Obtain authority before signing an offer to purchase

Category: Property Law

09 October 2015  |  by Chamonie Buys

In our administration of Trusts we experience too often that a trustee enters into property transactions without the required authority to do so.

In an unreported case handed down in the North Gauteng High Court on 20 May 2013, Jansen et al v Ringwood Investments 87 cc et al (Case No.: 59711/2012) the presiding judge, Khumalo AJ, again confirmed the process which must be followed when immovable property is purchased in the name of a Trust.

Trustees and trust administrators should take note and strictly adhere to the following process:

  1. The authority to purchase the immovable property in the name of the Trust must be recorded in writing by the trustees;
  2. The written authority/resolution may authorise one of the trustees to sign the offer to purchase on behalf of all of the trustees;
  3. The written authority/resolution must exist at the time of signing the offer to purchase.

Verbal authority by your co-trustees amounts to no authority and the signing by one trustee of an offer to purchase cannot be ratified by his co-trustees after the offer to purchase has been signed.  The offer to purchase is invalid if a trustee signs without having the authority to do so.

Consult your co-trustees before signing an offer to purchase and request your trust administrator to prepare the resolution to authorise the purchase of the property and to also authorise one trustee to sign the offer to purchase and the transfer documents on behalf of the Trustees and Trust.