WHEN A HANDSHAKE MEETS THE CONSTITUTION: CAN AN ORAL PROPERTY SALE BE ENFORCED?

MOHAMED RAEES HUSSAIN | LEGAL ADVISOR

 

For decades, South African property law has been unequivocal: if you are buying or selling land, the agreement must be in writing and signed by both parties.

 

This principle, entrenched in section 2(1) of the Alienation of Land Act 68 of 1981, has long been regarded as one of the cornerstones of property transactions. Its purpose is simple but important—to prevent fraud, reduce uncertainty, and minimise disputes.

 

But what happens when a strict legal rule stands between a family and the home they have already paid for?

 

That question lies at the heart of the recent Gauteng High Court decision in Dlomo v De Klerk and Others, a case that could have significant implications for the future of residential property transactions in South Africa.

 

A Family Home at the centre of the Dispute

The case involved former spouses and their two minor children who had been living in a residential property for several years.

 

Although the parties initially concluded a written offer to purchase, that agreement was later terminated and replaced by an oral arrangement. According to the applicants, they subsequently agreed to purchase the property for R1 million and paid almost the entire purchase price, largely from pension benefits, directly to the seller.

 

When the relationship between the parties deteriorated, the seller refused to proceed with transfer and relied on section 2(1) of the Alienation of Land Act, arguing that the oral agreement was legally unenforceable because it had not been reduced to writing.

 

The consequences were profound. A family that had paid nearly the full purchase price and had lived in the home for years suddenly faced the possibility of losing it, because the agreement was not reduced to writing.

 

When Legal Formalities Meet the Constitution

The Court was required to balance two competing principles. On the one hand stood the long-established rule that land sale agreements must be in writing. On the other stood fundamental constitutional rights, including access to adequate housing, human dignity, equality, and the paramount importance of children’s best interests.

 

The applicants were not merely seeking accommodation. They were already occupying the property and had made substantial payments towards acquiring ownership. The Court found that a rigid application of the law could leave vulnerable purchasers and their children exposed to eviction and potential homelessness.

 

Importantly, the Court observed that the Act effectively distinguishes between vulnerable purchasers with written agreements and those with oral agreements, even where both groups may have paid substantial amounts towards a home and face the same risk of losing it.

 

No justification for this distinction was advanced by the Minister of Trade, Industry and Competition. In the Court’s view, this legislative gap created a constitutional defect.

 

The Court’s Safety Valve

The High Court declared the Alienation of Land Act constitutionally invalid to the extent that it fails to provide protection for vulnerable purchasers of residential property who concluded oral agreements, paid the full purchase price or a substantial portion of it, and face the risk of homelessness if transfer is not effected.

 

To address this gap, the Court ordered that section 2(1) be read as including wording that would permit oral agreements for the transfer of residential property to be binding and enforceable in these exceptional circumstances.

 

However, this is not yet the final word.

 

Because the judgment involves a declaration of constitutional invalidity against an Act of Parliament, it must still be confirmed by the Constitutional Court before it becomes legally binding. Until then, the declaration and the proposed amendment remain suspended.

 

What the Judgment Means

The judgment should not be interpreted as opening the floodgates for informal property transactions.

 

The general rule remains unchanged: agreements for the sale of land should be reduced to writing and properly signed.

 

Rather, Dlomo appears to create a narrow constitutional safety valve for exceptional cases involving residential property, vulnerable purchasers, substantial payment, occupation and the risk of homelessness.

 

For purchasers, the lesson is clear: payment alone may not protect you. For sellers, accepting large payments under informal arrangements may carry serious consequences. For conveyancers, estate agents and property professionals, the case is a reminder that property transactions should be reduced to writing as early and clearly as possible.

 

Final Word: A Home Is More Than a Formality

The significance of Dlomo extends beyond property law.

 

At its core, the case asks whether legal formalities should always prevail where they threaten fundamental constitutional values such as housing, dignity and the welfare of children.

 

While the Constitutional Court will ultimately decide the matter, the judgment sends a powerful message: a home is more than a financial asset. It is a place of security, stability and human dignity.

 

Where strict legal rules jeopardise those values, the Constitution may well have the final say.

 

Until the Constitutional Court speaks, the safest advice remains unchanged: get the agreement in writing, ensure it is properly signed, and seek legal advice before any money changes hands.

 

 

This article is provided for general information purposes only and does not constitute professional advice. For advice tailored to your specific circumstances, please consult a suitably qualified professional.