Are Verbal Property Deals Binding? A Recent Court Case Explained

In South Africa, there has been a long-standing rule: all property sale agreements must be in writing. Without a signed, written contract, a property sale is generally not legally binding.

However, a recent case in the Pretoria High Court (Dlomo v de Klerk) has challenged this rule, sparking a debate about fairness and the rights of vulnerable homebuyers.

What Happened in the Dlomo Case?

The case involved a family who bought a house through a verbal agreement. They allegedly paid the full R1 million purchase price to the seller (using their pension money), but the seller never transferred the property into their names.

When the family faced the threat of eviction, they went to court. The High Court sided with them, declaring that the law requiring written contracts is "unconstitutional" because it fails to protect vulnerable buyers who have already paid for their homes but don't have a written contract to prove it.

Why Is This Controversial?

While the High Court’s ruling aims to protect people from homelessness, many legal experts are sceptical that this ruling will stand when it reaches the Constitutional Court.

• The Argument for Written Contracts: The law was created to provide "certainty." When everything is written down, there is no guessing who owns what, what the price was, or what the terms are. Banks, the government (SARS), and lawyers rely on these documents to ensure the property market runs safely and efficiently.
• The Risk of Oral Agreements: If the law changes to make verbal agreements legally binding, it could actually create more problems. Banks might refuse to give home loans for these properties because they can't verify the terms of a "verbal deal," potentially making it harder for people to get financing.
• Legal "Vulnerability": Critics argue that the law isn't the problem—the problem is skipping the legal requirement for a written contract. They argue the law is designed to prevent vulnerability by forcing both parties to document the sale properly.

Is the Law Changing?

Not yet. The High Court’s ruling must be confirmed by the Constitutional Court before it becomes law. For now, the old rule still stands: If it isn't in writing, it is likely not a valid, enforceable property sale.

What This Means for You

Whether you are buying or selling, this case serves as a massive "red flag" regarding the dangers of verbal deals:

1. Always use a written contract: Never hand over money for a property based on a "handshake" or a verbal promise. Even if you trust the seller, you are putting your biggest life investment at extreme risk.
2. Keep records: Always keep copies of all emails, messages, and receipts related to any property transaction. If a dispute ever arises, you need proof of what was agreed upon.
3. Get professional help: Property law is complex. Using a professional conveyancer or an estate agent ensures that the contract is drafted correctly, protecting both the buyer and the seller.

The Bottom Line

While the courts are looking at ways to protect vulnerable people from losing their homes, the safest path remains exactly as it has always been: If you are buying property, ensure your agreement is in writing and properly signed.