Claiming interest for delay in transfers | Legal Articles

 

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Claiming interest for delay in transfers

Seller's rights when selling a house

It’s important to understand the seller’s rights when selling a house in South Africa, especially when there is a delay in property transfer.

Property Transfer Delays Mora Interest

In some cases, transfers of property are delayed due to one party failing to meet his or her obligations in terms of the sale agreement.
More often than not, these delays are caused by the buyer, not the seller.

Delay in property transfer

Sale agreements typically have a specific clause, known as a mora clause, which is intended to prevent the buyer from delaying transfer of property.

The seller is entitled to claim mora interest from the buyer, should the transfer be delayed due to the conduct of the buyer.

Claiming interest for delays in transfer of property

In 2013, there was a case which lead the Supreme Court of Appeal to consider whether or not a seller should be entitled to claim mora interest from a buyer in cases where there have been no provisions made in the sale agreement.

The case involved a number of farms which were sold to the state in settlement of land claims. The purchase price was to be secured in writing by the Chief Land Claims Commissioner and that it would be paid within no more than 10 days after the date of transfer.

The undertaking should have been provided within 14 days of the written request by the conveyancers. However, the State was unable to provide the undertaking for a number of months.

Only once the seller instituted legal proceedings against the State, did the State provide the undertaking as requested.

As a result of this, the property’s transfer was delayed. A mora clause was present in the sale agreement and stated that the State would be liable to pay interest on the outstanding amount, provided that any part of the purchase price was not paid before the due date.

The seller then demanded that the State pays mora interest from the date the purchase price should have been paid, until the date that it was actually paid.

Because the terms of the mora clause stated that it was only liable for mora interest if any portion of the purchase price was not paid within 10 days after the transfer date, the state refused to pay the interest.

The State argued that it was not liable to pay mora interest if the undertaking was not delivered in time.

The court’s ruling was that the obligation to provide the undertaking and to pay the purchase price are not separate obligations and that payment of the purchase price depended on the State providing the undertaking.

Therefore, the State was liable to pay mora interest.

Furthermore, the court decided that even if there is no mora clause in a sale agreement, it’s possible to place a buyer in mora. All it takes is for the seller to demand performance from the buyer.

Van Deventer & Van Deventer Incorporated – Property Attorneys in South Africa

Contact our property attorneys in Johannesburg and Cape Town to find out more about seller’s rights when selling a house, as well as any other property related matters.
 

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