Before even getting to the point of signing an Offer to Purchase, we strongly advise that your finances and pre-approved bond details are organised and ready. It is essential that your financial position be as stable as possible, should it change after signing the contract and if it was signed in good faith, it will not be a reasonable and legal consideration to renege on the contract.Once you get to the point where you have checked out the property, or the developer, and are happy to sign an Offer to Purchase you are well on your way to a smooth and beneficial transaction. A signed offer constitutes a Deed of Sale; it sets the precedent for all further legalities around the ownership of the property so it’s important to know all the details.
Here are the first five considerations to take note of in your Offer to Purchase:
1. There is a basic checklist to follow that is covered at the beginning of the contract:
- check all the basic information on the first few pages;
- check the date of the offer (especially if there is a termination clause);
- check that the details of the buyer and seller are correct (known as the parties);
- check the address, or erf number, and ensure that it is in fact the property that you wish to buy;
- check the price offered; and,
- check the commissions payable to the relevant agents.
2. Dates: you’ve checked the offer date in your checklist, now you need to check the date of expiry of the Offer to Purchase as well as the date of occupation and a transfer date. An expiry date is given in order to keep the offer within a certain time-frame, it would be unwise to have an open-ended Offer to Purchase as the buyer could accept it a year later and the seller would be waiting on the buyer indefinitely. The expiry date enables there to be closure should the deal not go through. Occupation date refers to the date that the buyer wishes to physically move into, or start development, on the property, this could be before the transfer date.
3. Occupational rent: if the date of occupation is before the date of transfer (when legal ownership is transferred), the seller is allowed to charge the buyer rent. If this applies to your contract, ensure that the amount payable is clearly stated. It is also advisable to have a clause that limits the seller to charging a pro-rata should the transfer happen sooner than the stipulated transfer date.
4. Deposit: this is often included as a sign of good faith on the part of the buyer. If this is paid, it should be stipulated in the Offer to Purchase and put in an interest-bearing account. The contract should also state that the buyer be entitled to the interest earned when the deposit is released.
5. Fixtures and fittings: these are normally included in the sale by default, but if there are specifics like mirrors, pictures or curtains, these should be individually stipulated in the contract.
These are the top five things to remember BEFORE you sign your Offer to Purchase. Don’t rush, take you time to read everything carefully within the required period.
There is a cooling off period of 5 days, from the date of transfer, but that can take up to several months, so make sure that you know everything there is to know about your contract before signing it. Contact us at Rivigan Property Group for more information.
