LEGAL ASPECTS TO CONSIDER IN A PROPERTY SALE AGREEMENT
1.
INTRODUCTION
1.1.
An agreement of sale is a document drawn up between two or more parties when a person is selling a property to another person. Although verbal contracts are acceptable at law, property sale agreements must be reduced into writing and must specify explicitly the name of the seller and purchaser, the name and description of the property as it appears on the instrument of title, the purchase price of the property and the mode of payment. It is important that an estate agent or legal practitioner to check with the Deeds Office on the correct names of the parties, endorsements, servitudes, restrictions, caveats before drafting an agreement of sale.
1.2.
The agreement must also specify the warranties, rights and obligations of the parties, the conditions on which the property is sold, the applicable law, the resolution of disputes and the manner of termination of the contract.
1.3.
There are few challenges in an agreement of sale were the purchase price has been paid or secured. Problems may arise in sale of land by installments. In such instances, there might be of a double or multiple sale by the owner. This exposes the Purchaser since he/she is not a secured creditor nor does he/she have ownership of the property concerned.
1.4.
In order to protect the purchaser from this risk, the law provides for what are commonly known as Deeds of Sale which are registrable against the Title Deed of the property to show that the property is subject to an installment purchase agreement.
1.5.
Though the allocation of costs in an agreement of sale of property are governed by the specific terms of the agreement itself, there are statutory taxes and duties regulated at law by certain pieces of legislation, depending on the nature of the transaction. These include Stamp duty, rates clearance certificate payment, Capital gains tax and Value added tax and conveyancing fees as regulated under Statutory Instrument 28 of 2020 Law Society of Zimbabwe By-Laws, as amended from time to time. 16
STRUCTURE & DESIGN
1.6. An agreement of sale should also contain remedies and rights available to an aggrieved party in the event of breach by the other party, whether through acts of commission or omission. 2.
TERMS OF PAYMENT
2.1.
In an agreement of sale of a property, one of the most important considerations is the clause dealing with the price or valuation of the property and the method of payment. This clause is regulated by many of the other regulations and Acts dealing with legal tender and currency in Zimbabwe.
2.2.
The clause dealing with payment should explicitly state the price of the property concerned and the mode, method and frequency of payments in relation to installment payments. As relates to installment contracts, due regard must be had to Section 11 of the Deeds Registry Act, which states that deeds must follow the sequence of their relative causes. This aspect is dealt with in more detail under the heading “Point of Transfer of title and release of funds”.
3.
RBZ AUTHORITY FOR OFFSHORE PAYMENTS.
3.1.
In Zimbabwe, the Reserve Bank of Zimbabwe is the overall exchange control authority in terms of the Exchange Control Act. Offshore payments fall under the category of payments that require exchange control approval from the central bank.
3.2.
Exchange control is also governed by the Exchange Control Regulations 1996 Statutory Instrument 110 of 1996 and the Exchange Control (General) Order 1996 Statutory Instrument 109 of 1996. In order to repatriate proceeds of sale for a property in Zimbabwe offshore, using foreign or locally obtained free funds, one has to apply for exchange control approval to the Reserve Bank. This application for exchange control approval is usually facilitated through an authorized dealer (financial Institution).
3.3.
The Exchange Control Act and its allied regulations prohibit offshore payments without permission from the Reserve Bank of Zimbabwe. Without exchange control approval, an offshore payment from proceeds of a property sale transaction will be regarded as illegal and constitutes externalization of foreign currency.
