Advice and Opinion

The complexity of buying or selling a farm in SA

The market for farms in South Africa has attracted significant interest over the last few years with an increase in available properties, largely due to Government’s redistribution-of-land policies and the increase in cost of farming.

However, availability of stock has been countered by an upswing in demand as the lifestyle appeal of countryside living gains popularity with many embracing remote work and the increase in semigration.

Whichever way you look at it, the result is a peak in interest from willing buyers seeking 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, 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 regards 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 have attached a four-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 party to dispute with any neighbour or that there are no pending land claims registered to the property. He says that 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 i.e., purchasing 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.

Farms, albeit a sought-after investment, should come with a hefty checklist accompanied by an experienced contract specialist.