Houses – Transfer Trumps Intention

houses2“Experience is a hard teacher because she gives the test first, the lesson afterward” (Vernon Law)

Never assume that you have any rights to a property just because the owner says that he/she intends to give you ownership, even if a sale agreement is signed. Make sure that you actually do take ownership via registration in the Deeds Office.

That’s the hard lesson learnt recently by a mother and her children who will now be evicted from “their” home.

The relationship that soured

  • Mr A intended to marry Ms B, who lived with her children in a home owned by Mr A’s company
  • Mr A it seems intended to donate the home to Ms B and he accordingly signed a sale agreement (the “first agreement”) selling it from his own company to Ms B’s Company C (she being the sole director and shareholder)
  • Transfer was never effected to Company C
  • Mr A then left Ms B and married someone else instead
  • Mr A signed another sale agreement (the “second agreement”) in terms of which he sold the home from his company into his own personal name.  The property was duly transferred into Mr A’s name
  • Mr A died, leaving the home in his will to his new wife
  • Ms B, still living in the home but threatened with eviction by the executor of Mr A’s deceased estate, asked the High Court to order transfer of the property to her Company C per the first agreement.

A hard lesson from the law

The High Court held against Ms B, confirming that ownership of immovable property only passes on registration of transfer in the Deeds Office.

The parties must both have had the intention of respectively passing and accepting ownership of the property from the seller to the buyer, and on the facts of this case Mr A’s intention was clearly that ownership pass in terms of the second agreement, i.e. into his personal name.

Moreover Ms B had failed to prove that the first agreement was in existence or enforceable (in cases of “double sale”, the second sale can be set aside if the second buyer is shown to have had prior knowledge of the first sale).

The mistake she made

Ms B should have pushed for transfer to her Company C as soon as the first sale agreement was signed.   She seems to have assumed that the agreement itself was all she needed – a fatal mistake.

Ashersons Attorneys

Ashersons Attorneys

Industry news and noteworthy articles from a boutique corporate law firm in Cape Town, South Africa

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