Transfers

1|Pa ge 2019 MOD 3 EDPF Legal Aspects of Real Estate.
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LEGAL ASPECTS
OF REAL ESTATE
2019
2019 : MODULE 3
TRANSFERS
THE ENTERPRISE PROPERTY

DEVELOPMENT FUND
Nicole S Norval and Meyer de Waal
ASSIGNMENT DUE :
JULY 31
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training overview
I. SIX MODULES
MODULE 1 : BASIC LEGAL CONCEPTS
MODULE 2 : PROPERTY CONVERSION
MODULE 3 : TRANSFERS
MODULE 4 : PROPERTY DEVELOPMENT
MODULE 5 : ESTATE PLANNING & TAX
MODULE 6 : CONSTRUCTING A GOOD TEAM
2. THREE TRAINING DAYS
22 May 2019: MODULES 1 & 2
4 June 2019: MODULES 3 & 4
11 September 2019: MODULES 5 & 6
3. TWO CAMPUSES
JOHANNESBURG:
A T T A C Q, M A X W E L L OFFICE P A R K, 37 MAGWA C R E S C E N T,
WATERFALL CITY
CAPE TOWN:
A U R E C O N C E N T R E, 1 C E N T U R Y C I T Y D R I V E, WATERFORD
P R E C I N C T, C E N T U R Y C I T Y, C A P E T O W N
“The best investment on earth is earth”

- Louis Glickman
This course is not legal advice.

index
transfer of immovable property : an overview
1. offer to purchase and negotiation basics
1.1 purpose
1.2 formalities vs essentials
1.3 negotiation
1.4 important clauses
1.5 general clauses
1.6 example
2. t r a n s f e r process
2.1 flow
2.2 stages
2.3 potential delays
2.4 timing
2.5 registration at Deeds Office
2.6 examples
3. c o n d i t i o n s of title
3.1 purpose and sources
3.2 typical conditions and order
3.3 restrictive conditions
3.4 removal of conditions
3.5 drafting conditions
3.6 examples
4. e n c u m b r a n c e s : servitudes and mortgage bonds
4.1 source and effect on owner’s rights
4.2 personal vs praedial servitudes

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4.3 procedure and process
4.4 registration against property
4.5 servitude : example
4.6 mortgage bond : example
assignment instructions
assignment
resources
contact details
transfer of immovable
property
an overview
• The transfer of immovable property from its owner to a new owner can be achieved in a
number of ways, for example, by inheritance, by partition or exchange of a property, by
expropriation, by sale, donation, etc.
• In this module, we will explore the sale process, which results in the transfer of an immovable
property.
• Understanding the process involved in negotiating a sale of immovable property, the

agreement required (the offer to purchase), and the process of the transfer is vital for a real
estate entrepreneur.
• Restrictions on the rights of owners have an impact on how a sale is negotiated, the contents
of the offer to purchase, how an immovable property is transferred, and the time the entire
process takes.
• We will consider restrictions on ownership rights such as servitudes, other conditions of title,
and mortgage bonds.
• When you complete this module, you should have a good grasp of the process of both selling
and buying an immovable property, from identification of the buyer or desired property, up to
the registration of the transfer of ownership in the relevant Deeds Office.
1. offer to purchase
and negotiation basics
1.1 p u r p o s e
An offer to purchase is an offer made by a potential buyer to a potential seller, to buy immovable
property at a certain price..
The offer should :
• be in a written document,
• presented by the potential buyer to the potential seller,
• set out a timeframe within which the potential seller should accept the offer, and
• be signed and dated by the potential buyer.
If the offer to purchase is accepted by the potential seller within the timeframe set out in the
document, it becomes a legal contract* between the two parties, now the seller and the buyer (or
purchaser). If the seller does not accept the offer within the timeframe (even if the seller signs the
document afterwards), the offer expires, and the agreement (although it may be implemented)
cannot be enforced at law. A purchaser must be aware that an ”offer to purchase” becomes a legal
and binding agreement once accepted. It is sometimes confused with the concept that a further Deed
of Sale will be drafted for signature after the “offer to purchase” was submitted.
The offer to purchase sets out the terms and conditions on which the purchaser buys the property
from the seller. It identifies the obligations of both parties in ensuring that these terms and conditions
are met.
Once accepted, the offer to purchase is handed to an attorney specialising in real estate law (a
conveyancer), who assists the seller and purchaser to implement the terms of the agreement between
them, and registers the transfer of ownership from the seller to the purchaser at the relevant Deeds
Office.
As with any written agreement, an offer to purchase signed by both the seller and the purchaser is
evidence of the agreement made between the two parties. Any confusion or misunderstanding as to
what that agreement actually is, can then be resolved by referring to the written contract.
It is therefore very important that the offer to purchase is clear, easy to understand, and states what
can happen if either the seller or purchaser (or both) does not fulfill one of their obligations.
________________________________________
*Any reference to “offer to purchase” in this course includes a “deed of sale”, “sale agreement”, “contract of sale”, “agreement
of sale”, or a “deed of alienation”, unless the reference is made to a contract before the seller accepts it, in which case it is still
an offer.
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1.2 f o r m a l i t i e s vs essentials
The concepts “formalities” and “essentials” can be confused when referring to an offer to purchase,
but it is important to understand the difference to ensure that an offer to purchase is legal.
“Formalities ” generally refers to the provisions of Section 2 of the Alienation of Land Act 68 of 1981,
which states that, for alienation (transfer) of immovable property to be enforceable, the agreement
of sale must be in writing and signed by the purchaser and seller or their agents (representatives
appointed in writing). The one exception is when immovable property is sold by public auction.
The only other possible formality for a valid agreement of sale of immovable property is a “cooling-
off” clause. A cooling-off clause allows a purchaser time to change its mind about buying the property.
In South African law, there are two reasons for such a clause :
1. in terms of the Alienation of Land Act, when the purchase price is R250,000.00 or less. Then
the agreement must state that the purchaser has 5 days from signing the agreement to change
its mind.
2. in terms of the Consumer Protection Act No 68 of 2002, when the seller sells property in the
ordinary course of its business, and the purchaser is either a natural person or a juristic person
with an annual turnover of R2,000,000.00 or less. A property developer selling to individuals
would need to comply with this Act. The purchaser is entitled to cancel the agreement by
written notice to the seller for 5 days after the registration of transfer, provided the purchaser
returns the property (at its cost) to the seller within 10 days after registration if the seller failed
to comply with the provisions of this Act. The seller must then refund to the purchaser the
purchase price within 15 days after registration.
A “negative” formality (something that is not allowed) has been introduced by the Electronic
Communications and Transactions Act No 25 of 2002. An agreement for the sale of immovable
property is one of four documents in South African law that cannot be recorded electronically (the
others are a will/codicil, a long lease over 20 years, and a bill of exchange). No SMSs, emails,
WhatsApps, electronic signatures, advanced electronic signatures, or other electronic methods are
allowed to conclude a valid sale agreement. An agreement of sale must therefore be a paper
document signed by both parties.
“Essentials ” are derived from the requirement that the agreement of sale must be in writing. That is,
what essential terms must be in writing to understand that the agreement is one for the sale of
immovable property?
These essentials are therefore the minimum terms of agreement that must be stated in an offer to
purchase and can be remembered as “PPPS” : P roperty, P rice, P urchaser, Seller.
Property –
The immovable property must be identified, either by legal description :
TOWNSHIP””
“ERF 4861 HONEY MANOR TOWNSHIP
or street address :
“16 Rosedale Avenue, Honey Manor, Johannesburg.”
It is also acceptable for the property to be identifiable, for example :
“a 1 000 square metre portion of ERF 4861 HONEY MANOR TOWNSHIP, situated in the northwest
corner of the latter property, as depicted on the sketch plan attached hereto.”
(In this case, because the property is still a part of a larger property, the agreement must also contain
specifics regarding how the property being sold is going to be separated from the larger property,
eg. by subdivision, or a township establishment, so that the property being sold can be registered in
the name of the purchaser).
Sectional Title Property :

Where a sectional title unit is the property sold, the description of the property includes the section
number of the property sold, also includes any exclusive use areas (for example, a parking bay,
carport, garage, balcony, garden, yard, etc.), and identifies if the exclusive use area is held by its own
title deed or allocated according to the rules of the sectional scheme. The offer to purchase must
mention any real right of extension that has been registered in favour of the developer of the sectional
title scheme (Section 25(15) of the Sectional Titles Act).
Price
The purchase price the purchaser will pay the seller for the property must be :
• real (related to the actual value of the property and a price that the seller and the purchaser
both intend be paid),
• a stated amount (or capable of being ascertained by a method the parties agree on), and
• stated in current money (that is, not stated in movable goods, but it can be stated in a currency
other than South African Rand).
The time and method for payment of the purchase price must also be clear from the agreement.
Purchaser
The party signing the offer to purchase as the purchaser can sign on behalf of a company to be
formed, but not on behalf of :
• a close corporation to be formed (because no more close corporations can be registered),

• a trust to be formed (because a trustee must sign, and a trustee’s authority to do so comes
from Letters of Authority, which are not available until the trust is formed and the letters of
authority issued by the Master of the High Court).
special mention : nomination

If the purchaser signs on behalf of a “nominee”, or the offer to purchase allows a purchaser to
nominate another purchaser (“the nominee” ) to take its place, then the transaction must
attract VAT on the purchase price.
If transfer duty (and not VAT) is payable in respect of the transaction, the nominee MUST be
nominated and accept its nomination on the same day the offer was accepted by the seller.
Otherwise, SARS may well regard the nomination as a second transaction, and transfer duty
will be payable twice.
Seller
The seller does not have to own the immovable property when the offer to purchase is accepted, but
must legitimately expect to own it so that it can be transferred from the seller to the purchaser by
registration in the Deeds Office.
The formalities and essentials set out above are in addition to the basic requirements for a valid
contract in South African law. These are :
• the parties to the contract must have the legal capacity to enter into the contract (for example,
not a minor or intoxicated person, insolvent person, or an heir or spouse acting on behalf of a
owner who has died and before an executor for the owner’s estate is appointed),
• the contract must reflect what they have agreed,
• nothing in the contract can be illegal or contrary to public policy,
• it must be possible for the parties to actually fulfill (“perform”) the obligations stated in the
contract.
If any of the above requirements, including the formalities and essentials, are not followed, then the
offer to purchase (although it may be implemented) will be void and unenforceable at law.
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1.3 n e g o t i a t i o n
Negotiation is an art. How well you master negotiation will determine how successful your business
will be. Negotiating any contract, such as and offer to purchase, means to discuss the important
matters with a view to reaching an agreement on those matters.
Some guidelines :
• Don’t take anything personally

• Most people want to agree more than they want to disagree
• Stick to the facts
• Take a breath, count to ten if you need to
• Learn to disagree without being unpleasant about it
• if you are going to get angry, do it in a very deliberate way
• Don’t allow yourself to be rushed – pause, consider, take your time
• Use silence. People like to fill silence with information you may find useful
• Know what you want, go after it, but respect the other person
(Wymber, 2014)
To negotiate an offer to purchase well, it is recommended that you :
• Ask for a better outcome than you want. This allows you to compromise to what you are
actually willing to agree to. For example, offering a lower purchase price than you are willing
to pay.
• Always ask “what if?”. This applies both to “what if this does happen”, and “what if this doesn’t
happen?”. Answer the questions, then make sure those answers are recorded in the offer to
purchase.
For example, “what if the seller feels that the time periods for the suspensive conditions are
too long, but the purchaser needs those time periods?” One answer could be “shorten those
time periods, but provide for extension of one or more of those time periods by agreement of
both parties”. Another answer could be “the purchaser can take the time, but if the seller gets
an equal or better offer from another potential purchaser, then the seller can ask the purchaser
to fulfill the suspensive conditions sooner, failing which, the seller can accept the new offer.”
Always make sure that :
1. any issue important to you is discussed, an agreement reached, and that agreement is
recorded in the final written document signed by both parties;
2. the other party knows your discussion with them is a negotiation. Otherwise they may take
what you say personally!
Finally, and perhaps most importantly, your best leverage is if you can walk away from the deal
(before you commit yourself through a legal and binding agreement!)
agreement!)
1.4 i m p o r t a n t clauses
The requirements discussed under 1.2 are important clauses in any offer to purchase. So you must
check that, at least, the offer to purchase :
• is in writing : this means the terms and conditions that have been agreed are recorded in a
physical document, and are not verbal.
• allows for signature

s ignature by both parties : this is usually by way of “signing lines” at the end of the
document that look something like this :
“Signed : _______________________
Purchaser””
Purchaser
It is good practice for the seller and purchaser to also initial each page of the document as
well as any changes to the agreement or deletions. It is not necessary in our law for signatures
to be witnessed, but it is a good idea, since they can resolve any dispute as to whether either
of the seller or purchaser actually signed the document*. Make sure you know who the
witnesses are.
• complies with the Electronic Communications and Transactions Act : the offer to purchase
is not in an electronic/digital form or signed electronically/digitally.
• seller, as set out in 1.2

identifies the property, the purchase price, the purchaser, and the seller
above.
• states who owns the property,

property if it is not owned by the seller.
• states when the purchase price must be paid by the purchaser

purchaser.
haser This is usually on registration
of the transfer of the property in the Deeds Office. It is illegal (in terms of the Alienation of
Land Act) for the purchase price or any part of it, such as a deposit, to be paid directly to the
seller before registration if the property still needs to be separated from a larger piece of
property (that is, by way of subdivision, township establishment, or establishing a sectional
title scheme).
• indicates
ndicates if the purchase price includes VAT,VAT either at 15%, or at 0% (if the business
conducted on the property is sold, including the property, as a going concern).
________________________________________
* However, many financial institutions when processing a home loan application also require that a sale agreement must be
signed and initialled by at least two witnesses.
• states how the purchase price is to be paid by the purchaser.

purchaser For example, partly by a
deposit, partly by cash/loan finance. The method of payment should also specify other details
such as which bank account is to receive the cash, or the details that must be stated on the
bank’s guarantee/s where loan finance is involved. If the purchase price is to be paid by the
purchaser in more than two instalments over more than one year, then very detailed and
specific statements must be included in terms of the Alienation of Land Act*.
Other important clauses that should be included to make sure that the transfer process is a smooth
one, are :
• definitions.
definitions When there can be confusion as to what a word can mean, it is a good idea to
define that meaning in the context of the offer to purchase. It is recommended that defined
terms are easily identified by using a capital letter at the beginning of the word, so that where
a word can be both used both with a specific meaning, and with a general meaning, then the
specific meaning is clear as the word starts with a capital letter. For example, “Property” would
mean the immovable property sold, while “property” would mean any other property.
• a recordal of the context of the sale.

sale This is often useful where a sale of property is not a
simple sale of land between a seller and a purchaser. Examples of context would be where the
sale includes the business of renting the property (a “rental enterprise” or “letting enterprise”
sale), or a rezoning or other development process must also take place, or the seller and
purchaser agree to do something else besides transfer the property, like register a servitude
between them as well.
• any suspensive conditions.

conditions These are matters that must take place before the parties can
implement the agreement to transfer the property. They can be matters necessary for the
transfer, or simply agreed between the parties. For example, obtaining loan finance, a due
diligence investigation, obtaining the approval of the seller or purchaser’s (or both) board of
directors, furnishing a copy of approved building plans. Once all suspensive conditions set out
in an agreement have been fulfilled within the time agreed, the agreement of sale becomes an
enforceable agreement between the seller and the purchaser, and can only be terminated by
following a process to terminate that agreement (for example, on breach). If any one of the
suspensive conditions is not fulfilled, either in time, or at all, then the agreement of sale lapses,
and (although it may be implemented) it cannot be enforced between the parties. Ensure the
suspensive condition has a due date for fulfilment and also what will happen if the suspensive
condition is not met – example “the sale agreement will lapse and neither party will have any
claim against each other and the deposit [if paid] and interest will be refunded to the
purchaser”.
• who pays the transfer costs.

costs Costs of a transfer are, in general terms : transfer duty (paid to
SARS), conveyancing fees (paid to the conveyancer), and Deeds Office fees (paid to the Deeds
Office). These costs are typically paid by the purchaser to the conveyancer, but if there is an
agreement that the seller pays the costs or any part, then this must be disclosed to any
financial institution providing loan finance to the purchaser, as this is a practice frowned upon
by the banks, since it can be seen as effectively increasing the purchase price in order to obtain
a larger loan finance amount. For the same reason, also disclose who pays the VAT on the
purchase price, where VAT (and not transfer duty) applies to the transaction.
_________________________________________
*If an instalment sale agreement for property attracts interest, fees, or other charges, the National Credit Act No 34 of
2005 may also apply, and it is strongly recommended that a conveyancer draft the agreement of sale.
• the conveyancer’s details.

details Except in Kwa-Zulu Natal, where the purchaser usually appoints
the conveyancer, the practice is that the seller appoints the conveyancer. However, this
appointment can be negotiated between the two parties, and there are alternatives, such as
appointing two conveyancers (one to attend to the seller’s obligations, and the other to attend
to the purchaser’s obligations), as well as the non-appointing party instructing its conveyancer
to supervise the appointed conveyancer (called a “watching brief”).
• when the
th e purchaser takes occupation of the property and how much occupational interest
(occupational rental).
rental) See the discussion when risk passes below. It is important to
understand when the purchaser can obtain vacant occupation (ie. with no other occupiers,
legal or illegal) of the property, so that the seller and purchaser can make practical
arrangements such as handing over keys, or inspecting the property together well before the
date of occupation and checking that any repairs detailed in the agreement of sale have been
done. Occupational rent is payable by the party in occupation of the property at the amount
agreed, unless the agreement of sale states otherwise. As a general rule, whoever has the keys
to property is regarding as the party in occupation. If the property is occupied by one or more
tenants, the investor-purchaser can also take over the existing lease agreement/s and needs
to review the lease agreement/s as part of the due diligence process, before signing any offer
to purchase, or after signing, but in terms of a suspensive condition.
• a voetstoots provision.
provision “Voetstoots” means “as is”. It assumes that a purchaser is satisfied
with a property, even if there are defects the purchaser can see (“patent defects”). It protects
a seller from responsibility for any defects the purchaser cannot see (“latent defects”), unless
the purchaser can prove that the seller knew about such a defect and deliberately did not tell
the purchaser about it. The Consumer Protection Act effectively excludes this concept by law
where that Act applies to a sale of property (see 1.2 above). A purchaser can make sure it is
not negatively affected by a voetstoots clause in several ways : performing a due diligence
investigation of the property, including arranging expert reports (such as a structural
engineering report), or a property inspection report by an established property inspection
company* or requesting that the seller provide warranties in respect of certain issues.
• how any tenants are to be dealt with.

with In South African law, any transfer of ownership of a
property does not automatically cancel a lease over that property. The purchaser steps into
the shoes of the seller when the purchaser becomes the new owner, and is then the tenant’s
new landlord. Where there are tenants, it is important to agree on matters such as whether
those tenants should be treated any differently because of the sale, how any new tenants
should be signed up once the agreement of sale is in place, when and how any rental deposits
are transferred to the new owner, and how arrear rental is collected and accounted for once
ownership is transferred to the purchaser. Note that tenants can be dealt with differently
depending on whether the property is residential or not.
• when risk in the property passes to the purchaser.

purchaser Risk should pass on registration of the
transfer, but can also pass earlier, for example, on occupation. Risk means :
 the right to benefit from any income of the property (for example, rent),
________________________________________
* Once the Property Practitioners Bill becomes law, it is expected that more sellers will have to provide a property report issued
by an approved property inspection company. This is already required in many countries around the world.
 the obligation of the expenses of the property (for example, rates and taxes payable to
the municipality),
 the risk of total or partial destruction or damage to/of the property, for example, by a
sinkhole or a fire or force of nature.
If risk passes to the purchaser before the purchaser owns the property (for example, on
occupation), the purchaser must make sure to have the right strategies in place to make sure
it is not negatively affected by this. For example, ensure that the property owner’s insurance
(not contents insurance) is in place to benefit the purchaser. It is usually best for the risk of
the property to only pass to the purchaser when the full purchase price is paid to the seller
(which usually happens on registration of the transfer of ownership to the purchaser).
• whether VAT or transfer duty will be payable.

payable If a seller is registered for VAT for purposes of
a real estate business, then VAT applies to the purchase price, and no transfer duty is payable.
The seller must, once it receives the proceeds of the sale, pay any VAT to SARS out of those
proceeds. If the purchase price is not stated as exclusive of VAT, then VAT is, by law, included.
A purchaser must also pay or secure any VAT amount where the purchase price is stated as
exclusive of VAT. Where a business including a property is sold in accordance with Section
11(1)(e) of the Value-Added Tax Act No 89 of 1991 (for example, a letting enterprise), then VAT
is payable, but at 0% (that is, it is “zero-rated”), and the purchase price must be stated as
inclusive of VAT at 0%. For a sale like this, very specific statements must be made in the
agreement of sale, or SARS may reject the zero-rating, and insist that VAT is paid by the
purchaser at 15% (or the applicable VAT rate at that stage). If the correct statements are not
made in the agreement of sale, a dispute between the seller and purchaser may result.
• whether the business of renting the property is also being sold.

sold This is typically known as a
“rental enterprise” or “letting enterprise”, and the above comments regarding tenants and
zero-rating apply.
• a gazumping clause or the “72- “72- Hour Clause”.

Clause” This is a provision that allows a seller, although
it has signed an agreement of sale, to continue marketing a property until a specified time,
usually fulfillment of the suspensive conditions by the purchaser. The provision generally states
that any offer the seller then receives must be presented to the purchaser, who will have a
specified time to better the offer or fulfill (or waive, that is, give up the benefit of) the
suspensive conditions, failing which, the seller can accept the other offer for the property.
• who obtains any required compliance certificates.

certificates These certificates can deal with electrical
compliance, electric fences, plumbing (in Cape Town Peninsula), invasive insects (such as
borer beetles), gas supply, or any other issue the parties agree on. Who arranges for the
certificates can be a legal requirement (such as that a seller must arrange an electrical
compliance certificate), but these provisions can be worded so that legal requirements and
the parties’ agreement are both satisfied. Usually a seller arranges and pays for all certificates,
including any work on the property required for certificates to be issued by the relevant expert,
but there may be circumstances where this is not logical or desired. The plumbing compliance
certificate for properties in the Cape Town Peninsula is also a seller’s legal obligation.
• how invasive species regulations are complied with.with Trees, shrubs, and plants on a property
are subject to the Biodiversity Act No 10 of 2004, as amended, read with the Alien and Invasive
Species Regulations of 2014, which may require that an invasive species is removed or subject
to a permit in terms of the Act.
• The responsibility of the purchaser and seller where representatives are signing.
signing It may be
agreed that the person signing on behalf of a seller or purchaser should be personally
responsible for the seller or purchaser’s obligations, for example.
• who pays the estate agent’s commission.

commission This is usually the seller, but it can also be agreed
that the purchaser pays. Also, if the property is purchased at an auction, the purchaser usually
pays the auctioneer’s commission over and above the purchase price.
• what fixtures and fittings are included in the sale.

sale There is often confusion as to whether
some items are included as part of a property or not, for example, air conditioning units, or
customised light fittings. To avoid any confusion and a possible dispute as a result, it is wise
for the seller and purchaser to make a list of every such item on a property and agree that
those items are included as part of the property being transferred from the seller to the
purchaser.
1.5 g e n e r a l clauses
There are clauses that can (and probably should) appear in all agreements, including an offer to
purchase. Some of these general clause restate the law, while some record what the parties negotiate,
provided that what the parties agree is not illegal, contrary to public policy, impossible to perform, or
contrary to any legislation.
These clauses might seem quite boring, or difficult to understand, but they are necessary to regulate
certain typical matters that might arise between the parties to the agreement.
Some of these clauses are :
• Interpretation : how certain words, concepts, and phrases are to be understood and applied
to that agreement.
• Breach and termination : what one party to an agreement may do when the other party does
not fulfil an obligation in time, or at all. This clause will ensure that a process can be followed
which will allow one party to enforce its rights, whether to terminate the agreement, claim a
money payment where that party has been financially prejudiced, and so on. It is wise to
understand how this clause works so that you can use it properly and end an unsuccessful
agreement in the right way if necessary.
• Dispute resolution : how any dispute from the agreement or during implementation of the
agreement should be resolved, either simultaneously with, or before the parties go to court,
since court proceedings can be risky, time-consuming, and expensive. This might specify that
experts are involved, time periods that apply, and how costs of the resolution process are dealt
with.
• Notices and domicile addresses : matters such as how formal notices in terms of the
agreement should be delivered, time periods for delivery, and what addresses are to be used
for each of the parties. These clauses are important because they make sure that, for example,
when one party notifies the other in the correct way that it has fulfilled a suspensive condition
or obligation set out in the agreement, that other party cannot deny this has taken place. These
provisions also regulate delivery of legal documentation such as breach notices, or documents
involved in the dispute resolution process mentioned above.
• Warranty of authority : that each party is entitled in law to make the agreement.
• Whole agreement : that there are no other written documents recording what has been
agreed between the parties and only the terms of this particular agreement contains all the
terms and conditions of the sale agreement.
• Variation : how any terms and conditions should be changed.
• Relaxation : that if one party allows the other a longer time to, for example, pay occupational
rent, this does not mean that occupational rent can be paid late every time.
• Severability : that any invalid, illegal, or unenforceable provision in the agreement is “severed”
from the rest of the agreement, which can then be implemented without that provision.
• Cession and assignment : whether or not either party can legally transfer their rights and/or
obligations set out in the agreement to someone else, and whether the other party must
consent to that transfer.
• Governing law : that South African law (or the law of another country) applies to the
agreement.
• Publications and announcements : whether and/or how the transaction recorded in the
agreement can be made public, if there is no requirement to do so in law.
• Counterparts : whether and how the agreement can be signed as separate, identical physical
documents by the parties.
• Costs : who and to what extent each party is responsible for any costs of drafting and
implementing the agreement.
• Benefit of the agreement : whether or not the agreement can benefit someone that is not a
party to the agreement. For example, an estate agent that will receive commission from the
sale agreement can also accept the benefit of the agreement.
• Nomination : whether and how one party can nominate another party to take over their rights
and obligations set out in the agreement. This clause must not conflict with any cession and
assignment clause, or any provisions regarding the capacity of any party to the agreement.
_________________________________________
* Be careful of a cession being regarded as a nomination and attracting double transfer duty payable to SARS, as discussed in
Section 1.2 above.
1.6 e x a m p l e
See Annexure 3A (offer to purchase).

2. transfer process
2.1 f l o w
2. transfer process
2.2 s t a g e s
As set out 2.1 above, a transfer of immovable property has a certain flow to it. It typically starts with
the discussions between the seller and purchaser, moves on to the fulfillment of any suspensive
conditions, then the conveyancing work and fulfilment of obligations, and finally, the Deeds Office
process.
There can be other dimensions to the transfer process flow, such as a rezoning, assembling a number
of properties, dealing with tenants, or unique arrangements regarding finance, for example.
Discussions stage :
This stage can start in many ways – a potential seller places a property on the market or approaches
a potential purchaser it knows might be interested in the property, or a potential purchaser finds a
property it wants, and approaches the potential seller to buy the property. The potential purchaser
might make an offer “cold”, without negotiating, and the potential seller may or may not accept that
offer.
If the parties do negotiate the terms and conditions of the agreement, then, once they reach
agreement, those terms and conditions are recorded in writing.
Once both parties sign* the offer to purchase, the next stage starts.
Suspensive conditions stage :
It might seem like nothing is happening while the parties go about doing what they need to do to
fulfill the suspensive conditions. The reality is that there is often quite a bit going on, and the parties
need to make sure that anyone else involved also does what they need to do to so that the suspensive
conditions can be fulfilled properly and on time.
For example, where loan finance must be granted by a bank to the purchaser, the purchaser must
complete and hand in documents to the bank so that the bank can use the information provided to
decide whether the property is worth the amount of the loan the purchaser needs, and whether the
purchaser can repay the loan. The purchaser only has a certain time to obtain the loan finance, and
must therefore keep following up with the bank to make sure that the loan finance is granted within
that time.
________________________________________
*If a mortgage bond is registered over the property, the seller should give the bondholder (especially if it is a bank) at least 90
days’ notice that the seller intends to cancel the bond, which cancellation will happen on registration of ownership of the
property to the purchaser. This notice can be given by the seller before negotiations begin, or during, depending on the timing
of the transaction, but is necessary to avoid a possible 90-day penalty interest amount charged by most banks. Once the notice
is given, any access facility may be frozen and no funds can be withdrawn from the bond account. If the suspensive conditions
are not fulfilled (see below), or the sale does not proceed, the seller should notify the bondholder of this in order to unfreeze
the account.
Once all the suspensive conditions set out in the offer to purchase are fulfilled, the next stage can
begin.
Conveyancing
Conveyancing work stage and fulfilment of obligations :
This stage includes drafting and signing documents, dealing with conditions of title where necessary,
obtaining required compliance certificates, making sure the purchase price is paid or secured by a
bank guarantee/s, and making sure all necessary costs of transfer are paid, Municipal rates clearance
and Homeowners’ Association clearance certificates are typically obtained during this stage. Sectional
title levy clearance figures* are also obtained, although the levy certificate is not required by the
Deeds Office.
The conveyancer’s job is to register the transfer, and s/he must keep the parties informed of what
they need to do to make that happen. The conveyancer will also make sure that any other
conveyancers involved (for example, those cancelling the seller’s mortgage bond, and registering the
purchaser’s mortgage bond), do what they need to do and are ready for the next stage in the process
as closely together, since all these registrations and cancellations must happen at the same time in
the Deeds Office.
Once everything is in place for the transfer documents to be examined by the Deeds Office, the final
stage in the process can begin.
Deeds Office stage :
When lodgement takes place (the necessary documentation is handed in to the Deeds Office by all
conveyancers involved), registration can be expected 6 to 12 working days after that, provided that
there are no problems with the registration documents submitted to the Deeds Office. All the
documents (for the transfer, any mortgage bond cancellation, and any mortgage bond registration)
are reviewed (“examined”) by a junior examiner (Level 1), then a senior examiner (Level 2), and then
sometimes also by a moderator (Level 3).
Once the examination process is complete, the documents will be on “prep”, or they will be rejected.
If they are on “prep”, then the documents can be put forward for execution. This means that the
transfer of the property to the purchaser, the cancellation of the current mortgage bond/s and the
registration of the new bond will be registered on the following day.
________________________________________
*It is a common misunderstanding with agents managing body corporates for sectional title schemes that a levy clearance
certificate must be issued before registration of transfer takes place at the Deeds Office. In terms of the Sectional Titles Act,
the conveyancer must confirm that either the levy clearance figures have been paid or that sufficient funds are available to pay
the figures. Unlike a Homeowner’s Association (where the title deed conditions mention a levy clearance requirement in favour
of the HOA) no sectional title scheme levy clearance certificate is required by the Deeds Office for registration of transfer, and
it is typically obtained either on or shortly after transfer.
2. transfer process
2.3 p o t e n t i a l delays
When someone does not do what they are obliged to do, either in time or at all (and this includes
parties external to the agreement between the seller and the purchaser, such as municipalities and
banks), the transfer process can be delayed. A delay may only be a day or two, or it can stretch to
many months.
It is important to understand how the agreement of sale works in order to decide whether a delay is
reasonable or not, and what can be done to avoid or end the delay, or, in extreme circumstances, end
the agreement because of the delay.
It is also important that, if you are the party who wants to end the agreement, you either fulfill all your
obligations set out in the agreement, or you make every attempt to do that. This will mean that you
are then in an “innocent” position, and your leverage will be better should you want to renegotiate
any part of the agreement in your favour, instead of ending it.
2. transfer process
2.4 t i m i n g
In the business of real estate, it is vital that there are no delays when these can be prevented, since
delays often cost money. This means understanding how the timing of the sale and registration
process works. The timing is set out in the agreement between the seller and purchaser, but can
typically be summarised as made up of the following “events” :
• Date of signing / acceptance
• [if applicable*]
applicable*] Deposit due
• applicable]] Suspensive conditions to be fulfilled

[if applicable
• applicable]] Guarantees due

[if applicable
• Sign documents
• Obtain clearance certificates (municipal rates, HOA levy)
• Deliver certificates of compliance (electrical, gas conformity, plumbing, beetle)
• Lodgement at Deeds Office
• Registration at Deeds Office
• [if applicable] Sectional title scheme levy clearance certificate
Since agreements of sale can be very different from one another, it is important to read and
understand the agreement of sale with a view to when every “event” set out in the agreement must
take place. Remember that some of these events can depend on others taking place first, for example,
registration cannot happen until documents are signed.
________________________________________
*some of the events listed here may not be applicable, because, for example, a seller agrees the purchaser does not have to
pay a deposit, or the purchaser can pay cash for the property (then no bond finance suspensive condition or guarantees will
apply). The offer to purchase must reflect the correct combination of events, and it is important to check that the clauses do
not conflict with one another before signing.
2. transfer process
2.5 r e g i s t r a t i o n at Deeds Office
As set out in 2.2 above, registration of ownership of the property in the purchaser’s name can be
expected 6 to 12 working days after lodgement of all necessary documentation at the Deeds Office,
provided that there are no problems with the documentation lodged at the Deeds Office.
The Deeds Office staff (for example, examiners and moderators) are employed by the government to
consider the documentation lodged, as well as the Deeds Office records regarding the property, and
apply the law to make sure that any dealings with the property (such as a transfer or mortgage bond)
are registered correctly and that all information is accurate.
It is important to remember that the Deeds Office always has a discretion, and can sometimes insist
on additional documentation or processes in order to agree to a registration in respect of a property.
Some of these requests may by not be correct, or may not be reasonable in the circumstances – Deeds
Office staff are human, too! It is up to the conveyancer to check whether a request is correct or
reasonable, and then if not, make every attempt to (diplomatically) convince the Deeds Office that
this is so. If the request is correct and reasonable, the conveyancer must, as efficiently as possible,
ensure that request is complied with so that the registration can take place.
When the lodged documents are on “prep”, there may be other minor matters that the conveyancers
must attend to, and then the documents can be put forward for execution the following day. If the
documents are not executed the following day, they must be relodged and examined again, delaying
the process by a further week or two. Execution and formal registration of transfer of ownership, or
registration of a mortgage bond, is when the conveyancer signs the new title deed (or mortgage bond
or other deed) and the Registrar of Deeds signs, dates and affixes the official endorsement (the Deeds
Office seal of office) onto the document. In the case of a transfer of immovable property, this is the
moment of registration of the transfer of the property to the purchaser.
2. transfer process
2.6 e x a m p l e s
See Annexures 3B (power of attorney), 3C (resolution and affidavits), 3D (SARS declaration), 3E

(draft deed of transfer).
3. conditions of title
3.1 p u r p o s e and sources
Conditions of title restrict ownership of immovable property, preventing an owner from doing
something with the property, or stating that if the owner wishes to do something with the property,
the owner must do it in a certain manner.
There are many sources for conditions of title, such as the municipality (when a property is rezoned,
subdivided or approved for a township, for example), a property developer (who may wish to
entrench certain aspects of a development in the title deeds for those properties), other parties
(agreeing to a servitude, for example).
3.2 t y p i c a l conditions and order
Conditions of title are set out in the title deed to immovable property immediately after the property
description.
“Development” conditions are first – those imposed typically by a municipality or at provincial level,
or by a property developer, where a property has been subject to a township establishment, or
subdivided. Inheritance conditions are next, that is, conditions set out in a will when an owner inherits
a property. Any conditions imposed in favour of property association such as a Homeowners
Association are next. Finally, servitudes over or in favour of the property are set out.
It is important to obtain a copy of the title deed (as well as the pivot deed in the Western Cape) from
the Deeds Office, either directly, or through an interface such as WinDeed or Searchworx, since new
conditions can be stamped (“endorsed”) on pages added to the end of the title deed. A copy of the
title deed from the seller or a bank may not tell you the full story of that property. Also study the
Deeds Office property “printout” (search report) to check if any caveats or notes or contracts are
registered against the title deed.
3.3 r e s t r i c t i v e conditions
A restrictive condition is usually one that prevents an owner from doing something to or with an
immovable property, or restricts how something is done.
A good example is a building line restriction (which, to make real estate life interesting, may or may
not* be set out in a title deed). A building line restriction tells an owner where a building can be built
in relation to the boundary of the property. If a building line of 5 metres applies, then a building cannot
be built within those 5 metres of the property boundary.
When you wish to develop a property, it is a good idea to first understand what restrictive conditions
apply to that property, and whether they will prevent you developing the property in the way you
want to. This can be achieved by a due diligence investigation of all property information, involving
professionals such as a town planner and a real estate lawyer.
In the Western Cape, the “pivot deeds” system applies. That means since the first recordal of a title
deed, up to 1937, no prior or existing conditions were brought forward in a new title deed. It is thus
critically important to always obtain a certificate by a conveyancer when dealing with property in the
Western Cape to certify that a search was done “behind the pivot deed” and that no restrictive
conditions were found.
________________________________________
*You may also find certain restrictions on immovable properties in town planning (now land use) schemes, which were briefly
considered in Section 2.1 of Module 2, and will be considered further in Module 4.
3.4 r e m o v a l of conditions
Depending on the type of the condition, there are various methods of removing the condition. The
method can be set out in relevant legislation such as the Removal of Restrictions Act No 84 of 1967,
or by court order, or in terms of Section 68 of the Deeds Registries Act.
If the condition is imposed in favour of an outside party, often referred to as the “dominant” party,
you may need to approach such party, being a municipality, provincial government, an organisation
such as Eskom, or a private company or person, to get the approval/s you need to remove a condition
from a title deed. That external party may ask you to fulfill certain requirements before granting its
approval.
A servitude (which is also a restrictive condition, since it limits the property owner’s rights) between
two private individuals can be cancelled by lodging a Notarial Deed of Cancellation with the Deeds
Office, which is a relatively straightforward process. Servitudes can be of personal nature such as a
right of usufruct or habitatio, or of a praedial nature, like a right of way in favour of another property.
It is important to understand the nature of the condition, which parties are involved, and which of
those parties, if any, benefit from the condition. Only then can the process for removal of that
condition be determined.
3.5 d r a f t i n g conditions
When registering a transfer, a conveyancer must leave certain conditions of title out of the new title
deed (the “draft deed”), such as those dealing with mineral rights, any conditions of title that are
racially discriminatory, and any conditions that will be removed simultaneously with the transfer.
The seller and the purchaser may also agree to new conditions of title applicable to the property.
These must be included in the power of attorney to transfer signed by the seller, so that the Deeds
Office knows that the parties agreed on the new conditions.
There are other reasons for new conditions of title (see 3.1 above), but, however these new conditions
are introduced, they must be carefully drafted by the conveyancer so that they are clear, easy to
understand, and enforceable.
3.6 e x a m p l e s
See Annexure 3F (conditions of title).

4. encumbrances
4.1 s o u r c e s a n d e f f e c t o n o w n e r ’ s
rights
An encumbrance on an immovable property is a limitation on the owner’s full set in respect of rights
of that property.
Conditions of title and stamps (“endorsements”) in a title deed are proof of those encumbrances.
Examples are : building line restrictions, servitudes, mortgage bonds, Homeowners’ Association
conditions, etc.
4. encumbrances
4.2 p e r s o n a l v s p r a e d i a l s e r v i t u d e s
A personal servitude is a right one person has over the property of another person, where that right
is registered against the title deed of that property. This type of servitude typically lasts for the
lifetime of that person (100 years if the person is a juristic person), but can last for a set time period,
for example, 10 years, or until a specified event takes place. A personal servitude may also end if the
same person becomes the owner of both properties involved (“merger”), or the people involved agree
to cancel the servitude. A personal servitude is enforceable against a purchaser of the property over
which the servitude is registered.
Typical personal servitudes are usufruct, usus, and habitation.
A praedial servitude is a right one property has in respect of another property, and remains in force
even if ownership of those properties changes. A praedial servitude, like a personal servitude, can last
for a set time period, can end by merger or agreement, and is enforceable against a purchaser of the
property over which the servitude is registered. Unlike a personal servitude, however, a praedial
servitude involves at least two properties, not one, and can last in perpetuity (forever).
Typical praedial servitudes are right of way, the right to conduct electricity, and water rights.
4. encumbrances
4.3 p r o c e d u r e and process
The procedure and process for encumbering a property is similar to a transfer : there is the initial
stage of understanding and recording the nature of that encumbrance, then implementing the steps
(drafting documents etc.) to ensure the encumbrance is dealt with correctly, and finally interacting
with the Deeds Office to record that encumbrance against the property.
4. encumbrances
4.4 r e g i s t r a t i o n against property
An encumbrance such as a servitude or a mortgage bond can be registered (or endorsed, depending
on the circumstances) against an immovable property simultaneously with a transfer of that property,
or as a separate registration.
As with a transfer, the necessary documentation is prepared and signed, any other required processes
completed (such as obtaining a transfer duty receipt from SARS for a servitude), applicable costs paid,
and the documentation lodged with and then registered at the Deeds Office.
Recording the encumbrance against the title deed of the property at the Deeds Office is important so
that the rights involved can be known to everyone. Those rights are enforceable not just between the
parties (for example, the owner and a bank), but also against the rest of the world.
4. encumbrances
4.5 s e r v i t u d e : example
See Annexures 3G (Special Power of Attorney) and 3H (Notarial Deed of Servitude).

4. encumbrances
4.6
4. 6mortgage bond : example
See Annexures 3I (Power of Attorney to Register Bond) and 3J (Mortgage Bond).
“In the real estate business you learn more

about people, and you learn more about
community issues, you learn more about
life, you learn more about the impact of
government, probably than any other
profession that I know of.”
of.”
- Johnny Isakson
assignment instructions
submitting assignments:
• You are encouraged to do your own additional research and reading, provided that you
refer to these sources if you use them in your assignments. Read more below on how to do
this.
• Johannesburg candidates : email assignments to edpf@nlalegal.com.
• Cape Town candidates : email assignments to edpf@nlalegal.com.
• Assignments must be submitted on or before the due date set out on the cover page of
each module. Ensure that your delivery and read receipt functionality is enabled on your
email software.
• The cover page of each assignment must state the following :
2019
NUMBER]],
MODULE [ NUMBER
EDPF LEGAL ASPECTS OF REAL ESTATE
NAME]]
[YOUR FULL NAME
Harvard citations & plagiarism:
You are expected to give credit when you use someone else’s ideas or words or
both in your assignments. Every assignment will be checked for plagiarism, and
marks will not be awarded at all or marks will be deducted if an assignment or
part of an assignment has been plagiarised.
• Harvard c i t a t i o n s – this is a particular style of referring to someone else’s work

in your assignment, and then entering the full reference to their work at the end of your
assignment. You will find an example of the “within work” style at the end of the plagiarism
definition below, and the full reference style in the subsection below headed “References”
(at the end of this section “Assignment Instructions”). The website www.citethisforme.com
will help you with citations.
• plagiarism d e f i n i t i o n – this is when you use someone else’s work as yours, or

copy words/ideas without giving them credit, or refer to the incorrect source for
information you use (or you don’t refer to a source at all eg. you don’t place a quote in
quotation marks : “”), or you copy words/ideas so that they make up most of your work
(Plagiarism.org,
Plagiarism.org, 2017).
2017
References :
Plagiarism.org. (2017). What is Plagiarism? - Plagiarism.org. [online] Available at:

https://www.plagiarism.org/article/what-
https://www.plagiarism.org/article/what- is-
is - plagiarism [Accessed 14 Apr. 2019].
assignment
1. Describe for an investor in your property development how you will :
1.1 negotiate an offer to purchase with a particularly difficult owner; and (12)
1.2 ensure that the process of the transfer takes place smoothly. (18)
2. Obtain copies of four title deeds, one or more of which may or may not be title deeds for your
PIP property. Identify all restrictive conditions of title in the four title deeds, setting out the
reasons you believe each condition is restrictive. Attach the copies to your assignment.
(20)
[50]
resources
Agricultural Holdings Act No 22 of 1919
Alienation of Land Act No 68 of 1981
Biodiversity Act No 10 of 2004 (and the Alien and Invasive Species Regulations of 2014)
Consumer Protection Act No 68 of 2002
Electronic Communications and Transactions Act No 25 of 2002
Financial Intelligence Centre Act No 38 of 2001
Financial Intelligence Centre Amendment Act No 1 of 2017
Sectional Titles Act No 95 of 1986
Sectional Titles Schemes Management Act 8 of 2011
Value-Added Tax Act No 89 of 1991
Wymber, C. (2014). [online] Available at:

https://www.randcommercial.com/commercialrealestateblog/2017/10/10/inspirational-quotes-on-
the-art-of-negotiation [Accessed 10 May 2019].
“In a crowded marketplace, fitting in is a

failure. In a busy marketplace, not standing
out is the same as being invisible.”
invisible.”
- Seth Godin
contact details
Johannesburg candidates:
email : edpf@nlalegal.com
tel : +27 11 704 1563
Cape Town candidates:

email : meyer@mdwinc.co.za
tel : +27 21 461 0065
“There have been few things in my life which have

had a more genial effect on my mind than the
possession of a piece of land.”
land.”
- Harriet Martineau

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1|Pa ge 2019 MOD 3 EDPF Legal Aspects of Real Estate.

THE ENTERPRISE PROPERTY

MODULE 1 : BASIC LEGAL CONCEPTS

MODULE 2 : PROPERTY CONVERSION

MODULE 4 : PROPERTY DEVELOPMENT

MODULE 5 : ESTATE PLANNING & TAX

MODULE 6 : CONSTRUCTING A GOOD TEAM

2. THREE TRAINING DAYS

22 May 2019: MODULES 1 & 2

4 June 2019: MODULES 3 & 4

11 September 2019: MODULES 5 & 6

“The best investment on earth is earth”

This course is not legal advice.

1. offer to purchase and negotiation basics

1.2 formalities vs essentials

1.4 important clauses

1.5 general clauses

2.3 potential delays

2.5 registration at Deeds Office

3.1 purpose and sources

3.2 typical conditions and order

3.3 restrictive conditions

3.4 removal of conditions

3.5 drafting conditions

4. e n c u m b r a n c e s : servitudes and mortgage bonds

4.1 source and effect on owner’s rights

4.2 personal vs praedial servitudes

4.3 procedure and process

4.4 registration against property

4.5 servitude : example

4.6 mortgage bond : example

• Understanding the process involved in negotiating a sale of immovable property, the

The offer should :

• presented by the potential buyer to the potential seller,

• be signed and dated by the potential buyer.

“16 Rosedale Avenue, Honey Manor, Johannesburg.”

It is also acceptable for the property to be identifiable, for example :

Sectional Title Property :

• a close corporation to be formed (because no more close corporations can be registered),

special mention : nomination

• Don’t take anything personally

To negotiate an offer to purchase well, it is recommended that you :

Always make sure that :

• allows for signature

• seller, as set out in 1.2

• states who owns the property,

• states when the purchase price must be paid by the purchaser

• states how the purchase price is to be paid by the purchaser.

• a recordal of the context of the sale.

• any suspensive conditions.

• who pays the transfer costs.

• the conveyancer’s details.

• how any tenants are to be dealt with.

• when risk in the property passes to the purchaser.

• whether VAT or transfer duty will be payable.

• whether the business of renting the property is also being sold.

• a gazumping clause or the “72- “72- Hour Clause”.

• who obtains any required compliance certificates.

• who pays the estate agent’s commission.