Contract of sale to buy land – what should it contain?
Last year, we did an article that informed you that the sale and purchase of land must be evidenced in writing. Although any type of rudimentary note or writing can be evidence of an agreement to buy land, it is a huge advantage to you to have a contract that is properly prepared and spells out all the terms of the purchase. This article takes you through some of the essential ingredients of what a contract of sale to buy land should contain:
- Parties – the contract should clearly state who the seller is and who the buyer is. This sounds obvious but sometimes people fail to get even this part right when dealing with agents or ‘family representatives’.
- Purchase price – another obvious one, the contract should indicate how much the property is being bought and sold for. In addition, it should also state how the purchase price will be paid by the buyer – how much deposit will be paid upfront and how the balance will be paid; as a lump sum, or installments every quarter, month etc. This is a crucial part of the contract.
- Description of the property – it’s amazing how this is often left out or done incorrectly. You simply can’t say ‘plot 2B’ for example. It should have a full description of the property which also includes the size of the property and the survey diagram number.
- The parties’ advocates – the lawyers for each party will be mentioned in the contract. If you are in the diaspora, it is imperative that you do obtain a lawyer to represent you and protect your interests. Beware of buying from a seller who doesn’t have any legal representation. You may end up losing time or money or both.
- Costs – the sale of property comes with certain costs and a good contract should state who will pay for what costs. These costs include consent to assign, property transfer tax, registration fees, ground rents and legal fees. You don’t want to be caught by surprise by paying for costs you haven’t budgeted for.
- Vacant possession – This is another significant clause which will specify when a buyer can actually take possession or control of the property. If you are buying through a payment plan with several installments, the contract is likely to stipulate that you can only move onto the property once you have completed paying for it.
- Completion – this is often a misunderstood clause. Legal completion doesn’t refer to the date when you move into the property or when you get your title deeds. This type of completion refers to when the seller and buyer have completed their obligations to each other. This occurs when the seller provides all the documentation required for title deeds to be processed in the name of the buyer who has finished paying for the property. A buyer can move onto the property before the completion point and process title deeds after the completion point.
The best contracts for the sale and purchase of land are those where the parties have agreed the commercial terms and subsequently captured those terms in writing through their legal representatives. If you are in the diaspora please don’t make the mistake of buying property without a proper contract in place. It can literally be the difference between losing money or owning a property with your name on the title deeds.
Please note that the above information is intended to provide general information only. The contents contained in this article do not constitute legal advice and should not be relied on as such. For legal advice please contact a licensed legal professional.