is important to note that a guarantee can be withdrawn in certain instances, although this is rare. Defects and the "Voetstoots" clause: Take note of defect clauses. In certain cases the buyer is protected against severe defects discovered after transfer. The material question is whether the defect is a latent or patent defect. A patent defect is clearly visible upon inspection, for example, cracks in walls, broken windows, etc. It should be clearly stated in the contract who will be responsible for repairing these defects. If there is no clause stating this then the Buyer is deemed to have seen the defects and agrees to repair them at his cost. A Latent defect is not seen with the naked eye, for example, a faulty geyser, concealed damp areas or leaking roof. The Seller is responsible for all latent defects in the property for 3 years from the date of sale. The Buyer must ensure that he is aware of all latent and patent defects. As a result of the Sellers responsibility for latent defects, Sellers usually stipulate that the property is for sale "as is" (Voetstoots). However, the Seller remains responsible for any DELIBERATELY concealed latent flaw or defect. Estate Agents commission: The Seller is responsible for the payment of the agents commission Occupation and occupational rent: The date of registration should preferably be upon registration. However, if this is not viable, then occupation can be taken earlier on an agreed-upon date, and for an agreed-upon amount of rental per month. It is important to indicate in the contract whether this payment is inclusive or exclusive of the electricity and water used (rather include it than argue later). Cooling-off clause: The new consumer protection act makes provision that if a property is purchased from a developer and the transaction takes place as a direct result of the suppliers direct marketing of the property, the buyer has 5 business days as a cooling-off period, regardless of the value of the transaction (This does not apply to transactions where both parties are not dealers in property). In ordinary transactions between individuals the cooling off clause does NOT apply when: the property is not for residential purposes, agricultural land, purchase price is more than R250 000.00, bought at auction. Suspensive conditions: These are conditions included in the agreement that makes the contract subject to another condition, for example, selling his property or obtaining a bond. If the suspensive condition is not met the contract falls away. |
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