NOTE! IT IS STRONGLY ADVISED THAT YOU CONTACT AN ATTORNEY OR CONVEYANCER SPECIALISING IN THE SALE OF IMMOVABLE PROPERTY AND RELATED TRANSACTIONS SUCH AS DYKES VAN HEERDEN INCORPORATED SITUATED IN YOUR AREA, FOR ASSISTANCE AND ADVICE REGARDING EACH AND EVERY INSTALMENT SALE AGREEMENT CONSIDERRED BY PROSPECTIVE CLIENTS AS THE INFORMATION CONTAINED HEREIN IS INTENDED AS A GENERAL GUIDELINE AS TO THE INFORMATION REQUIRED TO DRAW AN INSTALLMENT SALE AGREEMENT TOGETHER WITH A VERY BRIEF EXPLANATION AS TO THE CONCEPT IN LAW.
THE TERM ACT REFERS TO THE ALIENATION OF LAND ACT, 1981
An instalment sale agreement is an agreement of sale of land as defined in terms of the Alienation of Land Act, 1981 used or intended to be used mainly for residential purposes and in terms of a contract as defined in terms of the Alienation of Land Act, 1981 in terms of which the purchase price is paid to the seller by way of more than 2 (two) installments over a period of longer than 1 (one) year. If the land is not held under a separate title deed at the point of entering into the contract the period of repayment in terms of the contract, may not exceed 5 (five) years.
Chapter II of the Act shall not apply in respect of any contract where the Seller is The State;
- A Community Development Board (Act 3 of 1966)
- The National Housing Commission; or
- A Local Authority. Furthermore
- Agricultural land;
- Land held by the State or the Minister in trust on behalf of any person
POINTS TO NOTE
- The purchase price is to be paid to the seller over a period of time, in instalments, which should ideally be sufficient to cover the seller’s bond repayments.
- The purchaser should ideally pay a deposit, sufficient to cover at least the estate agent’s commission.
- The agreement is registered against the title deeds in the Deeds Office by way of Section 20 of the Act recordal, registered within 90 days of signature of the agreement. This implies that the seller would not be able to register any further bonds over the property, or sell the property without the consent of the purchaser.
- The payments should be made over a period of no less than one-year.
- Instalments can only be paid once the agreement has been registered against the title deeds of the property.
- Transfer duty and costs should be paid by the purchaser to SARS within six months from the date of conclusion of the sale agreement otherwise the Transfer Duty shall attract penalties calculated at 10% per annum of the amount outstanding towards SARS.
- The seller retains ownership of the property.
- Should the purchaser fail to effect any payment in terms of the agreement timeously, all payments made by him, will be forfeited towards damages suffered and the property will revert back to the seller. This is subject to review by a court of law in terms of the Conventional Penalties Act.
- In the event of the seller’s estate becoming insolvent, the purchaser shall hold a preferent claim as opposed to a concurrent claim in respect of the proceeds of the sale of the property.
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