Buying or selling a farm in South Africa – make sure it’s a watertight contract

The market for farms in South Africa has attracted significant interest over the last few years. There has been an increase in available properties, largely due to Government’s redistribution-of-land policies, and some might add the increase in the cost of farming, but this availability of stock has been countered by an upswing in demand as the lifestyle appeal of countryside living gains popularity. With many people embracing remote working, and the increase in the semigration trend, the notion of farm life is extending its appeal.

Whichever way you look at it, the result is a peak in interest from willing buyers looking for value-deals.  Currently, Pam Golding Properties lists over 1 000 farms for sale in South Africa, while Private Property shows as many as 5 000 farms available countrywide.

Sitting on your stoep, sipping on a glass of merlot overlooking your farm may sound idyllic, but buying a farm is a lot more complex than any usual property transaction. PJ Veldhuizen, attorney, litigator, and senior mediator at Gillan and Veldhuizen attorneys says that besides the usual checks and balances of an Agreement of Sale, buyers and sellers should proceed with extraordinary care when entering such contracts with regard to farmland and working farms. “There is a lot to consider when buying or selling a farm,” he cautions. “We have recently assisted in the purchase of a game farm and, following findings during our due–diligence process, we’ve attached a 4-page schedule of listed specific warranties that will apply to the successful transfer.” Among the many examples, Veldhuizen lists are ‘basic’ assurances that the seller is not a party to dispute with any neighbour or that there are no pending land claims registered to the property. He says buyers should check if any servitudes apply and what water rights the farm has been granted; zoning rights and permits must be checked and investigation must be done to establish if the farm is under any environmental or heritage limitations.

Amongst the recurring disputes Veldhuizen has encountered, he mentions that rights of tenure to farm workers are very often overlooked and often not disclosed. “So, you buy a farm with the intention to turn the staff houses into guest units, only to find the staff have a legal right to the property.”

It seems that ‘I had a farm in Africa’, albeit a sought-after investment, should come with a hefty checklist accompanied by an experienced contract specialist.