The Agent's Function
The Estate Agent's Role in the Sale
In most property transactions, the first face you see belongs to an estate agent. They are the matchmakers of the property world — finding buyers for sellers, arranging viewings, and guiding negotiations. But their legal role is more precisely defined than you might expect.
Once an agreement of sale has been signed — whether it was drawn up by an agent or directly between the parties — the conveyancing attorney enters the picture. In fact, receiving a signed sale agreement from either an estate agent or a private seller is typically the very first step that sets the formal transfer process in motion on a conveyancer's side.
Finding Buyers
The agent markets the property, conducts viewings and identifies serious, qualified prospective purchasers.
Drafting the Offer
Agents typically prepare the written offer to purchase, which — once signed by both parties — becomes the binding sale agreement.
Assisting with Finance
Where a bond approval is a suspensive condition, the seller or the agent may be authorised to take steps to help the buyer secure financing.
Holding Deposits in Trust
Agents, like attorneys, are permitted to hold deposit funds in their trust accounts while the transfer process is under way.
Practical Tip: The sale agreement will specify who appointed the conveyancing attorney. This is not always the seller — and it is not always the agent's preferred conveyancer. The parties are entitled to agree on who handles the transfer.
An important distinction: the estate agent facilitates the deal — they do not perform the legal transfer. Only a qualified conveyancer can prepare and lodge the transfer documents with the Deeds Registry. Once the signed agreement lands on the conveyancer's desk, the agent's role becomes largely administrative: supplying documents, chasing outstanding information, and coordinating timelines.
The agent brings the parties together; the conveyancer makes the deal real in the eyes of the law.
Estate agents in South Africa must hold a valid Fidelity Fund Certificate and operate under the Estate Agency Affairs Act. This means all trust money they receive — including deposits from buyers — must be held in a dedicated, audited trust account, not mixed with the agency's general funds.
Who Pays, and When
Estate Agent Commission: Who Pays & When?
Commission is the agent's reward for successfully bringing a sale to fruition. Understanding who carries this cost — and at what point it falls due — can have a meaningful impact on your net proceeds or total acquisition cost.
The Default Rule: Commission is customarily paid by the seller. However, the sale agreement may specify something different — which is why every clause in that document deserves careful reading before signing.
In practice, the conveyancing attorney typically pays the commission on behalf of the seller directly from the transfer proceeds at the point of registration. This happens once all the funds have been received and the statements of account for both seller and buyer have been finalised. The agent doesn't get paid until the deal is done — registered at the Deeds Office.
| Item | What to Know |
|---|---|
| Who usually pays? | The seller pays commission, unless the agreement states otherwise. Always check the contract. |
| When is it paid? | On or shortly after registration of transfer, once the conveyancer receives the proceeds of sale. |
| Transfer duty impact | Where the buyer (not the seller) agrees to pay commission, that amount is added to the purchase price for transfer duty calculation purposes. |
| Sales in execution | For properties sold at auction in execution, only the portion of commission that exceeds 5% of the purchase price is added for transfer duty purposes. |
| Trust accounts | Agents must hold all money — including commission — in a dedicated trust account until they are legally entitled to it. |
Transfer Duty & Commission: If you as a purchaser agreed to pay the agent's commission, SARS adds that amount onto the purchase price when calculating transfer duty. This could push you into a higher duty bracket. It pays to negotiate who covers commission clearly in writing, upfront.
Where a buyer is selling their current home as a suspensive condition to the new purchase, sale agreements often include a specific clause requiring the proceeds to be net of any agent's selling commission on the existing property — clearly spelling out that the minimum price must be achieved after the agent takes their cut.
No Agent, Same Law
Private Sales: Buying & Selling Without an Agent
There is nothing in South African law that compels you to use an estate agent when buying or selling property. A private sale — where the parties find each other and conclude their own agreement — is entirely legal, and in a rising market, increasingly popular. The motivation is almost always the same: saving commission.
No agent involved means no commission — but also no professional buffer between two parties who may have very different expectations.
What Stays the Same
The Alienation of Land Act applies to every sale of property in South Africa, whether an agent is involved or not. The agreement must be in writing and signed by both buyer and seller.
The Agreement Still Matters
Without an agent guiding the drafting process, the risk of a poorly worded or incomplete sale agreement increases. A good conveyancer can review or draft the agreement before signing.
No Agent Doesn't Mean No Conveyancer
Transfer must still be handled by a conveyancing attorney. The legal process is identical to an agent-assisted sale from the moment instructions are received.
The Saving
On a R3 million property, a 5% commission saving amounts to R150,000 plus VAT — a substantial sum that makes private sales attractive for motivated sellers.
In a private sale, the conveyancer receiving the signed agreement directly from the seller — rather than from an agency — is perfectly routine. Many of the firm's most valued clients are private sellers. The process, the documentation, and the timeline are identical to an agent-assisted transfer.
Watch Out For: In a private sale, there is no professional mediator between buyer and seller. Disputes about what was promised verbally, what's included in the sale, or whether conditions were met can become messy. Get everything in writing, and consider having a conveyancer review the agreement before you sign.
Chapter II · Alienation of Land Act
Instalment Sales: Buying a Home on a Payment Plan
Not every buyer can pay in cash — and not every buyer can secure a bank loan. An instalment sale offers a third path: buying a property by paying the purchase price in regular instalments over a period of time, with the seller retaining ownership until the final payment is made.
Under South African law, this type of agreement is specifically regulated by Chapter II of the Alienation of Land Act 68 of 1981. The Act defines an instalment sale (referred to as a "contract") as a sale where the purchase price is payable in more than two instalments over a period exceeding one year.
Instalment sales aren't a modern invention — they're an old solution to a persistent problem: how do you transfer wealth through property when upfront capital is limited?
The Risks the Law Was Written to Prevent
Before the Act, instalment sales were treacherous. The seller remained the legal owner throughout the payment period, which created serious vulnerabilities for buyers:
Seller Insolvency
If the seller became insolvent before transfer, the buyer could lose the property entirely — with only a concurrent creditor's claim against the insolvent estate for the instalments already paid.
Late-Stage Bonding
The seller could register mortgage bonds over the property after the sale. Even after the full price was paid, the buyer might not be able to take transfer if the seller couldn't repay those bonds.
Multiple Sales of the Same Property
Without regulation, unscrupulous sellers could sell the same property to multiple buyers on instalment plans — leaving all of them without recourse.
Protection Through Recording
The Act requires instalment sale agreements to be recorded against the title deed of the property, giving the buyer's interest public notice and protection once the land is registrable.
Key Protection: Once an instalment sale agreement is recorded against the title deed, the buyer's rights are protected even against a change in ownership or a subsequent bond. This recording requirement is one of the central protections the Act introduced.
It's worth noting that Chapter II of the Act only applies where the purchase price is structured as more than two instalments over more than one year. A straightforward cash sale or a sale funded by a bank bond — even if there's a deposit followed by a lump sum — falls outside this specific chapter's scope, though the rest of the Act (particularly Chapter I on formalities) still applies.
First Right of Refusal
Rights of Pre-Emption: First Right of Refusal Explained
A right of pre-emption — commonly called a "first right of refusal" — is a contractual or registered right that gives a specific person the first opportunity to purchase a property if the owner ever decides to sell. It doesn't force the owner to sell, but it does bind the owner to approach the rights-holder first if they do.
Think of a right of pre-emption as a queue-jump ticket: it doesn't guarantee you'll buy the property, but it guarantees you'll be asked before anyone else.
How Does It Typically Arise?
The most common context is a lease agreement. A landlord lets a property to a tenant, with a clause giving the tenant the first opportunity to buy if the landlord ever decides to put the property on the market. It also arises in joint-ownership situations, where co-owners agree that if one of them wants to exit, the other must be offered their share first.
Owner Decides to Sell
The owner is under no obligation to sell at all. But once they decide to put the property on the market, they are legally required to first offer it to the pre-emption rights-holder.
Formal Offer Is Made
The owner must approach the rights-holder and offer the property — typically at the same price they'd be willing to accept from an outside buyer. The agreed minimum window for the holder to respond is often as little as 48 hours.
Rights-Holder Accepts or Declines
If they accept, a binding sale comes into existence. If they decline — or fail to respond in time — the owner is then free to sell to a third party, but not at a lower price than what was offered to the holder (without offering again).
Does It Have to Be in Writing?
In a significant 2017 Constitutional Court decision, the court held that a right of pre-emption does not need to be reduced to writing to be valid and enforceable — overturning earlier case law that required it. This means a verbally granted right of first refusal can legally bind a property owner, even without a signed document.
Still Get It in Writing: Even though a verbal right of pre-emption is enforceable, proving it happened — and proving exactly what was agreed — is far more difficult. A written right of pre-emption is always preferable, and if it is to bind future owners of the property, it must be registered against the title deed.
Importantly, where a pre-emption right has been registered on a title deed, it constitutes what lawyers call a "real right" — meaning it binds not just the current owner but also anyone who later acquires the property. An unregistered pre-emption right, by contrast, is a personal right that typically only binds the person who granted it.
Locking In the Right to Buy
Options to Purchase: Locking In the Right to Buy
An option to purchase is a powerful but often misunderstood instrument. At its core, it is a written offer by the seller to sell a specific property at a set price — combined with a binding promise not to withdraw that offer before a specified date. The prospective buyer (the "optionee") then has the exclusive right to accept or decline within that window.
| Feature | Option to Purchase | Right of Pre-Emption |
|---|---|---|
| Seller/owner obligation | Cannot withdraw until the deadline | May choose never to sell |
| When it applies | Buyer can exercise at any time within the option period | Only triggers if and when owner decides to sell |
| Formality | Must be in writing; seller must sign | Can be verbal and still binding |
| Registration | Cannot be registered against the title deed | Can be registered on the title deed |
| Fee / Force | Seller may charge a fee for granting the option | Holder cannot force a sale to happen |
Two Components That Must Work Together
For a valid option to exist, two things must be present. First, a full and complete offer to sell the property — including all the essential terms (parties, property description, price). This must be in writing, since the underlying deal is a sale of land. Second, an undertaking by the seller (the "optionor") to keep that offer open and not withdraw it before a specified date.
Only the seller needs to sign the option document at the outset. The buyer (the "optionee") accepts by giving written notice of exercise within the option period. At that point, a binding sale agreement comes into existence — and transfer can proceed.
Option Fee & Transfer Duty: If the seller was paid a fee for granting the option, that amount is added to the purchase price when transfer duty is calculated. The parties usually agree, however, that any option fee paid gets set off against the purchase price if the option is ultimately exercised.
A common misconception is that options and pre-emption rights can both be registered on a title deed. They cannot. Only a right of pre-emption can be registered as a real right against a property. An option remains a personal right between the parties who agreed to it.
Simultaneous Registration
Resale of Property Before Transfer Is Completed
What happens when a buyer, having signed a purchase agreement, sells the property on to yet another buyer — before the first transfer has even been registered? This scenario is more common than people think, particularly in active markets, on large developments, or where chains of transactions occur.
Under South African conveyancing law, this is entirely permissible. The result is what practitioners call a "simultaneous registration" — all the linked transfers in the chain are lodged at the Deeds Office at the same time, and registered in sequence on the same day.
Property can change hands multiple times on paper before a single transfer is registered. All of those registrations then happen simultaneously — a convoy of deeds moving through the Deeds Office in formation.
The "Intermediary" Concept
In law, someone who buys a property and then resells it before taking transfer is called an "intermediary". The Alienation of Land Act specifically defines this concept and governs chains of instalment-type agreements. But even in ordinary transfers, a resale before registration requires the conveyancer to structure the documents correctly — with each deed reflecting the proper chain of title through its "extending clause."
| Stage | What Happens |
|---|---|
| Sale 1: A → B | A sells to B. The signed agreement is sent to the conveyancer. Transfer is instructed. |
| Resale: B → C | Before registration of A → B, B sells to C. A new set of transfer documents is prepared for B → C. |
| Simultaneous Lodge | Both deeds (A → B and B → C) are lodged together at the Deeds Office and registered in sequence. |
| After Registration | C emerges as the registered owner. The title deed reflects the full chain of ownership through the extending clauses. |
Coordination Is Critical: When a resale before transfer occurs, the conveyancers handling the linked transactions must work closely together. FICA compliance, guarantees, bond cancellations and registration dates all need to be synchronised. Using an experienced firm for even the first transaction in such a chain is essential.
Note that where the chain involves instalment sale agreements (as defined in the Alienation of Land Act), special provisions apply to protect buyers who are exposed to the risk of their seller — the intermediary — failing to take transfer before the next buyer's rights need to be secured.
Tenant Protection & Scheme Checks
Sectional Title-Specific Sale Conditions
Buying a flat, apartment, townhouse or unit in a retirement estate comes with a layer of legal requirements that simply don't exist in a standard freehold sale. These aren't bureaucratic obstacles — they're important protections for everyone in the scheme.
The Lessee's Right of First Refusal
One of the most practically important sectional title sale rules is the protection afforded to existing tenants when a building is converted to sectional title. If a developer plans to open a sectional title register over a building that already has tenants, those tenants are not simply cut loose. The law requires the developer to first offer each tenant the unit they occupy, before selling it to anyone else.
Developer Gives Notice
The developer must notify existing tenants — personally or by registered post — offering each unit to its current occupant at a stated price.
90-Day Response Window
The tenant has 90 days to accept or decline the offer. If they decline or let the period lapse, the developer may sell the unit to a third party — but not below the price offered to the tenant for at least 180 days.
Void Contracts for Non-Compliance
Any sale agreement concluded in breach of these tenant-protection rules is automatically void by operation of law — even if both parties were unaware of the breach.
What to Check in a Sectional Title Sale Agreement
Levy Clearance Certificate
The body corporate must confirm that all levies — including arrears — have been paid before transfer can proceed.
HOA Clearance
Many sectional title estates also have a Home Owners' Association. Their own clearance certificate may be required in addition to the body corporate's.
Right of Extension
If a developer has a registered right to add more units to the scheme, this must be disclosed in the sale agreement. It affects your participation quota and the common property.
Exclusive Use Areas
Parking bays, garden areas and storage rooms need to be correctly described and transferred. What happens to these on sale must be explicitly stated.
Scheme Rules
The conduct and management rules of the body corporate govern what you can and cannot do in your unit. Reviewing these before signing can prevent unpleasant surprises.
Deposits & Trust
Where a scheme is not yet open (units not yet registrable), any deposits paid by buyers must be held in an attorney's or estate agent's trust account — or backed by a bank guarantee.
Special Conditions Carried Forward: In a sectional title sale, any special conditions created by the developer or a previous owner are automatically carried forward to subsequent deeds of transfer — they don't need to be "created" again in each new agreement. However, if the seller introduces a new special condition, it must appear in both the power of attorney and the deed of transfer.