Abstract
Chapter II of the Alienation of Land Act 68 of 1981 (“the Act”) governs instalment sales of land (as defined in the Act) where the purchase price is payable in more than two instalments over a period longer than 12 months. The Act affords the purchaser special protection, given the risks arising from instalment sale transactions. Perhaps the biggest risk is that the owner of the land may be sequestrated prior to transfer of the property to the purchaser, after the latter has paid the owner a portion of the purchase priceby way of a deposit and/or instalments. At common law this would leave the purchaser with no more than a concurrent claim for damages against the insolvent estate, should the trustee decide to abandon the sale: Glen Anil Finance (Pty) Ltd v Joint Liquidators Glen Anil Development Corp Ltd (1981 1 SA 171 (A)). Special provision is therefore made in the Act to safeguard the purchaser’s interests in the event of the owner’s insolvency. But there are also a number of other equally serious risks, including the unexpected implementation of a payment acceleration clause, cancellation of the agreement or a claim for damages, all of which could, depending on the wording of the agreement, be triggered by an isolated (even unknown) breach of contract on the part of the purchaser.
Highlights
The Act affords the purchaser special protection, given the risks arising from instalment sale transactions
Perhaps the biggest risk is that the owner of the land may be sequestrated prior to transfer of the property to the purchaser, after the latter has paid the owner a portion of the purchase price by way of a deposit and/or instalments
The specific remedies need to be specified in the notice. It is doubtful whether the remedies may be incorporated by reference: Oakley v Bestconstructo (Pty) Ltd
Summary
(a) Must the notice itself contain an indication of the steps the seller intends taking, or can it refer to the relevant clause in the sale agreement stipulating the seller’s remedies on breach of contract by the buyer?. According to the court the seller’s notice did not contain an indication of the steps that the seller intended to take in the event of the purchaser not remedying his breach. The purchaser refused to accept the cancellation and approached the court for an order declaring the sale agreement to be of full force and effect His main argument was that the letter of demand did not comply with the requirements of section 19(2)(c) inasmuch as it did not indicate the steps which the seller intended to take if the purchaser failed to comply with the demand. In my view the use of the plural does not justify this conclusion, since each of the courses enumerated in ss (1) could comprise more than one step.”
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