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    Rouwkoop clauses in a contract.....

    The so-called “rouwkoop” clause contained in a Deed of Sale covers the non-refundable deposit payable by the Purchaser to the Seller’s Conveyancer pending registration of transfer. This clause further provides that all monies all ready paid by the purchaser (including the deposit) may be retained by the Seller’s Conveyancer as pre-determined damages in the event that the purchaser breaches the contract. In the event that the Deed of Sale is clear on this, then such monies may be paid out by the Conveyancer to the seller when such a breach occurs and the contract is cancelled.

    There is a general rule applicable when a Sale Agreement falls through in that the parties are to restore to each other the position they were in immediately before the conclusion of such an agreement. Thus, a Purchaser who has paid a portion of a purchase price as a deposit is generally entitled to be repaid that sum. But of course the duty to restore is not immutable and may be excluded by agreement (eg in the case of a penalty stipulation) and the Seller relying on such conditions as contained in the agreement.

    The question that arises is when is a deposit paid by a Purchaser not refundable?

    If there are no suspensive conditions written into the sale agreement and the buyer is in breach of the contract, but does not take any steps to rectify the breach within the time stipulated, the seller is entitled to keep the deposit. Most agreements (some do differ) will also have a clause enabling the seller to cancel the agreement but retain the right to sue for damages

    In conclusion, where a deposit and transfer duty is paid by a Purchaser to a Conveyancer and the sale lapses due to the non-fulfillment of a suspensive condition, the Conveyancer is obliged to repay the deposit and transfer duty to the purchaser and not to hold them on behalf of the Seller.

    Last Updated (Thursday, 18 December 2014 18:10)