Real estate transactions involves different processes but one of the most important issue is ensuring that the proper documents that show that you are now the owner of the property is in your possession. Legally, there are documents that will guarantee that a property belongs to you or at least that a valid transaction has taken place, one of which is a receipt of payment so unless you have the legal title to a property your possession of it does not automatically confirm legal status on you as the owner in law. A receipt is a document acknowledging that a person has received money or property in payment following a sale or other transfer of goods or provision of a service. All receipts must have the date of purchase on them. A receipt of payment in real estate transactions is a document acknowledging that the vendor /seller has received the purchase price following the sale of the property to the purchaser / buyer.
When it comes to real estate transactions, the law recommends that agreement should be in writing. Any written document is less susceptible to mischievous misrepresentation. Mr. A can deny saying something to Mr. B or give another interpretation to his words, so it is of great essence to have proper documentation during real estate transactions .The whole process of a real estate transaction should be filled with proper accountability from all parties and documentation. A seller can agree to sell his or her property for any sum and it is during the negotiation process that this is sorted out by the parties. Negotiating before reaching a compromise is a process that often takes time in real estate and during this period offer, counter offer, acceptance and payment of the purchase price are usually discussed back and forth before a final agreement is reached.
Once the issue of consideration [purchase price] has been finalized and the payment made to the seller, there is a need for a purchase receipt that shows what was paid for, by whom, to whom and when and signed by the author/authors/thump print . When buying from traditional land owners what you need to request for at the time of purchase is a family receipt that bears the name of the family, date, details of what you have paid for and proper signatures/ thumb print in case of illiterates. A family receipt indicates the family name exercising ownership over a large area of land and not just the parcel of land being purchased. Normally the family head and the family representatives would sign across the attestation portion over a stamp. If the receipt contains any fine print read them carefully. Sometimes, traditional land owners write on the receipt that the land is leased to you not sold, which they can use this against you later in the event of litigation so insist on a plain receipt that clearly states and clarifies that you have purchased the land. It is presumed that the buyer’s interest will be well protected if his or her lawyer prepares the deed and by law the seller is expected to duly execute a deed of assignment for the buyer.
Purchase receipt is the evidence of due payment of the purchase of the land and it is usually required when registering the land. For example, in the event of litigation each party would have to tender a receipt of purchase, evidence of payment, Deed of Assignment, correspondences, etc. Any party who can not avail these documents may lose the case even if he is the rightful owner. The receipt is a proof that the purchaser has paid in consideration and exchange for the property. However, it is noteworthy that a receipt does not automatically confer legal title, but it is part of the documents a purchaser will use to prove ownership when there is conflict or litigation especially when the property in question is a family property, the family receipt is of great essence. The receipt will be issued by the family head with the signatures of both family representatives. The obligation to issue receipt is on the part of the vendor / seller .To ensure validity of sale , a properly executed deed of assignment is compulsory as it is a requirement of the law that for every land transaction to be legally binding on the parties involved, it must be backed by a deed.
Receipt of payment is an integral part of a real estate transaction and its essence cannot be over emphasized. A receipt clause discloses the fact that the vendor / seller has collected the consideration [purchase price]. By acknowledging the reception of the purchase price, he transfers his legal and equitable titles in the property to the purchaser / buyer free from any encumbrance. It is always inserted as the receipt clause in the deed of assignment in order to achieve the following:
- It serves as prima facie evidence of payment of consideration and operates as a sufficient discharge to the person paying the money without further receipt to be endorsed on the deed. (Section 54 CA and 92 PCL)
• It is sufficient evidence of payment in favor of a subsequent purchaser not having notice that the consideration acknowledged to be received was in fact paid or given. (Section 55 CA and section 93 PCL).
• It is also a sufficient authority for the assignee to pay the money to the solicitor producing the deed and acting for the party to whom the money is paid (section 56 CA and 94 PCL)
A receipt clause takes this form:
RECEIPT CLAUSE (the receipt of which the Vendor hereby acknowledges)
A deed of assignment is the main legal document for evidencing sale and transfer of ownership of property in favor of the purchaser / buyer, from the vendor / seller. It also acts as the main document for further sale by the buyer as it establishes his proof of ownership of the property. If the receipt of payment of consideration is not issued , the deed of assignment would not become void since there is an intention to convey the property between the parties. It is the execution and the registration of the deed of assignment [that has been prepared by a legal practitioner of your choice] that effects the passing on of the title, the receipt of payment of consideration is not a sine qua non for the passing of such title. As such, the receipt clause in the deed of assignment is evidence that title has passed and there is payment of consideration.
The vendor / seller must have acknowledged the reception of the purchase price in the deed of assignment under the receipt clause, which is why it is important for the purchaser / buyer to ensure a deed of assignment is executed when finalizing the real estate transaction. If the intention is that property should pass on registration, the sale is complete as soon as the deed of assignment is registered whether the receipt of payment of consideration has being issued or not.
In conclusion, acquiring a receipt of payment during the sale of a property is important as it forms part of the documentation in real estate business.