The parties concluded a written sale of land agreement for unimproved erven purchased with the aim of subdividing and developing them into residential erven but an immediate subdivision was required because one erf extended into an adjacent development. The agreement was void because the parties had not agreed on the exact property sold because of the intrusion into the neighbouring property and because a material term regarding subdivision was not contained in the agreement.
Section 2(1) of the Alienation of Land Act of 1981 requires the whole contract, including all its material terms, to be reduced to writing and signed. Material terms are not confined to the essential terms of a contract of sale such as the property sold and the price. Whether a term constitutes a material term is determined with reference to its effect on the rights and obligations of the parties.
Generally speaking the material terms, and especially the essential terms, must be set forth with sufficient accuracy and particularity to enable the identity of the parties, the amount of the purchase price and the identity of the subject-matter of the contract and also the force and effect of other material terms to the contract, to be ascertained without recourse to evidence of the oral consensus between the parties. Whether a term constitutes a material term is determined with reference to its effect on the rights and obligations of the parties. There was no express reference to a subdivision. The subdivision requirement would have contradicted the right of the seller to receive expeditious payment of the whole of the purchase price. There was nothing said about whose obligation it was to cause the subdivision to be effected and who would be liable for the costs. The agreement was also silent on the rights and obligations of the parties if the subdivision was not approved. Therefore the agreement was void because it lacked material terms.
The original agreement was signed in 2017 and the considerable delays in relation to the subdivision and the subsequent litigation caused the liquidation process of the seller to be held up for five years at least. It shows how serious it can be not to fulfil the requirements of the Alienation of Land Act strictly.