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The Cooling-Off Right for the Purchasers

These notes try to simplify the Law, and for detailed study, you should refer to Section 29A of the Alienation of Land Act, No. 68 of 1981 (hereinafter referred to as “Section 29A”). 

  1. The Cooling-Off Right contained in Section 29A became Law on the 27 th November 1998.

  2. The Cooling-Off right applies to: 

    1. Ordinary property sales.

    2. Retirement Housing or Retirement Development sales.

    3. Share Block sales.

    4. Sectional Title sales.

  3. The Cooling-Off right does not apply to:

    1. Sales where the purchase price exceeds R250 000-00.

    2. Where the Purchaser is a Trust, Close Corporation, Company or other legal entity other than natural persons.

    3. (Where the property was sold by a publicly advertised auction.

    4. Where the Seller and Purchaser have previously entered into an Agreement of Sale of the same property on substantially the same terms.

    5. Where the Purchaser reserves the right to nominate or appoint another person to purchase.

    6. Where the Purchaser exercises an option to purchase where such option was open for exercise for a period of at least five days excluding the date of signature, Saturdays, Sundays and Public Holidays.

    7. Where Agricultural Land is sold.

  4. To avoid a Purchaser making more than one offer for different properties within the five day period, once a second offer or sale is signed, the Purchaser is deemed to have revoked or terminated the earlier transaction and the Purchaser must forthwith notify the earlier Seller of the revocation or termination.  Failure to notify the earlier Seller is an offence and the Seller may also have a right to claim damages.  As the Purchaser is deemed to have revoked or terminated the earlier transaction, the first agent probably does not have a claim for commission or damages. Note this clause does not apply where the Purchaser genuinely wants to purchase more than one property.

  5. Subject to the above, a Purchaser or prospective purchaser of land may, within five (5) days after signature by him or her, (or by his or her agent acting on his or her written authority) of an Offer to Purchase or Agreement of Sale, revoke the offer or terminate the Agreement of Sale, by written notice delivered to the Seller or his or her agent within that period.

NOTES

  1. The five day period excludes the date of signature, Saturdays, Sundays and Public Holidays. This means, for example, where an offer is made on the 23 rd December 1998, the five day period expires at midnight on the 31 st December 1998.  It is important that the agent is able to calculate the period correctly.

  2. An Agreement of Sale is concluded in the normal course of events, by a Purchaser making an offer which the Seller accepts. Sometimes, the Seller signs first.  Whichever way it is done, the relevant date is the date the Purchaser signs , and not the date on which the Agreement is concluded.  Sometimes, the offer is not accepted in the form of the original offer made by the Purchaser, and the Seller or prospective Seller makes a counter-offer.  The Purchaser either accepts the counter-offer, in which case, an Agreement of Sale comes into effect, or the Purchaser may again make a further counter-offer.  The first offer falls away once the Seller makes a counter-offer, and if the Purchaser accepts that counter-offer, the relevant date for calculating the cooling-off period is the date on which the Purchaser signs the Seller's counter-offer . This may sound complicated. Just remember that the relevant date for calculating the Cooling-Off period is the last date on which the Purchaser signs or initials. (See NOTES sub-paragraph (f) below.

  3. If the Purchaser wishes to revoke his offer, or terminate an Agreement of Sale, the written notice must be delivered to the Seller.  This means that the Seller must be put in possession of the notice.  At the stage when the Purchaser makes an offer, the Seller is not a contracting party until the offer is accepted, and the Purchaser cannot impose on the Seller a domicilium address at which the notice can be delivered.  Therefore, if the notice is put into the Seller's home post box, and the Purchaser is unable to prove that the Seller was put in possession of the notice before the five days expires, the Purchaser could find that he has not lawfully revoked the offer or terminated the Agreement of Sale.  This can lead to undesirable litigation. The notice can also be delivered to the Seller's Agent, but who the Seller's agent is for accepting delivery is anyone's guess.  It is not necessarily the Seller's Estate Agent
    See the case of FICKSBURG TRANSPORT (EDMS) BPK vs RAUTENBACH EN ANDER – 1988 (1) S.A. 318 AD.

  4. The notice will have no effect unless it:- 
    i) Is signed by the Purchaser or his or her agent acting on his or her written authority.  Therefore, if an Estate Agent signs a notice, for example, and delivers it to the Seller, this notice will be invalid unless the Purchaser has given the Estate Agent his or her written authority (the Clause recommended by the Estate Agents Board in the “Agent” publication, is defective in this regard). 
    ii) The notice must refer specifically to the Offer or Agreement that is being revoked or terminated.
    iii) The notice must be unconditional.  Therefore, the Purchaser cannot say in his notice that he revokes the Offer or terminates the Agreement if, for example, his wife does not approve of the property.  The notice must be unconditional.

  5. Annexed hereto is the Clause recommended by the Estate Agents Board, with slight modifications. Please make sure that the date is correctly completed and refer to Clause (a) above dealing with the calculation of the five day cooling-off period.  If the Seller countersigns, when the Purchaser accepts the counter-offer, or makes a further counter-offer, the date must again be amended and initialed at the time the Purchaser signs.  This means that the Seller will have to initial so as to signify his approval that the date is going to be changed.

  6. The cooling-off clause can be an annexure or pasted into the Agreement. If it is part of the standard agreement, then care must be taken to delete it if the cooling-off right is not applicable.

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