| mekanik |

| the nca and the sale of land on installments |

The introduction of the National Credit Act is likely to see renewed interest in the sale of land in terms of instalment sale agreements. This growth will probably be triggered by the introduction of stricter measures for granting credit, which will make the process of obtaining mortgage bonds more difficult, thus leaving aspiring home owners with the option of purchasing property through instalment sale agreements. It is therefore important for aspiring property owners to keep themselves informed on the law regulating the sale of land on instalment.

 

The sale of land on instalment is governed by the Alienation of Land Act. This Act requires contracts for the sale of land on instalments to contain various prescribed provisions. These among other things, include: the names and addresses of the parties to the contract; the purchase price and the instalment amount; and remedies available to the parties in the event of a breach of contract. In addition, the contract of sale must be registered with the Registrar of Deeds. This requirement only applies where a prior contract has not been registered in respect of the land.

 

It is important for purchasers to know when they can take transfer of land purchased on instalment. Transfer of such property will take place upon payment of the outstanding purchase price provided the land can be registered at such time. Transfer can also take place upon payment of not less than 50% of the purchase price. This requirement only applies, if the land can be registered at such time and on condition that a first mortgage bond is registered over the property simultaneously with the registration of transfer in favour of the seller, to secure the balance of the purchase price and interest accruing in terms of the deed of sale.

 

Other important aspects to know regarding the sale land on instalment are the consequences for terminating a deed of alienation. The Act provides that upon termination of a deed of sale of land on instalment, the purchaser is entitled to recover from the seller, payments made in respect of the contract and interest at the prescribed rate on the payments made in terms of the contract (from the date of payment to the date of recovery).

 

On the other hand, the seller is entitled upon cancellation of a deed of alienation, to recover from the purchaser, a reasonable compensation for the occupation, use and enjoyment of the land including compensation for damages caused intentionally or negligently by the purchaser or by any persons for whom the purchaser may be liable.

 

It is important to bear in mind that, since cancellation constitutes a breach of contract, damages will be payable. Although it is not clear from the provisions of the Alienation Act, if the Act regulates payment of damages (cancellation amount), it is probable that the cancellation amount payable in terms of an instalment sale agreement will fall within the ambit of the National Credit Act, which governs credit agreements and transactions. This is because an agreement for the sale of land on instalment constitutes a credit transaction in terms of the National Credit Act.

 

 

 

| contact us |

delport ward & pienaar

attorneys, notaries &  conveyancers
1st floor - cornerstone house

16 loop street

cape town

8001

 

telephone, cape town
+27-21-419.3733

 

telefax, general
+27-21-419.3743

 

telefax, collections dept
+27-21-421.6625

 

telephone, london
+44-20-8133.0337

 

telephone, washington dc
+1-202-657.6733

 

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+852-8139.7374

 

| info@dwp.co.za |

 

 

1st floor - cornerstone house, 16 loop street, cape town | docex 600, cpt | t, +27-21-4193733 | f, +27-21-4193743

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