FOREIGN BUYERS OF IMMOVABLE PROPERTY: PITFALLS
As a general rule foreigners who live outside South Africa are not prohibited from buying immovable property in the Republic. However, foreigners physically present in the Republic at the time of the purchase must comply with visa requirements. Purchases by non-compliant foreigners are illegal; and assisting with such purchases (“aiding and abetting”) is also illegal.
The Immigration Act 23 of 2002 (“the Immigration Act) governs dealings with foreigners, their residence in and their departure from the Republic of South Africa, and related matters. The Act defines a foreigner as an individual who is not a South African citizen. If a foreigner is outside of the Republic at the time of purchasing the immovable property, there is no limitation or restriction on their transactions.
Foreigners who purchase immovable property while physically present in the Republic at the time of concluding the agreement of sale must comply with the requirements of the Immigration Act. This means they must either have a valid visa to remain in the country temporarily, or be in possession of a permanent residency permit.
Section 42(1)(a)(ix) of the Immigration Act prohibits anyone from aiding and abetting, assisting or enabling, or in any manner helping an illegal foreigner by letting or selling or in any manner making available immovable property to him or her. An illegal foreigner is defined as an individual who is in the Republic in contravention of the Act, i.e., who does not hold a valid visa or permit.
Temporary visa
Foreigners can be in possession of any of twelve kinds of temporary visa, under sections 10 to 23 of the Immigration Act. A visa is defined as the authority to temporarily sojourn in the Republic for purposes of:
- transit through the Republic;
- a visit;
- study;
- conducting activities in the Republic in terms of an international agreement to which the Republic is a party;
- establishing or investing in a business;
- working as a crew member of a conveyance in the Republic;
- obtaining medical treatment;
- staying with a relative;
- working;
- retirement;
- an exchange programme; or
- applying for asylum.
Permanent residence permit
There are two main categories of permanent residency permits for foreigners: direct residency permits and residency-on-other-grounds permits.
Direct residency permit under section 26 of the Immigration Act
Direct residency permits are issued to foreigners who have been residing in South Africa either on the basis of their work permits for a minimum period of five years, or has been a spouse of a citizen or permanent resident for five years, or is a child of a citizen.
Residency-on-other-grounds permit under section 27 of the Immigration Act
Residency-on-other ground permits are issued to foreigners who:
- are in possession of a permanent work offer in South Africa, or
- have exceptional skills and qualifications;
- intend to establish a business in South Africa;
- qualify as Refugees in terms of Section 27(c) of the Refugees Act;
- qualify as retired persons;
- are financially independent;
- are relatives (biologically or judicially adopted) of a South African citizen/permanent residence permit holder.
Criminal offence
Under section 49(6) of the Immigration Act it is a criminal offence if anyone fails to comply with their duties or obligations under the Act. This includes not to aid and abet, assist or enable, or in any manner to help an illegal foreigner by letting or selling or in any manner making available immovable property to him or her, in contravention of section 42(1)(a)(ix) of the Immigration Act. The offence is punishable by a fine or imprisonment not exceeding five years.
It is important to note that ignorance is no defence in any criminal proceedings arising out of section 42 of the Immigration Act. It is no defence for a seller, agent or conveyancer to plead ignorance of the status of a foreign purchaser of immovable property who is physically present in the Republic (i.e., whether he or she is an illegal foreigner), if it is proved that the accused ought reasonably to have known the status of the foreigner or that he or she is an illegal foreigner.
Sellers, agents and conveyancers involved with the purchase of immovable property in South Africa by a foreigner must therefore be aware that they have a duty to inquire into the status of the foreigner. This means ascertaining whether the foreigner holds a valid temporary visa or permanent residence permit and is legally within the Republic when the agreement of sale is concluded.
For enquiries about purchasing of immovable property by foreigners, please contact the Cluver Markotter Property Department.