The Offer to Purchase, Deed of Sale, Agreement of Sale … similar documents just worded differently depending on the circumstances surrounding the transaction. Is the purchase “offering” to buy the property, is the seller wanting to sell the property or is a mutual agreement signed simultaneously? Either way, probably the most important document signed in the sale of an immovable property, a residential house, township, flat, business premises or vacant land.
For sake of convenience we will use the term “Offer to Purchase” referring to all of the above documents, particularly as majority of immovable properties are sold with a purchaser first putting in an offer on the property.
The Offer to Purchase (“OTP”) is the base document for the sale, a contract between a willing buyer and willing seller. The contract does need to comply with the basic elements of a contract i.e. identification of parties, any offer and acceptance, consideration, meeting of minds, competency and capacity of signatories and legality of the contract. The further essentiale of an Offer to Purchase, when dealing with immovable property is that the contract has to be in writing.
In an Offer to Purchase certain more property specific clauses can be inserted, such as suspensive conditions eg securing of a mortgage bond, selling another property first or payment of a specific amount before a date. A suspensive condition is a condition that is suspended and only once fulfilled will the contract come into full force and effect. Other conditions (not suspensive) would include presentation of a compliance certificates eg electric, gas and fence. In certain area an entomologist’s report is required and a condition, relating to wooden structure where beetle destruction is prevalent.
Other clauses may be inserted relating to occupational rental, paid by the purchaser if early occupation is agreed to, i.e. occupation prior to the property being registered into the purchaser’s name. Another critical clause is the breach clause, which dictates to the parties what the procedures are to follow should any party not perform in terms of the contract and what remedies are available to such aggrieved party.
More specific clauses are sometimes also found relating to the seller wishing to continue marketing a property while the purchaser seeks mortgage finance or attempts to sell their existing house and while these “suspensive conditions” are being attended to, if the seller has another, similar or better, offer that the first purchaser is notified and given 72 hours (the continue marketing clause is sometimes also referred to as the “72 Hour Clause”) to either waive any of the suspensive conditions or speed up their fulfillment. Should the suspensive conditions not be fulfilled or waived the second offer will come into effect and be proceeded with.
Certain clauses relating to fire certificates, indigenous plants, building plans and plumbing certificate requirements also find their way in an agreement of sale from time to time, but these would be seller/buyer specific and depending on the property requirements.
An important clause that has to be incorporated in terms of the Property Practitioners Act relates to the seller’s mandatory disclosure of any defect to the property and its condition. This would go hand in hand with the voetstoots principle, where a seller is protected from damages in terms of defects, patent (visible on sale) and latent (becoming visible after the sale), if same as disclosed and not intentionally hidden to promote the sale of the property.
Any amendments should be done in writing, in the form of an Addendum and here is it important that if any amendment is to be done, i.e. extension of time, in relation to suspensive conditions, that the amendments be done prior to the expiry date. If done after expiry the Offer to Purchase may have to be re-signed, or take the form of a Revival Agreement, reviving the old Offer but amending the terms.
It is critical to ensure your Offer to Purchase is as accurate in terms of parties, property, purchase price, terms of payment and also any special conditions agreed to between the parties i.e. to fix a wall, compete the kitchen cupboard or clean out the garden or pool – verbal agreements are so easily misinterpreted and give rise to unnecessary disputes between parties, parties and agent, agent and conveyancer and can make, what should be a joyous event in a person’s life, so traumatic. Work with a reputable agent and with Tuckers Incorporated, experience is the key … to your new home.
By Hayley Appel – Attorney, Conveyancers and Notary at TUCKERS ATTORNEYS