Tripartite Agreements

CAN I STILL ENTER INTO A TRIPARTITE AGREEMENT?
IF SO, HOW DOES IT WORK?

Yes, but it won't help if the price is not the same. A tripartite agreement is one where A sells to B, but before transfer has been registered, B sells to C. The three parties (hence tripartite) enter into an agreement whereby the two sales are cancelled and A now sells directly to C.

The main purpose of a tripartite agreement is to avoid paying transfer duty twice. However the South African Revenue Services recently amended the Transfer Duty Act. With effect from December 22, 2003, if B "on-sells" to C at a HIGHER PRICE, transfer duty is paid on the final sale (A to C) AND on the cancelled sale of A to B, so there is no point in entering into a tripartite agreement. If, however A sells to B and B sells to C for the SAME PRICE, transfer duty is only payable on the final sale, and a tripartite agreement is appropriate. This type of tripartite agreement is arranged where, for instance, a purchaser has purchased in his own name and is then advised to have transfer registered in the name of a family trust. For more information in this regard, kindly contact one of our Conveyancers for Professional Property Information and Assistance.

Our Branches:

Cape Town 021 406 9100
Tableview 021 521 4000
Tygerberg 021 943 3800
Helderberg 021 850 6400
Wynberg 021 763 4100
Johannesburg 011 778 0600
Claremont 021 670 6840
East London 043 726 0894

Disclamer: The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. We accept no responsibility for any loss or damage which may arise from reliance on information contained in this article.