The time has come for you to put your name on the dotted line of your Offer to Purchase document (OTP). Do you know what each clause and condition detailed in the OTP means? Many buyers have realised only too late that what they initially thought they would get out of a property purchase is not in fact what they signed (and agreed to) in their OTP document.
While it is standard that your real estate agent takes you through each clause, you can also seek the expertise of an attorney who can go through the contract and explain in detail what your obligations and the sellers’ obligations are.
Here are 5 checks you should do before you sign an OTP
1. Are the parties to the agreement clearly listed?
Have you checked if your details and the seller’s details are correct? It is important to note that the seller of the property doesn’t necessarily have to be the owner.
If a contract is entered into on behalf of a company, the name of the company must be cited as well as the name of the person who is authorised to settle the contract. If a contract is entered into through a partnership, the names of the partners need to be cited in the OTP.
2. Description of the property
Is there a full description of the property and is it correct? When you buy a house, this will include the land around the house including all surface and subsurface soil, foliage such as trees and plants and water facilities.
You should also check if the description of the property is the same as the title deed. A title deed is a document that confirms that you own a certain property. It contains all the necessary information such as a detailed description of the property, its exact measured size, the original purchase price made by the current owner, and any sale restrictions. If any movable items are included in the sale, this should be listed in the OTP.
3. Is the selling price clearly stated?
This is top priority and should be considered the most important fact to check in your OTP. If you are buying off-plan, you should confirm exactly where your unit is in a complex using site plans provided by the developer. You should then check that the unit you are buying corresponds with the purchase price listed.
4. The “As Is” Clause
Also known as ‘Voetstoets’, this clause details all defects of the property. These are known as either patent or latent defects. A patent defect is a clearly visible defect which is seen on inspection. This could be either a broken window or cracks in a boundary wall. The OTP may include a condition to repair certain defects before the sale goes through.
A latent defect is a defect which is not easily seen in an inspection and could be a leak in the roof or a geyser which is not in working condition.
5. Do you understand all special conditions?
Special conditions pertain to additional conditions beyond a standard contract. These can be added at the request of either the seller or buyer and has to be mutually agreed upon. A special condition could be a suspensive clause when the buyer is waiting for a bond to be approved before the sale can go through. This condition suspends all rights and obligations of the buyer until the bond has been approved. A certain expiry date must be specified by which the buyer needs to make payment.
So now you know a little more about what to expect before buying a house so that you can make a more informed decision on whether the property includes all you wish it to include.