A “cooling off” period gives a Purchaser the right to unilaterally cancel a sale agreement.

This stems from Section 29A of the Alienation of Land Act 68 of 1981, as well as the Consumer Protection Act 68 of 2008. Under the Alienation of Land Act, the purchase price dictates whether the period applies, and under the Consumer Protection Act, any direct marketing dictates whether the period applies.

The cooling off period under the Alienation of Land Act, currently applies to properties which are sold for a value of R250 000-00 or less.

This cooling off period was legislated in order to protect Purchasers who require statutory protection. This protection only applies to residential property sales where the purchase price is R250 000-00 or less, and the purchaser is a natural person.

Commercial, industrial and agricultural properties are excluded from the application of the cooling off period. In addition, a company, close corporation and a trust is excluded from the protection afforded by the cooling off period. These categories relate to persons who can reasonably be expected to understand the nature of the transaction and if not, to obtain legal advice before entering into the transaction.

A further exclusion applies when the same Purchaser and the same Seller enter into a new sale agreement, in respect of the same land and on the same terms as previously contracted into between the parties. Therefore any Purchaser who signs a sale agreement for a piece of land, is protected by the cooling off period once only, and will not be afforded the benefit the second time around. In practice this would apply to all sales, where the cooling off was applied and the sale cancelled, or when a sale falls for any reason, and the Purchaser enters into a new sale agreement for the same property on the same terms.

Lesser known exclusions apply as well. If a Purchaser reserves the right to nominate or appoint another person to take over his/her responsibilities and rights under a contract, then no cooling off period will apply. The cooling off period will further not apply in the event that an option was exercised, which option was open for exercise for a period of at least 5 days.

Under the Alienation of Land Act, a Purchaser may not waiver or relinquish the right afforded by the cooling off period, and any deposits or fees paid must be refunded within 10 days of termination of the contract. No damages are payable, and all penalties and fees are void from operation regardless of agreements to the contrary.

The cooling off period, if relied upon requires that the Purchaser give written notice to the Seller or his/her agent within 5 days of entering into the agreement. The days are calculated by excluding the day the contract was entered into, as well as excluding weekends and public holidays. Important note must be made to “offers to purchase” which do not constitute a binding sale agreement until accepted by the Seller. In all cases of offers to purchase, the 5 day period runs after the contract becomes valid and binding i.e. date of signature by the Seller.

In the event of a Purchaser entering into a further sale agreement or signs an offer for another property, the first offer or sale agreement will be automatically revoked and cancelled. Written notice must be given to the Seller of the first agreement in such an event. Failure to do so is an offence under S29A, and may result upon conviction to a fine or to imprisonment or to both a fine and imprisonment. The notice need not be delivered if the purchaser intends to purchase both properties.

A further cooling off period applies under the Consumer Protection Act, and it is important to note that this cooling off applies only when a transaction is the result of direct marketing. Marketing directly by person to person, by mail, email or sms will result in the cooling off period being applied. Under these circumstances the purchaser may rescind/ cancel the agreement within 5 days after the agreement was concluded, regardless of the purchase price.