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An Offer to Purchase (OTP) is a legally binding document that outlines the terms and conditions of a property sale in South Africa. Several key clauses should be clearly understood by both buyers and sellers, as they define the terms of the sale and protect the interests of both parties.

Here are some of the most important clauses:

1. Purchase Price and Payment Terms

This clause details the agreed purchase price for the property and the payment method. It typically includes:

• The amount of deposit (if any) that the buyer will pay upfront.
• The balance of the purchase price and whether it will be financed through a mortgage bond or paid in cash.
• Timeframes for making these payments.

2. Suspensive Conditions

Suspensive conditions are conditions that must be met before the sale becomes final. Common suspensive conditions include:

Bond Approval: The sale is conditional upon the buyer obtaining bond finance from a bank. If the buyer cannot secure a loan within the agreed time, the offer to purchase can be canceled.
Sale of Another Property: In some cases, the buyer may need to sell their current home before they can proceed with the purchase.

3. Occupation Date and Occupational Rent

The occupation date is when the buyer can physically take possession of the property, which may be before or after the transfer of ownership.

Occupational rent is payable if the buyer takes occupation before the transfer is complete or if the seller remains in the property after the sale is finalized. The amount of occupational rent should be stipulated in the OTP.

4. Voetstoots Clause

The voetstoots clause, meaning "as is," is often included in the OTP. This clause states that the buyer accepts the property in its current condition, including both visible and hidden defects. However, as mentioned earlier, the seller cannot hide known defects, and the buyer has the right to inspect the property before finalizing the deal.

5. Fixtures and Fittings

This clause outlines what fixtures and fittings are included in the sale, such as light fittings, built-in cupboards, or appliances. It’s essential to be clear about what stays with the property to avoid disputes. Anything not mentioned here will not automatically be included in the sale.

6. Transfer and Legal Costs

This clause explains who will pay the transfer fees, which typically include:

• Transfer duty (a tax payable by the buyer).
• Conveyancing fees for the legal work involved in transferring ownership of the property. The buyer is responsible for most of these costs, and it’s important to clarify the amounts upfront.

7. Breach of Contract

This clause covers the consequences if either party fails to fulfill their obligations. If a buyer or seller breaches the terms of the OTP, the non-breaching party can cancel the agreement and may claim damages. The OTP will outline the steps required for rectifying the breach or terminating the agreement.

8. Agent’s Commission

If an estate agent was involved in facilitating the sale, the OTP should clearly state the agreed commission, who is responsible for paying it (typically the seller), and when the payment will be made (usually upon transfer of ownership).

9. Special Conditions

This is a section where any additional terms unique to the sale can be included. For example, the seller may need to repair certain defects, or the buyer might need to obtain specific approvals or certificates before the sale can proceed (like electrical compliance or gas certificates).

10. Timeframes and Deadlines

Deadlines for various actions are crucial in any OTP, including:

• When the buyer must obtain bond approval.
• When the deposit (if required) must be paid.
• When the transfer process must begin and conclude. Failure to meet these deadlines can lead to cancellation of the sale or penalties.

Conclusion

These clauses provide the framework for a smooth property sale. Buyers and sellers should carefully review each clause before signing the OTP and seek professional advice from attorneys or conveyancers if necessary.