News & Updates

LATE PAYMENT AND THE COMMON LAW RIGHT TO CLAIM INTEREST

Feb 1, 2025

Share this:

My purchaser is delaying my transfer as he hasn’t paid the balance of the purchase price on time – what can I do? 

This is a situation that is often encountered in property practice. Naturally the lack of performance by the purchaser constitutes a breach of contract, and various remedies become available to the seller. These include notice of the default to the purchaser, followed by cancellation of the sale agreement which would give rise to a claim for damages by the seller. But what if a seller chooses not to cancel the contract but rather to conclude the property transaction, albeit on a delayed basis? Is there then a right to claim interest from the tardy purchaser despite the fact that the sale agreement is not cancelled?

Owing to the fact that interest is the “life-blood of finance” and that delayed payment of monetary obligations will almost invariably deprive a creditor of the productive use of the money and thereby cause him or her loss, South African law recognizes the right to claim mora interest on the outstanding debt due to the debtor’s failure to perform promptly. 

Simply stated – ‘When a debtor’s contractual obligation is to pay money, and he is in mora, the general damages that flow naturally from the breach will be interest a tempore morae’. In South African property law, this would be defined as “interest from the time of the default that gave rise to the delay in transfer until such time as the delay is remedied by the purchaser such that transfer of the property may proceed”.

Because mora interest is a common law right constituting damages and is not governed by an agreement between the parties, it is regulated in terms of the Prescribed Rate of Interest Act, 55 of 1975. Mora interest is currently calculated at the prime lending rate in South Africa.

There will inevitably be certain legal technicalities in enforcing a claim for mora interest and we invite you to contact one of our attorneys for specific advice in this regard.

WE WOULD LOVE TO CONNECT WITH YOU – BE SURE TO FOLLOW US ON:

Instagram: fha.law
Facebook: Frank Holland & Associates FHA
For further information check out our website at www.fha.law.za

Our website newsfeed offers monthly updates with relevant property law articles and so much more.
Call us on 021 790 6006 / WhatsApp Line 064 539 4108