The notaries’ fiduciary role in regard to deposits in promise of sale agreements

Abstract

This research study provides insight into the current deficiencies resulting from the lack of legal certainty about deposits given on promise of sale agreements, and the corresponding fiduciary role of Notaries. While it is customary that on a promise of sale agreement, the purchaser pays a 10% of the purchase price as deposit on account, this is merely a legal custom, rather than a requirement provided in the law itself, which has consequently led to inconsistent decisions in Court. Moreover, the need to delve more into the fiduciary nature of Notaries was felt because of recent events that left clients desperate to retrieve their lifesavings. Although the studied judgements prove otherwise, the law attempts to forbid Notaries, indirectly and directly, to misappropriate their clients’ funds in both ordinary law and in the Notaries’ Code of Ethics Regulations. Moreover, the obligatory system of depositing funds in the Notarial Clients’ Account as per Article 24A of the Notarial Profession and Notarial Archives Act, has not yet been enforced, and to date, funds held in escrow with Notaries still form part of their personal estate. The purpose of conducting a comparative study was to project a more ascertaining regulatory system with regards to deposits on promise of sale agreements whereby clients’ funds are always protected, irrespective of whether the escrow agent, has misused such funds inter vivos, or whether it is discovered that he did misuse such funds after his demise. Ultimately, the main objective was to propose a way forward to ensure the protection of clients’ funds, inspired primarily by the comparative study, as well as the extent to which fiduciary law, the Notaries’ Code of Ethics Regulations, together with relevant civil and criminal code provisions are effective ways, or otherwise, for regulating the notary’s behaviour, and serve as a protection to his clients’ funds.