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Can a lapsed deed of sale in respect of immovable property be revived?

When entering into an agreement of sale in respect to immovable property, parties will often include a suspensive condition which suspends the rights and obligations of the parties until the happening of an uncertain future event.  In other words, the condition must be fulfilled in order for the agreement to come into effect.  If the future event does not occur, then the deed of sale will automatically lapse and be of no force or effect.

If parties to an agreement expect that a suspensive condition may not be fulfilled within the stipulated timeframe then, PRIOR TO the expiry date, parties should waive the condition or enter into an addendum to extend the time by which the suspensive condition must be fulfilled, failing which the agreement will lapse.  It is not uncommon for parties to execute a “revival” of the lapsed sale agreement, however the revival of a lapsed agreement of sale has in the past been fraught with controversy.

In Compu-Cool (Pty) Ltd v Silver Dawn Investments 168 CC and Others (unreported case no. 39651/2020) the Johannesburg High Court considered whether a revival agreement entered into between the seller and purchaser is valid and binding.  The core issue the Court had to determine was whether the statutory requirements of Section 2(1) of the Alienation of Land Act 68 of 1981, as amended (the “Act”) had been complied with.   The Act provides that, for a sale agreement to be of any force of effect, the sale agreement must be reduced to writing and signed by both the seller and purchaser, or their agents duly authorised to act on their behalf.

The Court held that although the intention of the parties was to revive the initial agreement, it was clear from its express terms that its purpose and effect was to conclude a new agreement of sale which embodied different terms to those of the initial contract which, if left unchanged, would automatically render the agreement void ab initio (invalid from the very beginning).  The Court found that the revival agreement was a new agreement that complied with the provisions of the Act and was valid and binding.

In Codevilla v Kennedy-Smith N.O and Others (10268/2020) [2022] ZAWCHC 30 the court had to determine whether a further agreement revived or reinstated an agreement of sale which had lapsed.  The Court considered the following principles which have been reaffirmed in Fairoaks Investment Holding (Pty) Ltd and Another v Oliver and Others (268/07) [2008] (4) ZASCA 41 and Benkenstein v Neisius and Others 1997 (4) SA 853 (C) -

• A suspensive condition cannot be waived or extended subsequent to its date of expiry.
• An agreement which has lapsed due to a suspensive condition not being met within the stipulated timeframe cannot be “revived” and parties must enter into an entirely new agreement.  The new agreement can be on the same terms and conditions provided the suspensive condition has been amended.
• An agreement cannot be revived without amendments as it would automatically self-destruct as a result of the non-fulfilment of the condition that brought about its demise in the first place.

The Court found that the new agreement complied with Section 2(1) of the Alienation of Land Act, and that the parties to the further agreement intended to and in fact did enter into a fresh agreement incorporating the terms of the initial agreement of sale and the addendum thereto, and that to conclude otherwise would frustrate the obvious intention of the parties.

In conclusion, parties wishing to “revive” an agreement of sale must ensure that the provisions of Section 2(1) of the Alienation of Land Act have been complied with and should take cognizance of the fact that this will be a new agreement of sale, with a new date of sale.