1. REAL ESTATE DRAFTING AND NEGOTIATION OF LEASE AND SALE AGREEMENTS
By Pieter Niehaus
Director: Property and Conveyancing Division

2. WHAT IS REAL ESTATE?
Land – definitions as per Deeds Registries Act vs Alienation of Land Act vs Subdivision of Agricultural Land Act
Real Rights in and to Immovable Property
Registration Type of Immovable Property
Freehold
Sectional Title
Leasehold
Long Term Lease
Land Registers – Township, Agricultural Holdings, Farm

3. “Back to the Future”
What did we decide in Level 1 Course were the important factors to consider when drafting Real Estate Agreements?
Parties
Description of Sale Object/Lease Premises
Price
Terms and Conditions
Duration, and
WORRY, WORRY, WORRY!

4. The Number One decision:
WHAT DO THE PARTIES WANT TO ACHIEVE BY CONCLUDING THIS AGREEMENT?
“STRATEGY WITHOUT TACTICS IS THE SLOWEST ROUTE TO VICTORY. TACTICS WITHOUT STRATEGY IS THE NOISE BEFORE DEFEAT”
SUN TZU
CHINESE GENERAL and AUTHOR
500 BC

5. “The enemy that you know is better than the one you don’t!”
PARTIES
“The enemy that you know is better than the one you don’t!”
- I have no idea who said this first!
“Know your enemy and know yourself and you can fight a hundred battles without disaster”
Sun Tzu, a Chinese General and Author
500 BC

6. PARTIES, continued
Before you start preparing any documents, always ensure who you dealing with – own client and other parties
Do the representatives have the requisite authority?
Which type of entity are you dealing with – company, close corporation, trust, deceased estate, insolvent estate, partnership, individual, government
Consider legislative provisions such as the Companies Act, 1973 and 2008; Close Corporations Act, Trust Property Control Act, Public Finance Management Act, Municipal Finance Management Act, Insolvency Act, Deceased Estates Act, Income Tax Act, etcetera

7. NOTES RELATING TO DESCRIPTION OF SALE OBJECT or LEASE PREMISES
Identify the immovable property CLEARLY!
Use conveyancing form; e.g.:
Portion 1 of Erf 1234 SANDOWN TOWNSHIP; Registration Division IR; Province of Gauteng
In extent/Measuring 4000 (Four Thousand) Square Metres
Held by Deed of Transfer T6789/2009
Verify OWNERSHIP and ENCUMBRANCES by doing an Electronic Deeds Search
If necessary, obtain DIAGRAM from Surveyor-General’s office

8. NOTES RELATING TO DESCRIPTION OF SALE OBJECT or LEASE PREMISES, continued
If sale agreement, parties must agree on:
Transfer of ownership
Transfer of Possession and Risk of Profit and Loss
Date of Occupation
What is included and excluded (e.g. Removal of existing fixtures)
Voetstoots – clause
Warranties and Representations
Special Conditions (e.g. Zoning)

9. NOTES RELATING TO DESCRIPTION OF SALE OBJECT or LEASE PREMISES, continued
If lease agreement, the parties must agree on the following:
Exact area of lease premises (specify by means of diagram)
Purpose of use of the premises
Maintenance of the Interior and Exterior
Alterations and Additions to the lease premises
Insurance
Restoration of Premises
“Fit for Purpose”
Access and Use without Interference

10. THE COST? “SHOW ME THE MONEY!!!!!!”
CUBA GOODING JNR’S CHARACTER IN
THE MOVIE JERRY MAGUIRE, 1996
The intended transaction will only work if it is commercially viable.
Do not be hesitant to ask the pertinent questions!

11. THE COST? continued
If it is a sale – how will the purchase price be paid?
Deposit payable?
Cash (really is King) or Mortgage Financing
Deferred Payment
Installment Sale
Trade
Kustingsbrief
Set off
Professional Charges (Attorneys, Agents)

12. THE COST? continued Leases, have slightly different considerations:
Rental Deposit
Maintenance/Increase of Deposit
Period of Payment – lump sum, monthly, annually, weekly, bi-weekly, daily, in advance, in arrears, etc.
Rates and Taxes and Consumption Charges
Special Levies (eg. BID or CID contributions)
Operating Costs
Stamp Duty?
Professional Charges

13. TERMS and CONDITIONS
“He who knows when he can fight and when he cannot, will be victorious.”
Sun Tzu
Chinese General and Author
500 BC

14. TERMS and CONDITIONS, continued
My Rules for Drafting:
First Rule: Use Plain and Simple Language
Second Rule: Use a good precedent BUT do not copy and paste or overtype!
Third Rule: Obtain Full and Proper Instructions
Fourth Rule: Consider the result you want to achieve
Fifth Rule: The client’s input on contentious issues must be obtained. You must advise the client whether the clause is legally possible and enforceable BUT you cannot make the business decision on the part of the client.

15. TERMS and CONDITIONS, continued
Consider the Structure of the transaction and where you are not the expert, get professional advice (e.g. Tax issues)
The client must be guided in relation to all the risks and opportunities that emanate from the agreement
WORRY, WORRY, WORRY on behalf of your client
Attempt to achieve a well balanced agreement
“incoterms”

16. TIMING ISSUES? SALE LEASE
Payment terms – Deposit and Balance Purchase Price secured
Fixed Term Leases vs Normal Leases
Estimated time for registration process to be completed
Long Term Leases – May be registered and may be used as security
Occupation Date
Short Term Leases – May be registered and used as security
Turnkey projects?
Renewal Periods
Possession
If premises not usable, extension of lease period or even cancellation
Risk of Profit and Loss

17. LEGISLATION TO CONSIDER AND APPLY
Alienation of Land Act, Act 68 of 1981
Deeds Registries Act, Act 47 of 1937
Income Tax Act, Act 58 of 1962
Transfer Duties Act, Act 40 of 1949
Value Added Tax Act, 1991
Subdivision of Agricultural Land Act, Act 70 of 1970
Sectional Titles Act, Act 95 of 1986
Companies Acts, 1973 and 2008
Close Corporations Act, Act 69 of 1984
Trust Property Control Act, 1988

18. “Opportunities multiply as they are seized!”
Sun Tzu
Chinese General and Author
500 BC

19. CONTACT PARTICULARS
PIETER NIEHAUS