Firstly, a warning to anyone selling or buying property to/from a trust - have your lawyer check upfront that you are adequately protected by the terms of the sale agreement.
The problem is that contracting with trusts has its own specific set of rules and, as a recent High Court case of Goldex 16 (Pty) Ltd v Capper NO and Others (24218/2013)  ZAGPJHC 305 illustrates, standard sale agreements don’t always provide adequately for them.
A seller sues an unauthorised trustee for R2m - personally
The risk for trustees
As the Court pointed out, the seller could have sued the trustee personally not for the purchase price as such, but rather for damages arising from the trustee’s “breach of warranty”.
There’s a warning there for all trustees - you risk a damages claim in your personal capacity if you don’t make sure that you are fully authorised to sign, that you hold the necessary letter of appointment from the Master of the High Court, that your trust has the power to do whatever you are binding it to do, and that all the terms of the trust deed have been complied with.
And a lesson for property sellers and buyers
On the other hand the seller, to succeed in such a damages claim, would have had to prove the extent of its loss, causation of that loss, mitigation of its damages and so on. Its position would have been much clearer, safer and easier had it, before signing the sale agreement –
1. Checked for all the necessary signing authorities, compliance with the trust deed etc (prevention being as always better than cure), and
2. Inserted a clause giving it clear and strong personal remedies against any unauthorised trust signatory.
The same advice applies of course to anyone buying property from a trust.
Mistakes here will be expensive – take legal advice before you sign anything!
Jack Crook, Director at DotNews, is well known to law firms as the author of LawDotNews since 2005. Jack’s legal qualifications (LLB Lond and LLB Rhod) are supplemented by many years of practical experience in law, in marketing his own firm, and in helping other small and medium sized professional firms to prosper by using simple, low-cost, effective marketing strategies.
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This is very good advice. And one can take it further. For example: What about trustees attempting to encumber trust property with a servitude? I have perused a number of authorities, and a number of reported cases on the powers of trustees to encumber trust property, and there are very few pronouncements on this subject. A servitude registered over trust property without proper authority would likewise be void ab initio. if any of your readers can point me to some authoritative source of law on this issue I would be most grateful.