South Africa: Purchasing Property in South Africa

Last Updated: 23 August 2010
Article by Ronel Straughan

Visitors to South Africa may find a property they wish to make their new or second home, or to buy property for rental or investment purposes. Bowman Gilfillan Inc has the expertise to assist in negotiating a contract to protect the interests of a buyer or seller. We can supervise or attend the process of registration of transfer of ownership of immovable property and advise purchasers on the security of title. Our international reputation and local market knowledge establishes confidence in our expertise.

The firm was recently awarded the following ACQ Global Awards 2010:

Client Care Law Firm – Africa
Deal Maker – Africa
Most Trusted Law Firm – Africa
M&A Law Firm – Africa

The firm is a member of Lex Mundi, an association of 160 independent law firms, each a pre-eminent law firm in its jurisdiction. Lex Mundi membership provides for the exchange of professional information about local and global practice of law, all of which adds to the peace of mind of a client who may be doing business in South Africa for the first time.

Forms of ownership

There are several forms of property ownership in South Africa:

  • Freehold land (whether or not in a township, registered as an erf, lot, plot, stand or farm, and demarcated on a diagram or general plan which defines the extent of the land in question, and which ownership includes any permanent fixtures on the land);
  • Sectional Title Units (generally apartments in a multi-unit building offering full ownership of particular areas of the building, joint ownership of the common property of the scheme and membership of a body corporate consisting of all the owners in the scheme);
  • Share Block (the ownership of shares in a company which owns a property, in which the owner of particular shares is allocated the exclusive use of specific areas of building or land, and shares in the costs of the company);
  • Time-share (interests in the use of property is shared between members of a club);
  • The purchase of the interests in a property-owning legal entity, such as a company or close-corporation;
  • Fractional ownership (a general class of shared ownership and usage of property allocated under a number of different schemes and legislation);
  • Syndication (multiple owners grouping together to purchase the property and share in its ownership, either informally or professionally managed).

The initial document binding

Visitors tempted to buy property in South Africa may be faced with a standard pre-printed agreement for completion. The terms of this "offer to purchase" or "agreement of sale" signed by the offeror is in fact the final agreement once accepted by the other contracting party. Purchasers should not be under the misapprehension that it is a preliminary or draft document or merely a statement of intent. In particular, the identity of the purchaser (self, spouse, children, company, foreign legal entity, close corporation or trust) must be certain before the offer is made, as this cannot be changed after the offer has been accepted. The pre-printed standard form must reflect the true intention of the seller and purchaser and should be altered by the purchaser making the offer, if necessary, to suit the requirements of the parties. The agreement can be made subject to the fulfilment of suspensive conditions such as the securing of mortgage loan finance. In particular, it may be wise to make any offer conditional on a due diligence period during which the buyer can examine all aspects of the property within a defined period once the price and terms are settled, before deciding to proceed with the purchase.

Due Diligence

The agreement can provide for a period of due diligence during which the purchaser investigates all information available in respect of the property. The investigation can include both legal information (title conditions, zoning rights, building and use restrictions, development capacity and building plans) as well as all physical aspects of the property that can be determined by a thorough investigation by the purchaser (such as the physical condition the buildings, damp and structural problems, encroachments, boundaries and occupancies).

In the case of farming properties there may be additional considerations including water rights, the availability of irrigation schemes, access, servitudes, roads, soil condition, climate conditions, the history of land use which may affect organic farming classification and farm workers' accommodation and vested rights.

In the case of sectional title properties it is recommended that the purchaser inspect the rules of the scheme, the audited financials of the body corporate of the scheme, the minutes of the latest AGM of the body corporate and the budget for the current year.

Other terms

An agreement for the sale of land must be in writing, contain certain prescribed information and be signed by both contracting parties. This in not necessarily the case where the contract is for the purchase of shares or the member's interest in a legal entity, but of course this is recommended. There are currently no restrictions on property ownership in South Africa by non-residents, other than for illegal aliens. The right to be present in South Africa to enjoy the ownership of the property is, of course, governed by considerations of residence status/visas.

Important aspects of the agreement include:

  • Costs payable by each party including any possible occupational consideration payable;
  • Whether the price includes VAT and whether the purchaser must pay transfer duty. Transfer duty is calculated on a sliding scale up to 8% on the higher of the value or sale price for private individuals, and at a flat rate of 8% for legal entities;
  • Whether the property is being sold as a "going concern" by a registered VAT vendor;
  • The timing of the payments required under the agreement. Generally the deposit and the transfer costs must be paid soon after conclusion of the agreement and the balance of purchase price must be guaranteed well before transfer of ownership. This must be anticipated by the buyer before committing to these payments.
  • Voetstoots clause: The purchaser is deemed to have knowledge of all that can be established from a thorough examination by a diligent purchaser, described in the due diligence process set out above;
  • The dates on which occupation may be taken and on which risk passes to the purchaser;
  • Warranties with regards to the introductory agent. Generally the commission payable to the property broker is paid by the seller;
  • Fixtures and fittings: the agreement must record what is included in the agreement as forming part of the purchased property;
  • Any implied obligations of the purchaser, such as the obligation to retain a portion of the purchase price for payment to the SA Revenue Services if the seller is a non-resident.
  • A cooling-off period for sales under R250 000,00

The process of acquiring ownership

The registration of transfer of ownership of the property is attended to by a conveyancing attorney, generally appointed by the seller, at the cost of the purchaser. The costs include the transfer duty payable to the State, deeds registration fees, rates clearance costs as well as the fee of the conveyancer (as determined in accordance with recommended guidelines of the Law Societies). The costs of the registration of a mortgage bond, if required by the purchaser, would be in addition to the costs of the transfer and this will be payable to the attorneys preparing the loan and bond documents for the lending institution.

The documents are prepared by the conveyancer for signature by both parties, and if these are to be signed abroad, certain strict rules must be followed for the proper authentication of signatures.

Foreign funds are easily introduced to South Africa by payment into a local banking account. Purchasers are urged to ensure that their record-keeping of funds brought into South Africa is well-maintained with the correct proof of receipt from the local receiving bank to facilitate the repatriation of funds on the resale of the property in due course in accordance with local Exchange Control Regulations. Money may be borrowed locally, although restrictions apply. Importantly, on the sale of the property, non-residents may repatriate the full nett proceeds of the sale provided certain requirements are met. It will be necessary to secure exchange control approval for the transfer by providing proof of residence status and the introduction of the full purchase price and costs from abroad for the initial acquisition. Accurate record keeping is essential and the endorsement of the title deed to show the non-resident status of the owner will facilitate this process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions