The Subdivision of Agricultural Land Act 70 of 1970 came into operation on the 2 January 1971, and as the name indicates, it deals with the subdivision of land deemed to be agricultural. The Act has changed how agricultural land is dealt with. A Repeal Act was gazetted in 1998, to repeal the entire Act, but the date for the Repeal Act to come into operation has not been set. Given a period of almost 20 years since the publishing of the Repeal Act in the Government Gazette, it is uncertain whether the Act will ever be repealed.
It is important to note at the outset that although restrictions are in place, one can apply to the office of the Minister of Agriculture for consent in writing in order to proceed against the restrictions. Time frames for obtaining consent vary.
The following restrictions are of importance when dealing with agricultural land:
Agricultural land may not be subdivided;
Agricultural land may not be sold in undivided shares unless those undivided shares already exist;
A portion of an undivided share in agricultural land may not be sold to anyone who does not already own a share in such land;
Agricultural land may not be leased for a period over 10 years, or for the natural life of the lessee, or for periods which can be renewed by the lessee which amount to a period of over 10 years;
A portion of agricultural land agricultural land cannot be sold or advertised to be sold;
The act stops the practise of dividing agricultural land into smaller units.
To understand how these restrictions apply, we look at the following examples:
A farmer owns a farm (agricultural land) and wishes to sell it. He may sell it to one buyer only. If he sells it to two buyers, then they would have to acquire ownership in undivided shares, which is not allowed. This would also apply to inheritances.
The solution would be to apply for consent to sell the farm in undivided shares, which could take a long period of time, and consent may not be granted. The alternative and faster solution is for the buyers to form a company, and purchase the farm through the company. Because the company acquires the farm in its entirety, there will be no contravention of the restrictions. The buyers will own the farm according to their shares in the company.
For inheritances, the options are the same, or if the beneficiaries do not wish to do so, a redistribution agreement can be entered into, or the asset realized (sold) and the proceeds distributed to the beneficiaries.
If the same farmer, decided to subdivide his land and sell off a portion, he cannot do so, and he further cannot advertise that portion to be sold, without consent first being obtained.
If farmer A and farmer B are the owners of the farm in undivided shares, and wish to sell the farm, they may sell it in undivided shares, because those undivided shares exist. The restrictions apply to the creation of further undivided shares.
If farmer A and farmer B are the owners of the farm in undivided shares, and Farmer A wishes to sell a portion of his share, he may only sell that portion to farmer B, because farmer B already owns a share in the farm. He may not sell a portion of his share to anyone else unless consent is obtained to do so.