Allen West Conveyancing Update

The sale of a number of properties, held under separate title, by one person to another vide one deed of sale will result in only one transaction for aggregate of the values of prices attributed to the properties concerned. A factor, however, which must be taken into consideration in deciding whether or not a single transaction has been entered into is the indivisibility if the transaction. Therefore, where a number of erven are purchased under one deed of sale and the agreement stipulates the terms of payment of the total consideration payable, the contract would be regarded as indivisible in that failure on the part of the purchaser to adhere to the terms of the contract would result in the cancellation of the entire contract as no part thereof could be implemented separately ( see Receiver of Revenue (Cape) v Cavanagh 1912 AD 459 and Caltex (Africa) Ltd v Director of Valuations 1961 (1) SA 525 (C), Standard-Vacuum Refining CO of SA (Pty) Ltd v Durban City Council 1961 (2) SA 669 (A) and Petterson and Others v Sorvaag 1955 (3) SA 624 (A) ) 

A contract that is, however, so worded as to make each unit of property the subject matter of a contract which stands by itself is divisible (even if embodied in a single deed of sale) and transfer duty would be payable on each property separately. In other words, the aggregate price for all the properties is not used to calculate the duty in that case, but rather, the duty is calculated separately in respect of each property based on the price (or fair value) which is attributable to that particular property. In the case where a number of properties are sold under one deed of sale and separate declarations by seller and purchaser are completed in respect of each property, the deed of sale must be called for, and if it appears that the contract is indivisible, transfer duty must be collected on the aggregate purchase consideration stipulated in the deed of sale. 

In Dawson v Yates NO 1958 (3) SA 820 (SR) Murray CJ states (at 822B-C): 

“The essential fact (in casu) is that there was a single contract, even though it related to the disposal of four separate items of property. It may be pointed out that these four stands were not held by the vendor under separate titles, one relating to each stand… But even if they were held by the vendor under separate titles registered in the Deeds Office, the position as I see it would be precisely the same.” 

It is thus imperative how one couches the contract.

Object of sale consists of more than “property” 

Transfer duty is only payable on the value of “property” as defined in section 1 of the Transfer Duty Act 40 of 1949. A purchaser who buys a property together with movable assets under a “lock, stock and barrel” or “going concern” arrangement which is not a taxable supply for VAT purposes, must exclude the value of movables such as furniture and equipment and/or incorporeal property such as goodwill or licences from the amount on which transfer duty is calculated. 

Should you require more information in this regard, kindly contact me.

Allen West
012 346 1278


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