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Scrutinise the trust deed before sale

control resizeIn a recent ruling, the court found that a trust deed should be scrutinised to determine whether a trustee is indeed authorised to enter into a transaction, this according to Tiaan van der Berg at M.C. Van Der Berg Attorneys.

In the case of Smith v ABSA Bank Limited the court ruled that as the trustee was not authorised, the transaction on the property was not properly concluded. This resulted in Mrs Smith, who stood surety for the trust, not being held liable as surety.
The agent has to before the contract is signed, investigate whether the trustee is indeed authorised. The agent must ask for the documents below.

  1. The trustees must have been duly appointed by the Master of the High Court. This authority is established in the Letter of Authority issued by the Master.
  2. The trustees must also act within the scope of their powers as set out in the trust deed.
  3. If only one of the trustees is the signatory in the agreement of sale we also require a proper resolution whereby the other trustees authorise and appoint that one trustee to enter into the agreement on their behalf. It is critical that this resolution is dated before the agreement of sale.

From this it is clear that the underlined documentation is required to verify the legality of the transaction.


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