How you can purchase a property with little or no money (Part 2)
In our first article we confirmed that it is possible to purchase property with little or no money, by purchasing property on instalments & we indicated the legal requirements for such a contract.
In this article we will highlight how your interests as a purchaser can be protected.
In terms of Section 20 of the Alienation of Land Act (the Act), the seller must within a period of 90 days from the date of signature of the contract cause the contract to be noted against the title deed of the land at the relevant Deeds Office. The noting is done by way of an endorsement on the title deed.
A contract which has been noted as aforesaid will enjoy preferential treatment. This means that in the event of the property being sold in execution or the seller becoming insolvent the purchaser will have a preferent claim in respect of the proceeds of the sale, such claim ranking immediately after any claim by a bondholder who’s bond was registered prior to the recording of the contract.
Should the seller fail to record the contract within the 90 (ninety) day period the purchaser may elect to cancel the contract or have the contract recorded at the Deeds Office himself. In terms of Section 26 of the Act, the seller will not be entitled to receive any consideration until the contract has been noted.
It is important to note that in terms of the Transfer Duty Act 40 of 1949, transfer duty is payable by the purchaser within 6 (six) months of conclusion of the contract, failing which, penalties will apply.
Section 27 of the Act provides that a purchaser who has paid 50% or more of the purchase price is entitled to demand transfer of the land from the seller on condition that simultaneously with the transfer the purchaser registers a bond over the property in favour of the seller for the balance of the purchase price. The conditions of the bond may not be more onerous than the conditions agreed to in the contract.
Have you entered in to an installment sale agreement and want your rights protected? Let Ramirez Attorneys assist you with noting the contract at the Deeds Office. Contact us via email [email protected] or our website www.ramirez.co.za