Legal Articles

From a conveyancing perspective, there have been various pitfalls identified with regards to contractual capacity and concluding offers to purchase in South Africa in respect of immovable property.

By looking at these pitfalls and possible remedies for them, the same may be avoided in the future, making for a smoother sale conclusion.

Offers to Purchase in South Africa – Contractual Capacity

What is contractual capacity?

Contractual capacity relates to the legal ability of a company, individual, close corporation or trust to enter into a contract or agreement.

The following are common pitfalls that appear:

Party to the Agreement when Married in Community of Property

When a party to an agreement is married in community of property, the signature of both spouses, as well as their full names as parties to the agreements, are required in order for the agreement to be deemed valid.

Deceased Estate

The executor or representative of a deceased estate has the contractual capacity to enter into an agreement on behalf of the deceased only from the date he or she is appointed by the Master of the High Court.

A letter of executorship or authority is required and only the individuals reflected thereon will have the capacity to sign an agreement.

Trusts

According to The Trust Property Control Act, a resolution must be signed by the Trustees of a Trust, before entering into an agreement.

Such a resolution should authorise the Trust’s engagement in the agreement and nominate a signatory who is authorised to sign the agreement and transfer documents on behalf of the trust.

Foreign Marriages

Foreign individuals who wish to sell or purchase immovable property are required to assist one another throughout the transfer process.

Therefore, the spouse of a foreign seller must be available to sign the conveyancing documents as well as the sale agreement.

Companies and Close Corporations – Final Deregistration

Close corporations and companies which have been finally deregistered by the CIPC do not have contractual capacity to enter into agreements.

Resolutions by Close Corporations and Companies

Resolutions to authorise the sale or purchase of immovable property by a company or close corporation should be signed prior to signing the agreement.

In addition, the resolution should also nominate a signatory to act on behalf of the company or CC. in the case of a close corporation, all members should sign the resolution.

With regards to a company, all directors must sign the resolution and, only in certain instances, the shareholders must also sign.

Van Deventer & Van Deventer Incorporated – Contractual Capacity in South Africa

Understanding contractual capacity in South Africa with regards to concluding the sale or purchase of immovable property is extremely important.

If you require professional, legal assistance with the process of signing offers to purchase or sale agreements, please contact our attorneys in Johannesburg and Cape Town.