How Old Do You Need To Be to Buy Or Sell Property?

One of our clients wanted to buy a property in the name of one of their children aged 5. Is it possible and can the parents sign on their minor child's behalf?

While the process for transferring ownership of immovable property remains largely the same in cases where one of the parties to the transfer is a minor, the minor's contractual capacity must be carefully considered.

In the case of a minor entering into an agreement for the sale of land and signing the transfer documents, there are according to Snymans Inc Attorneys a number of additional requirements that must be met.

Capacity to contract

First and foremost, a minor's capacity to contract is governed by the common law as well as legislation. Minors are divided into 2 categories based on their age, namely minors under 7 years and minors between the age of 7 and 18 years.

Minors under 7 have no contractual capacity, meaning he or she cannot enter into a legally binding contract alone. Both parents or the legal guardian must sign a contract for the sale of land on his or her behalf. Minors between 7 and 18 have limited contractual capacity, and must be assisted by both parents or legal guardian when buying of selling land.

The parents or legal guardian may also act alone in this instance, subject to Section 80 of the Administration of Estates Act 66 of 1965 which stipulates that "no natural guardian shall alienate or mortgage any immovable property belonging to his/her minor child, unless so authorised thereto by the Court (value exceeding R 250 000.00) or by the Master (value not exceeding R 250 000.00)".

Section 18 of the Children's Act 38 of 2005 is also relevant in this instance by providing the following:

"A parent or other person who acts as guardian of a child must:

• Administer and safeguard the child's property and property interests;
• Consent to the alienation or encumbrance of any immovable property of the child..."  

It can therefore be concluded that in the case of a minor being a party to the sale of land, the following will be necessary:

• Assistance by the parents or legal guardians
• Consent by the Master or the Court
• Consent by the parent or legal guardian where the minors immoveable property is sold or bonded (where the minor is duly assisted by the guardian in the power of attorney, this additional consent is not required.)

Donations

The above will also be applicable in the case of a property being donated to a minor. However, due to donations tax (payable by the donor) being high relative to other taxes related to transfers, donations of land is seldom used as a form of transfer.   

Inheritance

When a minor inherits property, it is best practice to create a testamentary trust in favour of the minor, stating that the property will devolve upon the minor at a later age for example when he or she turns 25. The title deed of the property will then be endorsed to this effect.

In the absence of such a trust, the property will be held by the guardian's fund at the Master of the High Court's office until the minor turns 18 and the minor will only then be entitled to take transfer.