NOTES ON ELECTRONIC AGREEMENTS OF SALE: IMMOVABLE PROPERTY

1. INTRODUCTION

We are often asked the question if agreements of sale for properties can be entered into electronically by buyers and sellers of property.

The short answer is: No.

See the notes below to gain more insight into the subject matter.

2. THE ALIENATION OF LAND ACT OF 1981 (‘ALA’)

Section 2(1) of the ALA (which governs all sales of immovable property) states that: ‘No alienation of land… shall… be of any force unless it is contained in a deed of alienation signed by the parties…’

(Note that ‘land’ includes sectional title units and exclusive use areas).

Accordingly, to be valid an agreement of sale of immovable must be in writing and it must be signed by or on behalf of the buyer and seller.

Although a signature is not defined in the ALA, given the fact that the act came into operation during 1981, it can be safely assumed that the signature required by the act is a ‘wet ink’ signature, in other words a signature physically made on the agreement in ink.

3. THE ELECTRONIC COMMUNICATIONS & TRANSACTIONS ACT OF 2002 (‘ECTA’)

After its enactment the ECTA gave legal recognition to electronic documents, agreements and signatures.

Examples of acceptable formats for electronic agreements are e-mail, WhatsApp and SMS, but the relative agreement/s would only be valid if they have incorporated the parties’ electronic signatures.

Examples of electronic signatures are a party’s typed name at the end of an a-mail, a scanned image of a handwritten signature embedded into a Word document, and a digital signature.

4. TRANSACTIONS THAT MAY NOT BE ENTERED INTO ELECTRONICALLY

Section 4(4) of the ECTA refers to schedule 2 attached to the act which lists specific agreements that may not be entered into electronically.

‘Agreements for the sale of immovable property is one of the transactions listed in the said schedule 2.

5. CONCLUSION

Sales of immovable property are thus specifically excluded and cannot be entered into electronically, as the law currently stands.

We have, however, no doubt that changes will be made to the applicable legislation in the near future to facilitate electronic sales of immovable property.

6. FINAL THOUGHT

The current practice in terms whereof a written offer to purchase a property is signed by a buyer in ‘wet ink’, and thereafter scanned to a seller, who then also signs the document in ‘wet ink’, is perfectly legal and the aforesaid does not constitute an electronic agreement.

Notes prepared by J Nortje at Pretoria on 21 October 2022.