Experts in strategic planning & implementation of fixed property instalment sale agreements
There are very few attorneys in South Africa who have the expertise to set up secure fixed property instalment sale agreements. This is a service we specialise in. Whether you are a private buyer or seller, or an estate agent, we can assist in this rapidly growing and exciting area of property finance.
Who should consider a fixed property instalment sale agreement?
- Buyers who cannot raise traditional bank finance, i.e. a home loan or a bond, but have access to funds (the purchaser’s means to pay are key to this solution)
- Self-employed persons who do not qualify for bank finance.
- Sellers who are struggling to sell their properties due to price or locality.
Did you know?
Instalment sale agreements must meet the criteria of the Alienation of Land Act (ALA) 68/81 which governs instalment agreements in South Africa. Once signed, the binding contract is recorded by the attorneys against the title deed in the deeds office. This is done to protect both the buyer and seller.
The attorney’s role in instalment sale agreements:
We protect both the buyer and the seller and draw up a binding contract as required by the ALA. We ensure that:
- The seller remains the owner of the property for the duration of the agreement.
- The bondholder has no right to refuse the conclusion of the agreement.
- The buyer takes occupation on the agreed date and pays the seller occupational rental.
- The buyer is liable to pay rates and taxes from the date of occupation unless otherwise stipulated.
- The seller receives the deposit together with all capital instalments on the due dates.
- The buyer takes transfer at the end of the agreement term but may elect to take transfer sooner on condition that the full purchase price is secured to the seller.
- The buyer may sell the property at any time during the period of the ALA agreement, on condition that the seller’s purchase price is secured and paid on the transfer date.
- What it means is the seller can’t sell the property to anyone else, get more bond finance or renege on the instalment sale agreement.
- The buyer must make all the necessary payments. If there is a default on the payments, the buyer will have to hand the property back to the seller. The buyer must also take proper care of the property.
- While there aren’t strict lending criteria to a property instalment agreement, we do however execute a vetting process to ensure that the buyer can afford to purchase the property.
We facilitate the negotiation between buyer and seller regarding:
- Purchase price.
- Initial deposit, if any.
- Instalment sale agreement term.
- Agent’s commission and how it is to be paid.
- Occupational rent which is payable.
- Date of occupation.
- Who will be liable for rates and taxes.
- Date when risk relating to the property passes on to the buyer.
- Capital instalments over term – try get to a 20% deposit over term.
“I consider the instalment sale phenomena to be something very precious as it offers an alternate solution in an often sterile market place.”