by Hennie Theron in Uncategorized
Each farmer’s farm is his business, his pride, his home and often his legacy for his children. This necessitates that any decision regarding such be dealt with prudently and with the appropriate upfront identification of risks. Most farmers and land owners are aware of the nature of a land claim and that the relevant legislation established 31 December 1998 as the cut-off date for the lodging of land claims, many of which still lie un-adjudicated today. What farmers do not necessarily know is what to look for before entering into a purchase transaction to ensure that they are adequately protected against a land claim that may lie against the property.
The purchase transaction to acquire the relevant piece of land must be concluded by way of a purchase agreement in order to be valid and enforceable. This agreement will form the basis of the transaction and serves as the most important document whose contents should be carefully checked. Due to the importance of the purchase agreement, it is strongly recommended that an attorney prepare or review such documentation.
A clause of the utmost importance in the purchase agreement is the “guarantees and warranties” clause in which the seller discloses certain information to you (the buyer) in good faith to provide reassurance that the transaction is not a sham or being entered into to the advantage of only one of the parties. It is important that the seller provides the following guarantees in writing (particularly regarding land claims), either voluntarily or upon request, in order to ensure that the transaction continues in good faith:
That no portion of the property has been expropriated.
That no claim for the restitution of any land right in respect of the property, including those of labor tenants, occupants, common law stakeholders, trust beneficiaries or beneficial occupiers has been made.
That the Regional Land Claims Commissioner has not issued any notice in respect of a land claim under the Restitution of Land Rights Act 22 of 1994.
Furthermore, warranties relating to possible rights by labor tenants, farm workers, occupants and other informal rights to the land can also be included to provide protection regarding other aspects which may affect the use of the land.
The warranty that deals with the Regional Land Claims Commissioner is the key aspect of which few prospective, often seasoned farmers or land owners are aware. Most people are correctly under the impression that once a land claim has been brought against a property, the property cannot be developed or sold. What they are not aware of is that such a sale or development of the property can happen if written notice in the required format is provided to the Regional Land Claims Commissioner one month before such intention is realized. After such notice to the Regional Land Claims Commissioner the seller can continue to sell the property legally even while the purchaser could be unaware of the fact that the property is the subject of an established land claim, especially if the above clauses are missing from the purchase agreement.
Accordingly, it is vitally important that you as a buyer take the necessary precautions to ensure that sufficient guarantees and warranties are provided by the seller in terms of the purchase agreement. This will help avoid later regret and the suspension of development on the newly purchased property and ensure that the expansion of your farm and legacy is the asset it deserves to be.