In keeping with the theme of this series on agricultural land, this is a question that is frequently incorrectly understood by property practitioners and legal practitioners alike.
Section 20 of the Alienation of Land Act allows for an instalment sale agreement to be entered into in respect of residential property only. The purchase price in such an agreement is paid to the seller by way of more than 2 (two) instalments over a period of longer than 1 (one) year.
However, Chief Registrar Circular 6 of 2002 confirms that all farm property must be regarded as agricultural land as defined in Act 70 of 1970, until proof to the contrary can be proven. As such, a farm will not automatically be considered residential in nature, regardless of the use of the farmland.
Accordingly, if a client wants to purchase a farm on an instalment basis, the interplay between The Subdivision of Agricultural Land Act and The Alienation of Land Act must be carefully considered. Contact our offices for expert advice when dealing with an instalment sale or the sale of a farm.