The Sunday News
Real Estate issues with Jonathan Thompson
Contract Law is extremely important to Real Estate, because every Real Estate transaction is recorded in an Agreement of Sale. It is good to understand the basics of contract law to protect yourself when entering into a Real Estate agreement.
Zimbabwean law is predominately based on Dutch-Roman law. Many people think that we are based on English law. Even though there are many similarities, they are not exactly the same.
In our system of law, we do allow for verbal contracts. One major difference between the English system of law and the Dutch-Roman system is that the English system requires that both parties of the contract must exchange something in order for the contract to be valid. For example, English law does not enforce a contract where one party is giving something away for free.
One the other hand, Dutch-Roman law allows for one party to give something away in a contract.
A legal, binding contract has these 4 elements; Parties — these are the people who are binding themselves to the Agreement. In Real Estate, these may be referred to as “The Seller” and “The Purchaser”. Mutual Consent — this means that both parties agree to the same terms, price and conditions of the Agreement.
Capacity — this is a legal term that explores whether each party has the ability to enter into a legal, binding contract. “Lack of Capacity” may include, but not limited to, someone being under-age, a party who is incapacitated (drunk, unconscious, on drugs, et cetera), a party who is not legally allowed to sell or purchase, a person who is of age, but is mentally deficient, and other considerations.
Legality — This refers, generally, to the item being sold. Is it legal to be sold? In Zimbabwe, most farms need to have a Certificate of No Present Interest from the government, prior to being sold.
English Law would add a fifth element which is, Adequate Consideration — Are both parties receiving a fair value for their portion of the Agreement. If the Seller is selling a property, is he receiving “adequate consideration” for his property in the form of money, also known as the Purchase Price?
Obviously, the converse is true, if an Agreement in Zimbabwe does not have the first 4 elements included, then the contract may be considered “null and void” by the courts. In Zimbabwe, an Agreement of Sale may be signed by the parties and witnessed.
If the parties are in Zimbabwe, that is all that is necessary. However, if any of the parties are outside of the country at the time of signing, then their signatures must be witnessed by a Notary. Some countries like the UK and Australia may charge a significant fee to notarise documents, but other countries, like the USA, are cheaper.
Once the documents are notarised, the original copies must be delivered back to Zimbabwe, prior to the Title Deed process.
A basic understanding of contract law can protect both the Buyer and Seller of an Agreement. Since Real Estate transactions are so important, it is essential to do things properly. That is why it is important to do your transactions through professionals, like your local Registered Estate Agents. They should have the knowledge and the ability to walk you through the entire process. This assistance should give you the understanding and guidance to complete these very important transactions without complications. Agreements which are formed outside the legal bounds of contract law can create untold complications.
Avoid this at all costs!
Jonathan Thompson is a Registered Real Estate Agent who works in Bulawayo. He has nine years of experience in Real Estate in the USA, and another 11 years of experience in Bulawayo. He is the founder and the Managing Director of Thompson Properties (Pvt) Ltd.
