Property Double Sale: Risk of Loss and Legal Costs

Imagine for a second you enter into an agreement to buy a property, you pay for that property, and later find out that you do not own that property. You then institute legal action against the person who sold you the property as well as the new owners of that property.  You go to court, lose the court case and then you are ordered to pay for the new owner’s legal costs.

This was the unfortunate series of events which played out in the case Mazhazi v Mukuma and others. ¹ The applicant (herein after KTM) entered into an agreement with the first respondent (herein after MPM) during November 2010 to buy a specific property, paid for the property and took occupation of the property.  However formal transfer of the property never took place.  In January 2021, KTM learnt that the same property was sold for a second time and that the property was transferred into the names of the new owners

KTM approached the court to set aside the sale and transfer to the bona fide purchasers (being the 2nd to 5th respondents) and for MPM to be legally forced to register the property in KTM’s name. MPM did not oppose this application, but the bona fide purchasers did.

The bond fide purchasers in Mashazi v Mukuma and others opposed the application on the grounds that firstly, they were bona fide purchasers unaware of the previous sale, and secondly, they asserted that KTM's claim had prescribed under the Prescription Act.

Judge Aucamp, AJ, took into account the legal principle set down in earlier rulings, most notably Gugu v Zongwana, which stipulates that in a scenario involving a duplicate sale, the property may be retained if transfer is made to a legitimate later purchaser:

“In the case of double sales, other than those in which one party has an option in a lease, if transfer is in fact passed to C and C is bona fide, he is entitled to retain the property and B is left with an action for damages against A, the seller.  However, if C knew of B’s right when he bought or when he took transfer, then B can claim against C transfer from C to himself or he can claim against A and see cancellation of the transfer to C and transfer from A to himself.” ²

KTM was not able to proof that bona fide purchasers were aware of the previous sale and the application was dismissed and KTM was further ordered to pay the legal costs.

So, what can we learn from this case?

Make sure you use a reputable attorney and conveyancer.

If you are a purchaser, make sure your money is held in the attorney’s trust account until ownership has passed to you before the purchase price is paid out to the seller.  It is not advisable to pay the purchase price directly to a seller, as this can create a scenario where ownership does not pass but the seller uses the funds before the transfer of ownership is concluded.

Once the transaction is concluded, obtain the original title deed, if not bonded or copy of the title deed and verify that you as the buyer are the new registered owner.

Written by: Gustav Snyman
Moderated and approved by: Glenda Nell

¹ Mashazi v Mukuma and others (17373/2021)[2024] ZAGPJHC 668

² Mazhazi v Mukuma and others (17373/2021)[2024] ZAGPJHC 668 at par 7

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