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Seller didn’t disclose he had a tenant - is property sale valid?

05 Jun 2017

A Property24 reader asks:

A Property24 reader asks if an offer to purchase is still valid when the seller did not disclose that he had tenants till Dec 2017, paying far less than the bond repayment cost.

Is an offer to purchase contract still valid if the seller did NOT disclose to the buyer that he had tenants who are residing on the property till December 2017, and paying a rental fee that is far below the bond repayment cost, prior to the contract being signed?

Jaco Rademeyer, from Jaco Rademeyer Estates, responds:

An Offer to Purchase when properly signed is per se a valid contract. In the same breath, the current tenants can stay on for the duration of their rental agreement without an increase in their rental.

A requirement for a valid contract is that the parties must be in consensus/agreement as to the terms of the contract. In this instance, there was clearly a mistake, although I would go as far as to rather term this an intentional misrepresentation on the seller’s part.

Our courts recognise different categories of mistakes, but important is that for a mistake to be relevant, such mistake must have influenced a party’s decision to conclude the contract in question. In this regard, a further distinction is made between material and non-material mistakes.  A material mistake is an error which negates actual consensus between the parties, and, to this end, must exclude an element of consensus. A non-material mistake does not exclude actual consensus between the parties because it does not relate to an element of consensus.

My practical advice is to see an attorney as a matter of urgency, an attorney who specialises in litigation. The terms as set out in this offer to purchase, will determine the most cost effective route to follow in order to resolve this pending dispute. What is clear is that should the purchaser continue with the offer to purchase, he will suffer financial loss – loss which he could claim from the seller, although this could involve lengthy and costly litigation, and should be avoided as far as possible.

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered.

About the Author
Jaco Rademeyer

Jaco Rademeyer

Jaco Rademeyer is the owner and principal of Port Elizabeth-based Jaco Rademeyer Estates (JRE). He obtained an LLB from Stellenbosch University with a special focus on contract law, and is a multiple Institute of Estate Agents award winner in the Eastern Cape. In 2012, Jaco won the Eastern Cape Property Icon Award and also won the business and law category of the Mail & Guardian’s 200 Young South Africans competition. He was also named in the Nelson Mandela Bay Business Chamber’s Top 40 Under 40 business people in the region. Follow Jaco on Facebook at JRE - Jaco Rademeyer Estates, or on Twitter at @jacorademeyer, or visit www.jacorademeyer.co.za.

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