THE sale and purchase of land in Zimbabwe, particularly urban land, has always been mired in drama and controversy. All too often we hear of people who have been duped of their hard-earned money in a land deal.
This week, I will look at deals where a buyer agrees to buy a piece of land that is not yet subdivided where, for instance, the owner of a 10 hectare piece of land agrees to sell to the buyer 4 hectares and undertakes to subdivide the land after the sale. Whenever clients come to me needing advice on transactions of this nature, my advice is to stop immediately and restructure the deal. The reasons why are set out below.
In terms of the Regional, Town and Country Planning Act (Chapter 29:12), subdivision can only occur after a subdivision permit has been issued.
For a permit to be issued, an application must be made to in terms of section 40 to the local planning authority.
The Act in section 39 reads:
“39 No subdivision or consolidation without permit
[1] Subject to subsection [2], no person shall –
[a] subdivide any property; or
[b] enter into any agreement –
[i] for the change of ownership of any portion of a property; or
[ii] except in accordance with a permit granted in terms of section 40…”
So, without a subdivision permit, there can be no contract of sale for a portion of an unsubdivided piece of land.
The problem with selling a piece of land that is yet to be subdivided is that it does not exist in terms of the law.
For land to be said to exist in legal terms, it must be identifiable both in name and measurement and this information must be filed with the Deeds Registry through a title deed or other document proving rights and title in land or with a local authority through approved documents like layout plans. Selling land that is yet to be subdivided is akin to selling a car that has not yet been built.
The simple logic that the Act espouses is that for one to be able to sell land, it must exist before rights can be exercised over it. It must not be forgotten that an application process is required for subdivisions to come about. Subdivision applications, as any other application, can be refused.
This would put a seller in an impossible position where they promised to give the purchaser land, yet they have no authority to apportion the land as agreed.
The seller must also ensure that a compliance certificate is issued by the local authority and that works are carried out according to the required specifications. Only at this point can the issue of selling land arise.
The courts have clearly stated that agreements of sale done in contravention of the Act are null and void from the moment they are signed. In X-Trend-A-Home (Pvt) Ltd v Hoselaw Investments (Pvt) Ltd 2000 (2) ZLR 348 (SC) the Supreme Court stated as follows;
“Whether the change of ownership is to take place on signing, or later on an agreed date, or when a suspensive condition is fulfilled, is unimportant. It is the agreement itself which is prohibited.”
The evil which the statute is designed to prevent is clear. Development planning is the function and duty of planning authorities, and it is undesirable that such authorities should have their hands forced by developers who say “but I have already entered into conditional agreements, major developments have taken place; large sums of money have been spent. You can’t possibly now refuse to confirm my unofficial subdivision or development.”
So, by entering into contracts which look to subdivide a property at a later date, the parties are effectively usurping the powers of local authorities to administer land.
This is what the Act stands against. It is understandable that a seller will be anxious to sell, and a purchaser will be eager to secure land for themselves.
This collective haste to transact is what gets the parties in trouble with the law. The first thing I caution in such situations is a thorough due diligence exercise looking at aspects like the seller, their rights in the property and their authority to sell for instance.
The second thing I caution against is to restructure the deal entirely. It goes without saying that a subdivision permit must be on the table before any negotiations can be meaningfully entered into.
There are ways of ensuring that terms agreed to before the subdivision permit is granted are solidified so that the seller does not shift goalposts after it is issued.
For example, it is not uncommon for sellers to hike the purchase price after the permit is issued. The third piece of advice I give is patience.
Haste is the number one tool that scammers use against eager and impatient purchasers. Take your time, do your homework and you will avoid the headaches that come with settling a dispute that could have been avoided in the first place.
Muza is a duly admitted lawyer with expertise in business law, labour law and commercial litigation. He writes in his personal capacity. For feedback, email him at hilarykmuza@gmail.com or call on +263719042628.