Under South African law, the sale of immovable property is governed by various statutory requirements. To avoid unnecessary complications and delays, it is essential to adhere to these requirements to ensure an agreement of sale is valid and legally binding. To that end, here are a few common FAQs regarding property sale transactions to keep you informed and compliant.
What are the formalities for the conclusion of a valid agreement of sale?
According to section 2(1) of the Alienation of Land Act (‘the ALA’), an agreement of sale in respect of the disposal of immovable property must be reduced to writing and signed by the seller(s) and purchaser(s) – or their duly authorised representatives – to be valid and enforceable.
Can an agreement of sale be signed electronically?
No. While the Electronic Communications and Transactions Act (‘ECTA’) permits the use of electronic signatures and advanced electronic signatures in most contracts to facilitate the instant dispatch and receipt of documents, there are notable exceptions. Specifically, section 4(3) of ECTA expressly excludes the application of ECTA to agreements involving the sale of immovable property concluded under the ALA. Indeed, section 4(4) of ECTA read with Schedule 2 to ECTA, stipulates that the Act’s provisions ‘must not be construed as giving validity to any transaction’ concerning an agreement for the alienation of immovable property.
Although the ALA does not define the terms ‘sign’ or ‘signed’, our courts have interpreted section 2(1) of the Act as requiring the parties in a property sale transaction to physically sign the agreement for contractual certainty. Consequently, electronically signed agreements of sale are not legally binding.
Can an agreement of sale be signed in wet ink and scanned electronically?
Yes. A scanned copy of an agreement of sale signed in wet ink constitutes a valid agreement under the ALA. However, neither party may append an electronic signature to an agreement and scan it to the other party to sign in wet ink – or vice versa.
Does the ‘wet ink’ requirement extend to addenda and annexures?
Yes. An addendum to an agreement of sale, which adds, deletes, or modifies specific terms or conditions in the original agreement, must be signed in wet ink by both parties to be valid and enforceable. Similarly, annexures to the agreement, which provide supplementary information, must also be signed in wet ink by both parties.
What are the legal consequences of non-adherence?
Although our courts have occasionally been willing to uphold electronically signed agreements of sale in the interest of commercial expediency, agents, sellers, and purchasers would be wise to avoid costly litigation and untimely delays by ensuring that the agreement of sale, and any annexures or addenda to said agreement, are signed in wet ink and comply with all other legal formalities.
Must an agreement of sale be witnessed to be valid?
While the ALA does not expressly require that an agreement of sale be witnessed, it is highly advisable that agreements, annexures, and addenda are signed by two competent individuals in the presence of the signatory, namely the seller, purchaser, or their duly authorised agent. The evidentiary value of witnesses’ signatures is particularly crucial in instances where one party to the agreement disputes the authenticity of their signature.
For further information or assistance, contact us at info@stbb.co.za.
