Important things to know about an Offer to Purchase
Category Property Tips
The important aspect to an Offer to Purchase is to know that it is a legally binding contract and should not be entered into without forethought and preparation.
Ensure you read it properly and ask the agent for clarity when necessary. Seeff highlights a few important provisions as:
Mortgage finance and costs
If you are buying and need mortgage finance, it is vital that you do a prequalification beforehand. You should also obtain a quotation for the transfer and bond registration costs to ensure that you will have the funds available before signing the offer. Even if the property is exempt from transfer duty, there will still be attorney and bond registration costs to be paid by the buyer.
Conditions of sale (or suspensive conditions)
These are usually linked to the buyer obtaining a mortgage loan for a specified amount and/or the sale of a property for a stipulated amount. It is always attached to a fixed timeframe which can be extended by agreement if there is a reasonable chance of success. If these conditions are not fulfilled the offer usually becomes null and void. The buyer, however, cannot exploit this to get out of the deal, for example by not accepting a mortgage loan grant. Once the conditions are fulfilled, the contract goes ahead.
The 72-hour clause
When there are suspensive conditions, this clause allows the seller to continue marketing the property after acceptance of the conditional offer. If the seller receives a better offer within this period, they will notify the original buyer in writing who will then have the option of waiving the suspensive conditions should they want to go ahead with their offer. If not, the offer to purchase will be rendered null and void and the seller will be free to sign a deal with the new buyer.
Fixtures and fittings
The seller should know that anything fixed to the property (fixtures) as seen by the buyer will need to remain and is included in the purchase price. This includes security gates, burglar bars, air-conditioning and light fittings. Fittings are usually movable items such as garden decor, decorative mirrors and shelving which will not form part of the purchase price. The buyer and seller can agree for certain items to remain which should then be recorded in the Offer to Purchase.
Occupational rent
Date of occupation is usually on transfer of the property to the new owner. If the property is available the buyer wants to move in before that day, occupational rent will be payable to the seller. Likewise, the seller may need to stay on longer than date of transfer, in which event occupational rent will be payable to the new owner.
Voetstoots clause and defects
While the inclusion of a "voetstoots' clause affords the seller a degree of protection, he/she remains responsible for latent defects in a property, i.e. faults not easily picked up by a superficial inspection and of a structural nature. While it has been best practice for some time to include a comprehensive property defects disclosure document as part of the Offer to Purchase, it is compulsory under the Property Practitioner's Act.
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Author: Gina Meintjes
