Installment Sale Agreements

1. Sale of land in
Installments

2. Instalment Sale
1. Alienation of Land Act, 68 of 1981
2. Only residential properties (not
Agricultural Land as defined)
3. NB: Contract to be drafted as per the
Act!!

3. Purchase Price
1. Paid in more than 2 instalments over a
period exceeding one year
2. Transfer Duty payable within 6 months

4. Recordal of Contract
1. Against Title Deed in Deeds Office within
90 days

5. Implications
1. Seller remains owner until full purchase price is paid.
2. The Property cannot be transferred to someone else,
without the contract being dealt with.
3. Purchaser is a preferent creditor on the Seller becoming
insolvent, this claim shall rank immediately after that of
a mortgage bond, registered prior or on the day the
contract is recorded.

6. Purchaser Defaults
1. Sec 19 of the Act provides that on default the Seller must give notice of at
least 30 days before he will be entitled to certain remedies
2. The special remedies that the Seller may propose are the following:
- an action under an acceleration clause
- an action under a penalty stipulation including a clause providing for
the forfeiture of already paid and future instalments This is subject to
review by a court of law in terms of the Conventional Penalties Act.
- termination of the contract
- an action for damages

7. National Credit Act
1. The purchase price is paid in instalments and any charge, fee or
interest is payable to the seller.
2. Seller must register as a Credit Provider
• The buyer can raise the defence that the credit provider (the seller)
should never have extended credit in the first place or raise the
defence that the lending was done recklessly. In order to counter
such a defence the seller will have to show that all reasonable
steps was taken and a proper investigation was conducted
into the buyers’ ability to service the debt.
Reckless lending = contract invalid

8. www.kvvinc.co.za
087 351 2022