Contractual Capacity in Property: Who Can Sign?
The The Property Perspective is a weekly radio show on 919 FM, airing every Tuesday at 4:15 PM with Al and Lesedi on The Drive Train.
Episode 6 | The Property Perspective with Etchells & Young
Signing a property contract is a significant financial commitment, but not everyone has the same legal capacity or authority to sign.
In Episode 6 of The Property Perspective on 919 FM, Harry looks at contractual capacity and some of the circumstances that can affect who needs to sign a lease agreement, offer to purchase or other property contract.
In This Episode
Harry explains why establishing the correct legal authority to sign is important before entering into a property transaction.
Harry discusses:
What contractual capacity means
How age can affect the ability to sign a contract
How marital status can affect property transactions
Marriage in community of property and joint signatures
The role of an antenuptial contract
Powers of attorney and signing on behalf of another person
How companies and trusts authorise someone to sign
Insolvency, deceased estates and other special circumstances
Watch Episode 6
The Property Perspective airs weekly on 919 FM.
What Is Contractual Capacity?
Contractual capacity refers to whether a person is legally able and authorised to enter into a particular agreement.
Harry explains why this is especially important in property transactions, where a lease or sale agreement can involve substantial financial commitments.
Getting the signing authority wrong can cause delays or complications later in the transaction, which is why it should be established before the agreement is signed.
How Can Marital Status Affect a Property Contract?
Marital status is one of the important factors discussed in this episode.
Harry explains that where spouses are married in community of property, both parties may need to participate in certain property transactions.
Where an antenuptial contract applies, the position may be different depending on the marital regime and the terms of that agreement.
The practical lesson is to establish the parties' marital status and signing requirements before concluding the transaction.
What Else Can Affect Your Ability to Sign?
Marriage is not the only circumstance that can affect contractual capacity.
Harry also discusses minors, people who may have a legally appointed curator, insolvency and situations where someone needs another person to act on their behalf.
In these cases, the person signing may need to be a guardian, trustee, curator or another properly authorised representative rather than the individual concerned.
Signing Through a Power of Attorney
There may also be practical situations where someone is legally able to contract but cannot personally attend to the transaction.
Harry uses the example of a person being overseas and granting a power of attorney to someone they trust.
The authority given should clearly establish what the appointed person may do on behalf of the principal so that their signing authority is not left uncertain.
What About Companies and Trusts?
Companies and trusts can own property, but the entity itself cannot physically sign a contract.
Harry explains that the relevant directors, members or trustees normally need to authorise a person to sign on behalf of the entity.
This is commonly dealt with through a formal resolution identifying the person who has authority to conclude the particular transaction.
Establishing that authority before the property agreement is signed can help prevent problems later.
Deceased Estates and Property
The episode also touches on what happens when property forms part of a deceased estate.
Once an owner has passed away, the administration of that property is no longer handled in the same way as an ordinary personal transaction.
Harry uses this discussion to highlight another important point: having a valid will can make the administration of an estate considerably clearer for those left behind.
Not Every Marriage Is Treated the Same Way
Harry also explores some of the less straightforward situations that may arise with customary, foreign, same-sex and religious marriages.
These circumstances can introduce additional questions around marital status, applicable law and who has authority to sign.
Where there is any uncertainty, Harry recommends obtaining appropriate professional advice before entering into the property agreement.
A Key Takeaway
Before signing any major property agreement, make sure the person signing actually has the legal authority to do so.
Marital status, age, insolvency, powers of attorney, trusts, companies and deceased estates can all affect who needs to sign and in what capacity.
Getting that right at the beginning can prevent unnecessary delays and complications later in the transaction.
What Is The Property Perspective?
The Property Perspective is Etchells & Young's weekly property segment on 919 FM.
Each episode explores a different aspect of property - from rentals and property management to buying, selling, legislation, sectional title living and the everyday questions property owners and tenants face.
Follow the series as we unpack more of the issues that matter to Johannesburg property owners, buyers, sellers, landlords and tenants.
Buying, Selling or Renting Property?
Property agreements can involve far more than agreeing on a price or monthly rental.
Speak to the Etchells & Young team for professional guidance when buying, selling, renting or managing residential property.
