Buying a property is a complex process which involves many steps, processes, and legalities. Understanding everything that goes into an offer to purchase is crucial as it could be the difference between getting your dream home or losing it to a misunderstood clause.

Our bond originators in South Africa specialize in all things property and we can help you understand the legal jargon, clauses, and terms and conditions in your sale agreement.

What is an Offer to Purchase?

An offer to purchase (OTP), sometimes referred to as the sale agreement, is a legally binding contract between the buyer and seller of a property. This document governs the sale agreement entered into by both parties.

Knowing exactly what your offer to purchase means is extremely important because once you make an offer to buy a property, you cannot easily change it.

The sale agreement contract serves to stipulate what exactly is expected from both the buyer and the seller in order for the sale to be successful. It will clearly define what each party must do, how exactly it should be done, as well as which party is responsible for covering certain costs.

Failure to meet these requirements can result in an unsuccessful sale.

Suspensive Conditions in Offer to Purchase

Suspensive conditions are conditions which must be complied with before the sale agreement between the buyer and seller is enforceable. These conditions also have specified due dates. So, not only are the conditions to be met, but they must also be met before the allocated date otherwise the sale agreement is no longer valid.

The most common suspensive conditions in sale agreements for property are:

• Selling your current property
• Securing bond approval

However, there is a variety of other conditions that the seller may deem necessary to include in the sale offer to purchase.

There is a 72-hour clause which allows a seller to continue marketing their property and accept other offers after accepting the conditional sales agreement from the first prospective buyer. In the event of another offer coming in, the seller must inform the first buyer that they have 72 hours to meet their suspensive conditions. If they are unable to meet the conditions, the seller is free to accept the second offer.

Because suspensive conditions can be complex and time consuming to accomplish, it’s highly advised that one condition is dealt with at a time. Additionally, the clause should be set up in such a way that it allows both parties to extend the due date to a later date if there are unusual circumstances which hinder the parties from meeting the conditions.

Phoenix Bonds – Bond Originators South Africa

At Phoenix Bonds, we can assist you with bond origination, pre-qualification approval, residential home loans, commercial bonds, and development approvals.

Contact us to find out more.