Property sale agreement

When is it invalid?

A recent judgment from the Eastern Cape High Court has sent a strong message to buyers, sellers and public entities alike: if a property sale agreement is not signed by both parties, it is not a contract at all.

In Eastern Cape Development Corporation vs. Dlamini, the court confirmed that an unsigned deed of sale is void ab initio (meaning it is invalid from the outset) and cannot be enforced, even if the buyer has occupied the property for many years or made payments they believe were part of the purchase price.

The decision highlights the strict requirements of the Alienation of Land Act and the risks that arise when parties rely on informal arrangements or incomplete paperwork.

The background

The dispute concerned a property that the respondents had occupied for more than 20 years. They claimed to have purchased the property from the Eastern Cape Development Corporation (ECDC) and relied on a written agreement.

They made two payments, one of R24 000 and one of R340 000. The respondents considered these instalments towards the purchase price. The ECDC maintained that R340 000 was paid to halt eviction proceedings and did not form part of a valid sale. Crucially, the supposed deed of sale was not signed by the ECDC or any authorised representative, and the property was never legally transferred.

In 2023, the respondents approached the regional court for an urgent interdict to stop the ECDC from auctioning the property. The court granted interim relief and later issued a final interdict in their favour. The ECDC appealed – successfully. Here’s why:

What the court said

A sale of land must be signed by both parties. Section 2(1) of the Alienation of Land Act 68 of 1981 requires any sale agreement to be in writing and signed by both parties or their authorised agents. The respondents’ agreement lacked the ECDC’s signature, rendering it invalid from the start. Without a valid contract, no rights to transfer could arise.

Payments outside contractual terms cannot validate a void sale. Even if the respondents believed they were paying towards the purchase price, the payments were made outside the 60-day period stipulated in the unsigned agreement and were not tied to any enforceable sale. Section 28 of the Act, which provides limited relief for performance under a void contract, did not help because the payments were late and the property was never transferred.

The Regional Court lacked monetary jurisdiction. Because the sale agreement was invalid, the purported purchase price could not be used to determine jurisdiction. In the absence of a valid contract, the ECDC’s uncontested valuation evidence – placing the property’s value at R700 000 – was decisive, and exceeded the Regional Court’s R400 000 monetary limit.

Long-term occupation does not create ownership rights. Occupation for 20 years did not establish a “clear right” for a final interdict. Ownership cannot arise from mere occupation.

The magistrate applied the wrong legal test. A final interdict requires proof of a clear right, an actual or reasonably apprehended injury, and the absence of any adequate alternative remedy. The respondents failed all three. They had an alternative remedy under section 28, which allows compensation where a party acted in good faith under a void agreement.

Therefore, the High Court set aside the regional magistrate’s decision, cancelled the interim order, and dismissed the application. The respondents were order to pay costs in both courts.

Key lessons for buyers and sellers

Five key points emerge from this case, which both buyers and sellers (but particularly buyers) should heed:

1. No signature, no sale: an unsigned deed of sale is legally invalid from the start.
2. Payments do not cure a defective contract: making payments or occupying the property cannot validate an unsigned agreement.
3. Know your court’s limits: jurisdiction depends on the true value of the property, not an assumed purchase price.
4. Final interdicts require real, enforceable rights: without a valid deed, a buyer cannot stop a lawful sale.
5. Section 28 may help, but only if there is full compliance: remedies under this section are limited to parties who fully comply with the void agreement’s terms.

ECDC vs. Dlamini underscores the importance of observing proper formalities in property transactions. The sale of land requires a signed written agreement. Without it, no rights to transfer, stop a sale, or rely on occupation exist.

For further information

If you have queries about property agreements, transfers or dispute resolution, contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za. Simon Dippenaar & Associates, Inc. is a law firm of specialist property lawyers in Cape Town, Johannesburg and Durban.

SD Law – Simon Dippenaar & Associates Inc.

Attorneys, Notaries & Conveyancers

SD Law is a Cape Town law firm with a strong practice in divorce and family law, urgent eviction matters, antenuptial contracts, liquor licence applications and selected commercial disputes. Clients instruct us when the matter is urgent, high-stakes or strategically sensitive, and when they want direct, clear legal advice backed by practical litigation experience.

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