A reader has enlisted the help of our experts regarding a property he purchased from a deceased estate.
In September last year, he signed an offer to purchase in his capacity as trustee of a trust. One of the terms of the agreement was that transfer would take place by November.
Shortly after the reader and the executor of the estate signed the offer to purchase, the executor objected to the terms and insisted on a new contract.
The original offer was drafted by the agent who was mandated to sell the property. The estate agency, a national concern, intervened and the executor eventually agreed to abide by this offer.
However, not long after this, he again insisted that another contract be signed. The trustees scrutinised the document, made a few amendments and then signed it but the executor’s attorneys were not content with the changes.
Acting on the assumption that transfer would have taken place in November, the purchaser had already signed a lease with a tenant.
The tenant could not take occupation on December 1 because of the contractual disagreement, which was resolved on condition that the purchaser paid the full purchase price upfront.
The reader obliged, but is understandably unhappy as the original agreement stipulated that the money was only payable on transfer of the property. He wishes to cancel the whole agreement and take action against the seller.
“First of all, it is important to mention that the reader was not in a position to enter into a valid lease prior to taking ownership of the property,” says Charl Crous from Du Toit Strömbeck Attorneys in Port Elizabeth.
According to Crous, he would only be able to do so if he were acting on the authority of the seller or if he was lawfully in possession of the property and had the right to lease or sub-lease it.
“As we have pointed out before, once an offer to purchase is signed by all parties, a fully binding agreement of sale comes into force.”
When one of the parties then insists - as the executor has done in this example – that a “new” agreement be signed, this (as well as the simultaneous cancellation of the first agreement) must take place by mutual consent, says Crous.
“It is not quite clear whether the second agreement was, in fact, signed by all parties, since the purchaser made amendments, potentially constituting a counter offer, that first had to be accepted by the seller.”
If not, says Crous, the original signed contract still stands as the valid agreement between the parties.
“Based on certain terms that the seller had reneged on, the purchaser may be able to place him on terms to comply with the provisions of the contract,” says Charlotte Vermaak from Chas Everitt in PE. “Failing this, he could take steps to enforce or cancel the agreement.”
If, however, both parties had signed the “new” agreement, this would constitute the new terms of their sale, says Vermaak. “Assuming, of course, that it was the parties’ intention to cancel the previously concluded agreement, which appears to be the case.”
Vermaak says it further appears that the purchaser paid the purchase price in accordance with the new agreement, which implies that the second agreement is indeed the one that is enforceable between the parties.
“Only if the terms of this new contract had been reneged on, can the purchaser take steps against the seller,” says Vermaak. “The ‘old’ agreement is no longer the measure in terms of which the seller must act.”
Vermaak says this dispute again highlights the importance of the parties first reaching consensus on the content of their agreement.
Latest posts by Fullstop (see all)
- Air Con – Landlord not happy! - 25 June 2014
- What happens to your deposit if Agent is declared insolvent? - 11 June 2014
- Calculating pro rata rental fairly - 23 May 2014
- Constitution obliges owner to comply with HOA rules - 14 May 2014
- Homeowners’ association versus sectional title - 30 April 2014
