Written by: Eugene van der Walt | Afrikaanse weergawe
For decades the rule in South Africa has been simple and absolute: a sale of property is worth nothing unless it is in writing and signed. A recent High Court judgment has now put a crack in that rule and if the Constitutional Court agrees, the way we buy and sell homes could change.
The Rule as It Stands
Section 2(1) of the Alienation of Land Act of 1981 requires that any sale of land be contained in a written deed of alienation signed by both the buyer and the seller, or by their duly authorised agents. If the agreement is not in writing, it is void from the start and no rights flow from it. This rule has stood for more than forty years and has kept certainty in the property market by keeping he-said-she-said disputes out of the sale of homes.
The reasons for the rule are practical. A written agreement makes the essential terms easy to identify, which matters not only to the buyer and seller but also to banks, conveyancers, estate agents and the Receiver of Revenue, all of whom rely on documentary proof to process a transfer and manage their risk.
What Happened in the Dlomo Case
In Dlomo v De Klerk, a Pretoria family had originally signed a written offer to purchase a home. That written offer was cancelled and replaced with a purely verbal agreement to buy the property for R1 million. The family paid the price and lived in the home for several years. When they sought to have the property transferred into their names, the sellers refused, relying on section 2(1): there was no written deed of alienation, so in law there was no valid sale.
The family approached the High Court. They argued that the strict writing requirement left them and their children facing eviction and homelessness despite having paid for the home, and that this outcome unjustifiably limited their constitutional rights to housing, dignity and equality.
What the Court Decided
The High Court agreed with the family. The judge found that section 2(1) is constitutionally deficient to the extent that it fails to protect vulnerable buyers who have paid the full purchase price, or a substantial part of it, and who then face the loss of an existing home simply because their agreement was never reduced to writing.
As a remedy the court ordered that the section be read as including wording to the effect that a verbal agreement for the transfer of residential property shall, in appropriate circumstances, be binding and enforceable. Importantly, because the ruling declares part of an Act of Parliament invalid, it does not take effect immediately. It has been suspended and referred to the Constitutional Court, which must confirm it before it becomes law.
Why This Is Not a Green Light for Handshake Deals
It would be a serious mistake to read this judgment as permission to buy or sell property on a handshake. The ruling is narrow. It is aimed at vulnerable buyers who have already paid and who face homelessness, not at ordinary buyers and sellers who simply neglected to put their agreement in writing.
There is also real doubt about whether the Constitutional Court will confirm it. Critics argue that section 2(1) does not itself create vulnerability. Vulnerability arises only when someone chooses to conclude an oral agreement despite the protection that a written contract offers. On that view the section protects buyers rather than harms them, and a court may be reluctant to rewrite it.
What You Should Take from This
Until the Constitutional Court rules, the law remains that a sale of property must be in writing and signed. The safe and correct course, in every case, is to reduce your agreement to a proper written contract prepared or reviewed by an attorney.
The value of this judgment for now is as a warning. Verbal arrangements over property, even between family members or people who trust one another, create exactly the kind of uncertainty and heartbreak this case illustrates. If you have paid money toward a property on the strength of an informal understanding, or if someone is living in or claiming a property of yours on that basis, you should seek legal advice sooner rather than later.
Van der Walt and Associates Inc assists buyers, sellers and property owners throughout the Tygervalley area with sale agreements, transfers and property disputes. Contact us for an initial consultation.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.