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So you think you know the law?

So you think you know the law?

Author: Mireille Barnard
Date: 2023-01-30

"Done! We?ve put an offer in on our dream home? you say excitedly. Have you read the Offer to Purchase(OTP)" Or did you merely enter an amount and sign on the dotted line? Although it is always wise to read any contract prior to signing it, it too can be overwhelming. Many clauses in an OTP is standardised, whilst others are not, here is the starting point to which clauses you should pay extra attention to.

1. The price and timeframe for payment or bond approval. This is very important because it tells you exactly how long after acceptance of the OTP you have to secure the purchase price.

2. Traditionally, property was sold Voetstoots (as it is) but recent legal development have changed this. A property can now only be purchased Voetstoots when it is first purchased from a developer. If anyone else has ever owned or lived in the house a significant amount of time then a detailed patent (faults you can see) and latent (faults you will only notice after living in a house for a significant amount of time) list must accompany the OTP. If anything needs to be fixed in order for an electrical certificate or a pest control certificate (if mandated in you province) to be issued then the Seller will have to pay for its repairs, everything else you are accepting responsibility for once you own the house. Also pay attention to the Fixtures and Fittings clause, you might love the chandelier in the Master Bedroom but the Seller might have stated that it will not form part of the sale.

3. The breach of contract clause it also very important as it lays out your financial liability should you break the contract. It is always important to check whether there is a Continue to Market clause. This clause allows any agencies which have a mandate to keep advertising the property until such a time that the purchase price has been secured. So you might think you have another three weeks to get bond approval only to receive a letter that you now only have 72 hours or you risk losing the property.

4. Lastly make sure that there are approved municipal plans for all structures on the property. Think of the OTP as a negotiation between you and the Seller and know that you can strike out any clause (that legally does not need to be there) or strike and change timeframes as long as both Seller and purchaser agree to the conditions.

Although the above is a rough guide to the important parts of an OTP it is always a good idea to read the whole contract. If you find it too boring and technical send it to us, we will gladly assist.