The reckoning of time frames in deeds of sale

It is essential for parties to a deed of sale in respect of immovable property to have absolute clarity as to the exact date of expiry of any period of time stipulated therein.

Limits are normally placed on the time periods within which:

• an offer to purchase has to be accepted by the seller in order for it to become a binding and enforceable deed of sale;
• a deposit has to be paid by the purchaser;
• the requirements of FICA have to be complied with by both parties without which it is virtually impossible to prepare the transfer documents;
• a company or close corporation has to be registered that will be taking transfer of the property purchased (in the event that a signatory is acting as a trustee or agent on behalf of such an entity still to be registered);
• a purchaser has to register as a VAT-vendor (for example, in order to ensure that the transaction is considered by SARS as one to which a zero VAT rate will apply);
• a mortgage loan has to be procured by the purchaser in order to comply with the suspensive condition, failing which the deed of sale will merely lapse and become null and void;
• guarantees have to be furnished by the financial institution that has granted a mortgage bond to the purchaser or, alternatively, the time within which payment of the purchase price by the purchaser has to be effected;
• a purchaser’s property has to be sold and/or transferred (if the deed of sale is subject to such a suspensive condition);
• the transfer documents have to be signed (by both parties) and the transfer costs paid (by the purchaser);
• registration of transfer has to be effected by the transferring attorney;
• any breach of the agreement has to be remedied to prevent the aggrieved partly from cancelling the deed of sale.

In the event that a deed of sale provides for “continued marketing” of a property (in anticipation of a purchaser applying for a mortgage loan or trying to sell his/her other property in terms of the suspensive conditions contained in the deed of sale) proper directions should be provided in such a deed of sale as to the effective application of the so-called “72-hour clause” which in practice is normally being treated as a 3-day clause. If that is the case, then rather refer to the time allowed as 3 days (instead of 72 hours) and provide an explanation as to how exactly the 3-day period is to be calculated. Experience has shown that trying to determine or prove the exact starting time of the 72-hour period is very difficult.

The above list does not purport to be exhaustive, but it should be quite clear that the feasibility of a deed of sale depends entirely on due performance by either of the contracting parties within specified periods of time. A deed of sale that does not clearly stipulate the periods of time within which certain actions should take place is extremely difficult and often impossible to enforce which will, of course, contribute to unnecessary time being wasted and costs being incurred in order to approach a court to provide the relief that the deed of sale was supposed to provide, or at least properly regulate, in the first place.

In the absence of clearly defined time limits in a deed of sale, the party who wishes to enforce compliance by the defaulting party will have to allow a ‘reasonable time” for such action/s. What is “reasonable” according to the seller might not be reasonable to the purchaser, and vice versa. Ultimately the parties may have no option but to approach the court for a ruling as to what would be reasonable in the circumstances. Therefore, when preparing an offer to purchase (which upon acceptance by the seller will constitute a deed of sale), it would be wise to stipulate specific dates on which certain conditions should be complied with and suspensive conditions be fulfilled, instead of referring to a number of days, weeks or months. Alternatively, the deed of sale should at least stipulate the manner in which any period of time contained therein has to be calculated.

The reckoning of time periods can otherwise become a vexed exercise as our law recognizes several methods for the reckoning thereof.

For example, where any period of time in a deed of sale is referred to in days, Section 4 of the Interpretation Act states that the time period shall be reckoned exclusively of the first and inclusively of the last day, unless the last day falls on a Sunday or on a public holiday, in which case the period shall be reckoned exclusively of the first day and also of every such Sunday or public holiday. Consequently, every Saturday has to be included in the calculation. (However, bear in mind that Section 4 will not apply if the deed of sale specifies how the time periods are to be calculated.)

In cases where contracts have been silent on the method of reckoning time and Section 4 of the Interpretation Act did not apply, our courts have in the past (depending on the unique circumstances in each case) used a number of methods to calculate time periods. These methods are:

• The “ordinary civilian” method whereby the first day of the period is included and the last day excluded;
• The “natural” method whereby the time is reckoned from the hour, or even minute, of an occurrence to the corresponding hour or minute on the last day of the period;
• The “extraordinary civil” method whereby both the first and last days are included;
• The “clear days” method whereby both the first and the last days are excluded.

Therefore, in order to avoid the technicalities surrounding the calculation of time periods and the entailing waste of time and accumulation of costs in the absence of clearly defined time frames, it is advisable to word an offer to purchase/deed of sale in such a way there can be no doubt as to the exact way of determining the expiry date of any period of time contained in such a document.