In property sale transactions, whether commercial or residential, property purchasers often opt to buy in a company rather than in their personal capacities. Whichever way one goes about it, it is strongly recommended that you consult with your conveyancer before signing the agreement, to avoid the pitfalls that often arise.
In this regard it is important to give due consideration not only to the decision to buy in an entity, but also to clearly reﬂect the purchasing entity in the sale agreement.
In the June 2013 judgment in Osborne v West Dunes Properties 167 (Pty) Ltd, a R 17 million sale fell through because the purchaser did not clearly indicate whether he was purchasing the property in the name of an existing company he owned or in the name of a shelf company that he intended to purchase for this purpose.
The Court found that the statutory requirement that the agreement must be ‘signed by’ the parties, was accordingly not met as the signature of the purchaser that appeared in the agreement seemed to indicate that the purchaser was the existing company and not the shelf company (which was the intended purchaser). The signature was therefore not that of the true purchaser and rendered the written agreement invalid.
Speak to a property law expert for guidance in all your property matters, especially when it comes to sale agreements.
Smith Tabata Buchanan Boyes: www.stbb.co.za