Agricultural activity is the lifeblood of South Africa. Besides helping feed the millions of families in the country, agricultural exports account for around 10 billion USD of revenue alone. It is no wonder that the law has placed such high value on agricultural land by making the laws regarding its transfer strict.
Transfer of agricultural land between two legal entities seems simple enough, but there are a few considerations to be considered before such land may be transferred. To understand why, we must first look at what South African law considers agricultural land to be.
As per the definition in section 7 of the Agricultural Holdings Registration Act (1919), agricultural holding
“…shall mean a portion of land not less than one morgen in extent used solely or mainly for the purpose of agriculture or horticulture or for breeding or keeping domestic animals, poultry or bees.”
One morgen is equal to 8567m2, which is thus the lowest limit of size any agricultural holding may consist of. The ‘one morgen rule’ also applies for subdivisions of agricultural land in that when transferred to two or more entities, each entity’s division must constitute more than one morgen.
Section 5(2) of the Agricultural Holdings Registration Act clarifies the legislation by stating that
“[t]he Registrar of Deeds shall not register the transfer or lease of any lot or portion of such land or any part thereof which is less in extent than one morgen[,] nor shall any lot or portion be capable of being held by two or more in joint ownership where if the lot or portion were divided according to the shares of the joint owners any of such divisions would be less in extent than one morgen.”
Further regulations determining the extent to which agricultural land can be transferred are laid out in Section 3(b) of the Subdivision of Agricultural Land Act, 1970, which clearly lays out the following conditions for subdivision of agricultural land:
“no undivided share in agricultural land not already held by any person, shall vest in any person.”
The reason for this rule is simple – if an imbalance in the division of shares in agricultural property exists, it may render some of the subdivided land to be unusable for the purpose of agricultural activity. However, Section 3(b) of the Subdivision of Agricultural Land Act makes it unlawful for agricultural land to be transferred (without the consent of the Minister), into the name of:
- Two or more unmarried persons;
- Two or more persons married out of community of property; or
- Two or more legal entities.
Any of the three transfers listed above would/could create an imbalance of share in the transferred agricultural land, which must, in effect, be held by one entity only or must exist in whole within one estate. Agricultural land may therefore be transferred to spouses married in community of property as there is no undivided share (barring the dissolution of the marriage, of course, which would have its own ramifications).
The caveat here is that, in consideration of the Section 5(2) of the Agricultural Holdings Registration Act and Section 3(b) of the Subdivision of Agricultural Land Act, if the persons who would have joint ownership should (if it could be divided) own less than one morgen of total area in the agricultural land, such a transfer would be unlawful.
JJMM specialises in property law as it relates to the transfer of agricultural land and the intricacies involved in the exchange of ownership. If you should be considering a property transfer of the kind discussed in this article, please contact one of our highly qualified attorneys to ensure that you do things by the book and avoid unnecessary headaches down the road.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E&OE)