We are seeing quite an increase in the number of requests for Instalment Sale Agreements, where buyers are unable to obtain mortgage bonds via the traditional route. It certainly provides a feasible option but these are not your typical sale agreements and we would suggest you consult with a property lawyer, or a company like SENTINEL HOMES, which is a company that specialises in assisting buyers and sellers with agreements of this nature.
Herewith a very brief summary of the typical features of instalment sale agreements:
1. They only apply where the purchase price is paid in more than 2 instalments, over more than 1 year and can only be used for properties which are used mainly for residential purposes. It does not apply to agricultural property.
2. If there is a bond over the property, the seller must provide confirmation of the outstanding balance owing, within 30 days of conclusion of the transaction. The buyer may demand to have proof of the balance owing from time to time but not more than 3 times a year.
3. The seller must register the sale agreement in the appropriate deeds office within 90 days from conclusion of the sale agreement. The title deed is endorsed. It will thus prevent any further sale or hypothecation. This will protect the buyer of course.
4. Once the buyer has paid half of the purchase price he may insist on taking transfer subject to a bond being registered in favour of the seller for the balance owing.
5. And lastly, of great significance, is the fact that should interest be levied on the instalments, as one would expect to be the case, and the buyer is a consumer under the National Credit Act, then all the requirements of the NCA will also apply.
Such deeds of sale can be lengthy and complex and no one should attempt to prepare such an agreement if they are not experienced in both areas of law.
Miltons Matsemela Inc