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You have just seen the house of your dreams and the estate agent gives you an offer to purchase document to sign. However, do be extra careful because this document could well mean the difference between a smooth transaction and a lawsuit.
Make sure you understand the implications of signing the document because you might just be signing away your hard-earned cash. The offer to purchase is a formal document offering a certain price for a specific property.
Experts say it is vital to give it some careful thought because once your offer to purchase is signed by both you and the seller, it becomes a binding legal contract known as the deed of sale.
It underpins everything the various parties involved commit to do to make the transfer of the property legal and as efficient as possible.
How do you avoid being offhand when signing an Offer to Purchase?
First National Bank and other experts advise the following:
l Ensure that the description of the property is correct as described in the title deed. Note any exclusions, for example light fittings and so forth.
l Are the buyers' and sellers' details and property addresses documented clearly and correctly? Ensure that the purchase price is written in correctly.
l Ensure that the estate agent's commission is in line with what was agreed upfront.
l Ensure that the offer is made subject to obtaining a minimum amount from a bank.
l Should the buyer be in a position whereby they are relying on the proceeds of the sale of an existing property, this fact needs to be stated clearly in the Offer to Purchase.
l As the buyer, you have the option to put the seller under pressure to make a decision regarding the offer. This normally includes a time limit in which your offer remains valid for acceptance.
l Paying a deposit on the property is not obligatory, but should you decide to do so as a sign of good faith, you must ensure the details of the deposit are recorded in the Offer to Purchase.
l Should you be paying a deposit on the property, you should also ensure that there is a clause relating to the interest on your deposit. This clause should state that the deposit must be held in an interest-bearing trust account and that you are entitled to receive interest on your deposit.
l There are certain items within the property and house that are assumed to be part of the overall sale. These include fixtures and fittings, such as built-in cupboards, fitted carpets and light fittings to name but a few. If you are, however, unsure about any specific items, ensure that they are recorded in the Offer to Purchase.
l There are two dates that are critical for the Offer to Purchase. The date of occupation, that is, to physically occupy the property, and the date of possession of the property. The date of possession can, however, differ from the date of occupation and can be defined as the day on which you take responsibility for the property.
l Should you move into the property before it is transferred into your name, you will be required to pay occupational rent until the property is legally registered and transferred into your name at the Deeds Office.
This amount must also be specified in the Offer to Purchase and is normally calculated as a percentage of the purchase price.
l Any defects or faults or even renovations that are still to be completed prior to transferring the property must be recorded in the Offer to Purchase.
Property is usually sold "voetstoots" or "as is", which means that you purchase the property with all its latent defects and cannot claim damages from the seller arising from these defects if you discover them at a later stage.
l Do remember that by law, sellers are required to provide the buyer with an electrical compliance certificate. In some cases, if you should be applying for finance from a bank, they may require additional documentation such as engineering certificates or certificates against certain pests, depending on the age and location of the property you are purchasing.
l The "cooling off" clause valid for five working days from signing the Offer to Purchase protects the buyer from making rash decisions by allowing him or her to withdraw from a property sale.
However, it only applies to properties of R250 000 and less. If you have paid a deposit, this must be refunded within 10 working days.