Signing Deed of Sale in representative capacity.
Regarding section 2(1) of the Alienation of Land Act No 68 of 1981, no alienation of land shall be of any force or effect unless it is contained in a deed of alienation signed by the parties to it or by their agents acting on their written authority. Therefore, where someone is signing on behalf of someone else, he must be authorised in writing to perform that act. For example by a Power of Attorney, either General or Special.
Where either the seller or purchaser is a company, trust, close corporation or some other legal entity, then estate agents should be careful to establish that the person entering into the sale agreement has been validly authorised to do so. Most agreements of sale have a clause regarding which the seller/purchaser warrants his authority to act. It would, however, be a good idea for the seller/purchaser to write after his signature, "Who warrants that he is duly authorised to bind the Co/CC/Trust hereto." -A belts and braces approach.
If no inquiries were made as to the other contracting party's authority to bind the entity and there was no warranty clause included in the deed of sale, then the other directors/members/trustees of that entity could challenge the validity of the contract, if desired. The other contracting party is however protected in a case where the person signing in the representative capacity lied about his authority when queried thereon. It is important therefore for the question to be asked and then recorded as to whether that person is authorised to enter into the contract or not. It must not just be assumed.
As the transferring attorneys, we make sure that we get a Resolution signed by all directors, members, trustees, etc. ratifying and approving the sale. It is the period between the date of sale and the date we get the above resolution signed that is vulnerable for either party and yourselves as the agents.
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Louwrens Koen Attorneys
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