Exploring the problem of double sales in real estate

May 19, 2022

Introduction 

Following the rush in acquiring residential stands in Zimbabwe through corporations and housing schemes, many have fallen victim to double sales where a property is sold by the seller to two different purchasers to which this creates legal impediments between the rights of the purchasers with regards to attainment and transfer of title.

It is therefore the sole purpose of this article to shed light over what the law dictates in relation to double sales and where to go when one is caught up in such situations.

 

What the law says 

The position of the law with in relation to double sales is such that when ownership has not yet been legally transferred, the first purchaser who is the first to buy the property is the one who receives favour over the second purchaser by operation of the law.

The second purchaser however, has an avenue to pursue the seller for damages or even compensation accruing from the conduct of the seller.

There are however special circumstances with regards to double sales that might result in the law favoring the second purchaser over the first purchaser.

 

What are the special circumstances?

For a second purchaser to attain favour at law over the first purchaser in the event of a double sale, the circumstances must heavily be in his/ her favour.

The question of special circumstances differs from case to case.

The list of circumstances is in exhaustive and includes the following: –

(i)    The Second buyer should have purchased the property without genuinely knowing that the Seller had already sold it to the First Purchaser.

(ii)   The property has not yet been legally transferred to either purchaser by the seller.

The consequences surrounding such a circumstance is that in the event that title had been passed to the first

purchaser, he or she therefore acquires an indefeasible right leaving the second purchaser with the remedy of only instituting an action for damages and restitution against the seller.

In the event that title has been passed to the second purchaser, the second purchaser therefore acquires an indefeasible right subject to the fact that he/she had no knowledge either at the time of the sale or at the time transfer was effected of the prior sale to the first purchaser.

The only remedy for the first purchaser would be an action for damages against the seller.

If, however, the second purchaser had knowledge of the prior arrangement between the seller and the first purchaser, the first purchaser can recover the property from the second purchaser taking into consideration that no special circumstances intervene to affect the interests of the first purchaser.

(iii) The Second buyer has already expended a lot of money on the property and made visible developments to it such that depriving them of the property will only amount to great prejudice.

It is therefore apparent from the above illustrations that the law has a two-pronged prerequisite that is, acquisition in good faith and registration of title in good faith. Good faith must concur with the registration.

If it would be shown that a purchaser acted in bad faith, the alleged registration he /she has

amounts to no registration at all. Good faith means that the registrant must have no knowledge of the defect or lack of title of the seller, or must not have been aware of facts that should have put him upon such inquiry and investigation as might be necessary to apprise him with the blemishes in the title of his seller.

 

Where to go when caught up in a double sale.

In the unfortunate event of having been caught up in a double sale situation, it is advisable to approach the courts to seek recourse or consult legal counsel to pursue one’s interest of either acquiring the property or instituting an action to pursue damages and restitution against the seller.

 

Conclusion 

In summation, the law in double sales dictates that the first buyer must succeed where the title has not been passed to either party unless special circumstances exist in favor of the second purchaser.

There is no definitive criterion in relation to special circumstances in double sales, rather, the courts deal with such case on a case by case basis.

These special circumstances must be proved by the second purchaser on a balance of probabilities in order to succeed in her/his claim in acquiring title in the property.

 

Fungai Chimwamurombe is a  registered legal practitioner and  Senior Partner at Chimwamurombe  Legal Practice and can be contacted for feedback at fungai@ zenaslegalpractice.com and WhatsApp 0772 997 889. Theophilus us a Legal Intern and email address is theomubemi@gmail.com phone number 0717936310

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