Asked by the Customer on 29-07-2015 11:29:42
Question posted in the Property Law category relating to Gauteng
Question posted in the Property Law category relating to Gauteng
Dear Lawyer,
We need to find out about the LAW OF CONTRACTS. We tried to buy a farm near Cullinan. We gave the seller an offer in writing. SELLER accepted verbally and by email PURCHASER’S OFFER TO PURCHASE for RX amount with monthly repayments over 10 years, interest charged at Prime minus 1%, and occupation rental at RY amount. SELLER said in his email that he would get his own lawyer to draw up OFFER TO PURCHASE AGREEMENT.
However, when the document finally arrived from SELLER’S lawyer it was for RX plus R200 000, with interest Prime plus 2, and occupation rental RY x 5.(5 TIMES). The question is whether SELLER may change the terms of agreement or is he bound by law of contracts to honour the terms of previous acceptance email. SELLER is now intimidating PURCHASER with threat of eviction to accept increased purchase price, increased interest rate, and increased occupation rental.
Can PURCHASER sue SELLER for breach of contract if evicted?
How can PURCHASER make SELLER revert to original terms so sale of land can proceed rather than be evicted?
We need to find out about the LAW OF CONTRACTS. We tried to buy a farm near Cullinan. We gave the seller an offer in writing. SELLER accepted verbally and by email PURCHASER’S OFFER TO PURCHASE for RX amount with monthly repayments over 10 years, interest charged at Prime minus 1%, and occupation rental at RY amount. SELLER said in his email that he would get his own lawyer to draw up OFFER TO PURCHASE AGREEMENT.
However, when the document finally arrived from SELLER’S lawyer it was for RX plus R200 000, with interest Prime plus 2, and occupation rental RY x 5.(5 TIMES). The question is whether SELLER may change the terms of agreement or is he bound by law of contracts to honour the terms of previous acceptance email. SELLER is now intimidating PURCHASER with threat of eviction to accept increased purchase price, increased interest rate, and increased occupation rental.
Can PURCHASER sue SELLER for breach of contract if evicted?
How can PURCHASER make SELLER revert to original terms so sale of land can proceed rather than be evicted?
Message from the Attorney
Posted by Att. Patrick on 29-07-2015 12:24:55
Hi there and thank you for the question,
If your question revolved the sale of anything else other than the sale of immovable property, my answer would be very different and would in fact me in your favour almost 100%.
BUT, the agreement is in relation to the sale of immovable property, so there are very strict formalities that need to be met.
First, if the seller physically signed your offer to purchase, then you would have a done deal and could enforce that offer to purchase.
The seller verbally accepting your offer to purchase, does not create an agreement. This appears from the fact that the seller then drew up a further agreement with monthly repayments over 10 years. There was no true agreement concluded between the parties.
When the seller's attorney drew up the second agreement (for Rx plus R200 000) that agreement actually constituted a reverse offer to purchase to you, which you could then accept or reject. If you signed that agreement then there would be a binding agreement in place. If you didn't sign it, then there would be no sale.
To answer your question, the seller is not changing the terms of the agreement by making a counter offer. He is simply making a counter offer.
On the facts as set out above, there is no agreement that you could hold the seller to.
There is no breach of contract, as there was no contract entered into - and by that, I mean a contract of sale of immovable property that met all of the requirements of the Alienation of Land Act.
There is however an implied rental contract in that you are now living in the property. What the amount of the occupational rental is will depend on what contract was "in draft form" at the date that you moved in. Therefore, if your inital offer to purchase with occupational rental at RY was the agreement in play, then that would be the occupational rental payable. If however the lawyer's agreement was the agreement in play when you moved in, then the occupational rental would be RY x 5.
The seller could give you notice to vacate, and if you didn't, he could sue you for eviction from the property. He can also do that if you don't pay the occupational rental to him. That is a risk that you are taking.
Unfortunately the purchaser can't make the seller revert to the original terms of the sale of land agreement, as there was no agreement ever concluded!
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
If your question revolved the sale of anything else other than the sale of immovable property, my answer would be very different and would in fact me in your favour almost 100%.
BUT, the agreement is in relation to the sale of immovable property, so there are very strict formalities that need to be met.
First, if the seller physically signed your offer to purchase, then you would have a done deal and could enforce that offer to purchase.
The seller verbally accepting your offer to purchase, does not create an agreement. This appears from the fact that the seller then drew up a further agreement with monthly repayments over 10 years. There was no true agreement concluded between the parties.
When the seller's attorney drew up the second agreement (for Rx plus R200 000) that agreement actually constituted a reverse offer to purchase to you, which you could then accept or reject. If you signed that agreement then there would be a binding agreement in place. If you didn't sign it, then there would be no sale.
To answer your question, the seller is not changing the terms of the agreement by making a counter offer. He is simply making a counter offer.
On the facts as set out above, there is no agreement that you could hold the seller to.
There is no breach of contract, as there was no contract entered into - and by that, I mean a contract of sale of immovable property that met all of the requirements of the Alienation of Land Act.
There is however an implied rental contract in that you are now living in the property. What the amount of the occupational rental is will depend on what contract was "in draft form" at the date that you moved in. Therefore, if your inital offer to purchase with occupational rental at RY was the agreement in play, then that would be the occupational rental payable. If however the lawyer's agreement was the agreement in play when you moved in, then the occupational rental would be RY x 5.
The seller could give you notice to vacate, and if you didn't, he could sue you for eviction from the property. He can also do that if you don't pay the occupational rental to him. That is a risk that you are taking.
Unfortunately the purchaser can't make the seller revert to the original terms of the sale of land agreement, as there was no agreement ever concluded!
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
Message from the Customer
REPLY QUESTION:
I am under the impression that email confirmation is now regarded as binding by law. Surely therefore the SELLER’S first email confirmation of the first terms of agreement is binding and the SELLER is obliged to stay with original price, which he agreed to both verbally and by email? How can it be acceptable for him to say a few months later that he has changed his mind and wants more – particularly as the delay has come from his side, with his lawyer taking his time to draw up the Offer to Purchase Agreement? ….. or was he just waiting for us to get settled on the land, dig a toilet, install borehole pump and irrigation, plant crops and orchard, build house, kill the snakes, etc. (We are discussing 50ha of land that was previously part of an 800ha farm and used for grazing cattle, with no improvements on the land whatsoever.)
I am under the impression that email confirmation is now regarded as binding by law. Surely therefore the SELLER’S first email confirmation of the first terms of agreement is binding and the SELLER is obliged to stay with original price, which he agreed to both verbally and by email? How can it be acceptable for him to say a few months later that he has changed his mind and wants more – particularly as the delay has come from his side, with his lawyer taking his time to draw up the Offer to Purchase Agreement? ….. or was he just waiting for us to get settled on the land, dig a toilet, install borehole pump and irrigation, plant crops and orchard, build house, kill the snakes, etc. (We are discussing 50ha of land that was previously part of an 800ha farm and used for grazing cattle, with no improvements on the land whatsoever.)
Message from the Attorney
Posted by Att. Patrick on 31-07-2015 11:12:20
Hi there,
As I said above, I don't think that you are right. What you're saying is most certainly right in respect of contracts/agreements that do not involve the sale of immovable property. The sale of immovable property has VERY strict requirements, and I don't think that an email confirmation is good enough.
As you said, the lawyer has taken time to draw up the Offer to Purchase Agreement. That confirms to me that the formalities were not previously met, and there is no binding agreement in place.
You would however have a claim against him for unjustified enrichment, which basically involves your claim against him for ALL improvements that you've made to the land, and for all costs that you've incurred.
I hear what you're saying, I really do - but at the end of the day if a Judge asks "Where is the signed offer to purchase", you can't actually hand the document up to the Judge.
I think that you should take my advice and speak to an attorney who can actually read all of the emails, documents, correspondence, etc and either confirm my advice or give you different advice. My advice is however correct - in my opinion.
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
As I said above, I don't think that you are right. What you're saying is most certainly right in respect of contracts/agreements that do not involve the sale of immovable property. The sale of immovable property has VERY strict requirements, and I don't think that an email confirmation is good enough.
As you said, the lawyer has taken time to draw up the Offer to Purchase Agreement. That confirms to me that the formalities were not previously met, and there is no binding agreement in place.
You would however have a claim against him for unjustified enrichment, which basically involves your claim against him for ALL improvements that you've made to the land, and for all costs that you've incurred.
I hear what you're saying, I really do - but at the end of the day if a Judge asks "Where is the signed offer to purchase", you can't actually hand the document up to the Judge.
I think that you should take my advice and speak to an attorney who can actually read all of the emails, documents, correspondence, etc and either confirm my advice or give you different advice. My advice is however correct - in my opinion.
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
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