Buying Or Selling Property Part 10: Instalment Sale Agreements
This is Part 10 of our series on Buying or Selling Property.
An instalment sale agreement is an option when a buyer is not able to get a home loan.
This may be because they are paying off a few personal loans. In this case, the buyer offers to pay the purchase price in instalments over a specific period of time.
This is much like a rental for the seller, because he is at least getting a monthly income.
The question for the seller is whether he can do this and charge interest on the instalments. This is important because it will take a few years for the buyer to pay the price in full.
The buyer and seller need to consider two pieces of legislation.
These are the Alienation of Land Act and the National Credit Act.
The seller should make sure that the buyer will be able to repay the debt.
There are advantages and disadvantages for both buyer and seller.
It’s in both parties’ interest to have the agreement drawn up by a lawyer. This is because there are many obligations involved.
