Who is entitled to transfer of a property in the case where a seller concludes two sale agreements at the same time with two different purchasers for the same property, without indicating that the second agreement is subject to the cancellation of the first? This was the question before the court in the case of Fulsome Properties (Pty) Ltd v Selepe.
In this case, the seller signed a contract with Fulsome Properties for 2 sectional title units. Fulsome took early occupation in terms of the agreement and placed tenants in the properties. 5 Weeks after the sale to Fulsome, the seller sold the same units to Lentse Investments, in terms of an instalment sale agreement.
Neither Fulsome not Lentse was aware of the other agreement. They became aware of the double sale after Lentse interfered with Fulsome’s tenants in the properties.
The court held the common law principle of first in time, stronger in law is applicable, where registration has not yet taken place. Accordingly Fulsome succeeded in claiming specific performance and the transfer of the property.
Property practitioners must ensure that back-up offers include a clause which states that the second offer will only proceed once the first offer has been cancelled.