Lapse of Sale and Eviction
Can You Be Evicted After Moving In If a Home Sale Falls Through? Legal Insights
Introduction
Buying a home is an exciting but complex process. Sometimes, a buyer might move into a property before the sale is finalized. What happens, though, if the sale falls through? Can the buyer be evicted, or do they have legal protections? This article explores the legal rights of both parties when the sale lapses, citing key legal precedents and legislation such as the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE).
When a sale lapses, the potential buyer may find themselves in a precarious situation. The seller, having already expected the transaction to close, might demand the buyer vacate the property. But is this legal? Let’s break it down.
The Legal Framework Around A Lapse Of Sale and Eviction.
The process of eviction in South Africa is governed by several legal frameworks, the most prominent being the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE), Act 19 of 1998. Section 4 of the PIE Act specifically mandates that eviction can only occur after following due process and through a court order. It protects people from being evicted without judicial oversight, even if their occupation has become unlawful, which can be the case after the lapse of a sale agreement.
Key Legal Protections:
Section 4(1):
This section requires that no one may be evicted from their home without a court order. It also mandates that the owner of the property must prove that the eviction is just and equitable.
Section 4(7):
The court must consider whether it is fair to evict the occupier, considering the circumstances, including how long they have occupied the property and whether they have alternative accommodation.
The moment the sale falls through, the buyer’s legal right to occupy the property may disappear, classifying them as an unlawful occupier under Section 1 of the PIE Act. However, being classified as an unlawful occupier does not mean immediate eviction. The seller must follow the necessary legal steps to obtain an eviction order.
Can the Buyer Be Considered an “Unlawful Occupier” in the case of an eviction brought on by lapse of sale?
Once a sale collapses, the buyer is at risk of being classified as an unlawful occupier under Section 1 of the PIE Act. This definition applies to anyone who occupies land without the owner’s consent or another legal right. Under Section 4(2), the owner must give the occupier notice before initiating eviction proceedings, stating the grounds on which the eviction is sought.
The process typically involves:
Notice of Eviction (Section 4(2)):
The seller must serve the buyer with a notice of eviction at least 14 days before the hearing.
Court Application:
The seller must apply for an eviction order, and the court will consider whether eviction is fair and equitable, taking into account the buyer’s situation.
Right to Defend:
The buyer has the right to defend the eviction, presenting any evidence that might justify their continued occupation. For instance, the buyer may argue that they entered the property in good faith under the assumption that the sale would proceed.
In Graham v Ridley (1931 TPD 476), the court held that the owner does not need to prove that the occupier’s stay is unlawful, only that they are the owner and the occupier no longer has a legal right to stay. This ruling underscores the delicate position buyers find themselves in once a sale lapses.
The Doctrine of “Huur Gaat Voor Koop” and How It Applies to lapse of sale and eviction.
The principle of huur gaat voor koop—literally, “the lease survives the sale”—is rooted in Roman-Dutch law and is applicable under South African common law. This principle is codified under Section 14 of the Formalities in Respect of Leases of Land Act and protects lessees when a property is sold.
In Mkwanazi v Bivane Bosbou (Pty) Ltd 1999 (1) SA 765 (LCC), the court affirmed that the buyer of a property is bound by any existing leases on the land. If a buyer was permitted to lease the property as part of the sale agreement, huur gaat voor koop may apply, giving them some protection against eviction. However, in situations where the sale was not finalized and no lease was in place, the buyer would not benefit from this principle.
Without a formal lease agreement, the buyer would not be able to invoke huur gaat voor koop as a defense. Instead, they would likely be regarded as an unlawful occupier under the PIE Act once the sale lapses.
What Happens if there is a lapse of sale and an eviction application and the Buyer Made Improvements to the Property?
If the buyer made improvements to the property before the sale collapsed, they might argue that they have a lien, or right of retention, over the property. South African common law, specifically the concept of enrichment liens, recognizes that a person who improves another’s property in good faith has the right to retain possession until compensated for those improvements.
This principle is supported by the ruling in Chetty v Naidoo 1974 (3) SA 13 (A), where the court affirmed the right of a party to retain possession of a property until the rightful owner compensates them for necessary improvements. For a buyer to claim a lien, they must prove:
The improvements were necessary or added value to the property.
They acted in good faith, believing the sale would be completed.
While this lien does not provide an indefinite right to occupy the property, it can delay eviction until compensation is settled. However, in Ebrahim v Pretoria Stadsraad 1980 (4) SA 10 (T), the court clarified that relying on a lien is not a defense against eviction but rather a temporary right to remain until the improvement issue is resolved.
Court’s Discretion and Consideration in Eviction Cases where there is a lapse of sale and an eviction application.
When a sale collapses, and eviction proceedings begin, courts have a discretionary role in determining whether eviction is just and equitable. In terms of Section 4(7) of the PIE Act, the court must consider various factors, including:
The length of time the buyer has occupied the property.
The reason for the sale collapse.
The buyer’s financial situation and ability to secure alternative accommodation.
In Ndlovu v Ngcobo; Bekker and Another v Jika 2003 (1) SA 113 (SCA), the court emphasized that while the seller has the right to reclaim possession, eviction cannot be granted if it results in homelessness or severe hardship without careful judicial oversight. The court may delay eviction, allowing the buyer more time to secure alternative housing, or even require the seller to compensate the buyer for improvements made.
Practical Tips for Buyers Moving in Before the Sale is Finalized to avoid the lapse of sale and eviction proceedings.
To avoid eviction after a sale collapses, buyers should take the following precautions:
Get It in Writing:
Ensure any agreement to move into the property before the sale is completed is in writing, outlining your rights if the sale falls through.
Secure a Lease Agreement:
If possible, negotiate a temporary lease agreement to ensure legal protection in case the sale fails. This would allow you to invoke huur gaat voor koop if needed.
Document Everything:
If you make any improvements to the property, keep detailed records, including receipts and before-and-after photographs, to support any lien claim.
Legal Representation:
Always seek legal advice before moving into a property that has not yet been transferred into your name.
Conclusion: Can Eviction Happen When a Sale Falls Through?
The lapse of a sale doesn’t automatically mean eviction, but it does place the buyer in a vulnerable legal position. South African law, through the PIE Act and common law principles such as huur gaat voor koop, provides certain protections for buyers who move in before a sale is finalized. However, without clear agreements, buyers may find themselves classified as unlawful occupiers once the sale collapses, making eviction a very real possibility.
The courts maintain a discretionary role, balancing the rights of both the seller and the buyer. Buyers who have invested in improvements or who find themselves without alternative accommodation can make compelling cases to delay eviction or receive compensation, but these rights are not guaranteed.
In the end, it’s essential for anyone moving into a property before the sale is finalized to fully understand the legal implications. As the saying goes, “It’s better to be safe than sorry.”
FAQs
What legal protections do I have if the sale collapses, and I’ve moved in?
Under the PIE Act, you cannot be evicted without a court order. You may also argue that you are not an unlawful occupier but someone who entered in good faith under the assumption of a valid sale agreement. Courts will weigh factors like how long you’ve lived in the property, whether you made improvements, and your ability to find alternative accommodation before granting an eviction order.
Can I claim compensation for improvements I’ve made if the sale fails?
Yes, you may be entitled to claim a lien for any improvements made in good faith. According to case law like Chetty v Naidoo 1974 (3) SA 13 (A), if you can prove that the improvements added value to the property and were made under the assumption that the sale would proceed, you could retain possession until compensated.
Does huur gaat voor koop protect me if the sale falls through?
No, huur gaat voor koop only applies if there is a valid lease agreement in place. This principle protects tenants but is not typically extended to buyers unless a lease was part of the sale agreement. Without such a lease, the buyer would likely be considered an unlawful occupier under the PIE Act.
Can a seller immediately evict me if the sale collapses?
No, the seller must follow the legal procedures outlined in the PIE Act. This includes providing notice of eviction and obtaining a court order. The court will consider whether it is just and equitable to evict, taking into account your circumstances, including the reason for the sale’s collapse and whether you have alternative housing.
What should I do to protect myself from eviction if I move in before the sale is final?
To protect yourself, ensure that you have a written agreement outlining your rights if the sale falls through. This could include a temporary lease to give you legal protection under huur gaat voor koop. Additionally, document any improvements made to the property and seek legal advice before moving in.
If you are a tenant and have no lease and would like to know more click here.
If you are a landlord and would like to know more about your rights click here.
For a view on what tenants rights are click here.
If you are a first time property buyers and have concerns click here.
If your matter relates to the all-important suspensive condition click here.
