Legal Discussions with Vengai Madzima: Sale of Land by Instalments in Zimbabwe  

NewZimbabwe.com has invited Mr. Vengai Madzima, the Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM legal) to discuss legal issues that affect Zimbabweans. The discussions are of a general nature and those seeking specific legal advise should contact their respective lawyers.

Reporter: Welcome back Mr. Madzima, this week we want to discuss the purchase of property or land by instalments. It is common knowledge that there are limited lines in Zimbabwe resulting in individual property owners, be it private sellers or developers, offering property or land sales through instalments, what are the legal protections available for such transactions?

VM: Thank you for having me.

To enable a conclusive response, it is critical to first establish what our courts have considered as a land sell by instalments. It may, at first glance appear common knowledge, however, experience has taught me to explain even the common.

Our courts consider a land sell by instalments to include a deposit and two or more instalments.

You are right in that most of our new developments are opting for these types of sales. This is because of two reasons; instalment sales allow properties at pre–completion stage to be more marketable and such sales act as supplement development finance at zero percentage interest for the developer.

By this I mean that they also work as cheap finance for developers to enable completion on projects at a viable cost. In the alternative and to the benefit of buyers, they allow a wider pool of buyers to be property players,  who ordinarily could not afford to buy outright or be considered by lending institutions.

Reporter: Are these sale by instalments legal or protected legally?

VM: I was coming to that.

Land sales by instalment are within the protections of our laws through the Contractual Penalties Act (Chapter 8:04), Money Lending and Rates of Interest Act, our common law and other laws that may be invoked by individual contracts or are contract specific.

Among other issues, our laws prescribe that all land sales by instalments have to be in writing. The reasoning behind it is easily deductible, for instance, written agreements have clear contractual terms minimizing disputes over what, who or how the contract is to be performed.

I may need to put a qualification on that to say, well drafted agreements have clear contractual terms.

This does not necessarily mean that unwritten agreements for sale by instalments sales or oral agreements are not enforceable, it means that they are difficult to enforce, especially in circumstances where the parties to the unwritten contract have a different understanding on what they agreement.

In such circumstances the burden of proof is on the on alleging the default on the oral terms agreed. In any event, our law is clear that all sale of agreements have to be in writing.

Reporter: What are some of the things to look out for when entering into a land sale by instalment agreement?

VM: The first thing to understand is that all land transactions that do not immediately  result in the purchaser acquiring title deeds give the purchaser what are known as personal rights to the land.

Personal rights in simple terms allows a buyer, in the event of a double sale for example, especially where the other buyer in the double sale has acquired a title deed on the same land, to make a claim against the seller for damages and not necessary against the land.

I say this because the period to acquire title deeds in land sales by instalment is subject to the completion of the instalment payments which increases the period to title deeds.

It is recommended that such instalment agreements be registered against the title deed to protect the purchaser.

Further, as stated earlier, land sales by instalment agreements are ultimately governed by statutes,  some provisions within contracts concluded by individuals may offend our laws making them void and unenforceable.

Developers or land owners may intend on enforcing a penalty clause, demand accelerated payment of purchase price or even sue for damages, if the notice issued for such breach is not what is prescribed in our law for land sales by instalments, this will make the notice void to the extent that our law will consider it as if no notice was issued.

Reporter: That is an interesting point, does this apply to all contracts?

VM: Yes it does, all sale of land by instalments contracts.

Further, you may also notice some sale of land agreements have interest provisions. This may offend our laws in that only entities registered for money lending are allowed to charge interest on a debt. Further, some of the interests may be too high and own courts frown on agreements that charge usurious interests.

You also have agreements that stipulate that in the event of default, the owner/developer will withhold money paid, this may be illegal in that the land owner in our law is entitled to compensation for losses actually incurred.

Reporter:  Thank you Mr. Madzima we have run out of time.

VM: Thank you

You can contact Vengai Madzima on vengai@mcmlegal.co.zw.

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