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Here's what to consider when buying or selling a farm in SA
While recent uncertainty around South Africa's land policies, as well as an increase in the cost of farming, has resulted in greater availability of farm properties, this increase in stock has been countered by an upswing in demand as the lifestyle appeal of countryside living gains popularity.
PJ Veldhuizen, attorney, litigator and senior mediator at Gillan and Veldhuizen attorneys
With many people embracing remote working, and the increase in the semigration trend, the notion of farm life is extending its appeal. While sitting on your stoep overlooking your farm, sipping on a glass of merlot, may sound idyllic, buying a farm is a lot more complex than any usual property transaction.
PJ Veldhuizen, attorney, litigator and senior mediator at Gillan and Veldhuizen attorneys, says that besides the usual checks and balances of an Agreement of Sale, buyers and sellers should proceed with extraordinary care when entering such contracts with regard to farmland and working farms.
“There is a lot to consider when buying or selling a farm,” he cautions. “We have recently assisted in the purchase of a game farm and, following findings during our due diligence process, we’ve attached a four-page schedule of listed specific warranties that will apply to the successful transfer.”
Some of the ‘basic’ assurances to consider
Among the many examples Veldhuizen lists are ‘basic’ assurances that the seller is not a party to dispute with any neighbour or that there are no pending land claims registered to the property. He says buyers should check if any servitudes apply and what water rights the farm has been granted; zoning rights and permits must be checked and investigation must be done to establish if the farm is under any environmental or heritage limitations.
Amongst the recurring disputes Veldhuizen has encountered, he mentions that rights of tenure to farm workers are very often overlooked and often not disclosed. “So, you buy a farm with the intention to turn the staff houses into guest units, only to find the staff have a legal right to the property.”
It seems that ‘I had a farm in Africa’, albeit a sought-after investment, should come with a hefty checklist accompanied by an experienced contract specialist.
