The Validity of a Signed Offer to Purchase

The Validity of a Signed Offer to Purchase

As soon as the Seller accepts and signs (as per the Alienation of Land Act of 1981) the Offer to Purchase (hereinafter referred to as the “OTP’) it becomes a valid agreement of sale. If the seller verbally accepts the Offer but does not sign it within the stipulated time period, no contract exists.

Author: Aiesha Isaacs

As soon as the Seller accepts and signs (as per the Alienation of Land Act of 1981) the Offer to Purchase (hereinafter referred to as the “OTP’) it becomes a valid agreement of sale. If the seller verbally accepts the Offer but does not sign it within the stipulated time period, no contract exists.

Once a decision is made to purchase a property, a written and signed OTP must be submitted to the Seller which contains the material terms on which the Purchaser is willing to purchase the said property.

An OTP in most instances is prepared by the estate agent mandated to sell the property on the Sellers behalf and is thereafter presented to the Seller once an offer has been made by the Purchaser.

An offer cannot be withdrawn after signature and thereof the offer is regarded as irrevocable. The offer will have a clause specifying a period of time in which acceptance by the Seller is required, such is usually a few days after it has been signed. You may therefore not withdraw your offer up until that period has expired. The Seller has the right to accept the offer at any time during the specified period.

The period in which the Seller has to accept or counter an offer will depend on the time period by which the Purchaser is prepared to allow him to do so which should be stipulated within the OTP. If no acceptance or rejection transpires during this period, the offer will lapse. Should the Seller however be willing to accept the offer after the expiry date, a new offer will need to be drawn up and signed by all parties.

An estate agent may never withhold any offers from the Seller, he/she is compelled to submit the signed OTP to the Seller regardless of the amount at offer.

One must note that even if the Seller has provided a mandated selling price which the Purchaser has agreed upon, the Seller is not obliged to accept it. Should the Seller reject the offer, he may still be liable to furnish the estate agent with commission as the agent would have completed the mandate however, the Seller has the right to elect who the property is sold too.

An OTP does not have to be drafted by an estate agent, a Purchaser is entitled to compile one however, an attorney or estate agent will be better equipped to draft it as they have more experience and expertise regarding same.

An offer which is signed by all the necessary parties becomes a binding contract. It is important to note, once an offer is made by the Purchaser, he/she is not simply expressing an interest in the property, he/she is declaring a specific intention to purchase it.

An escape clause often referred to as the 72-hour clause is a condition within the sale agreement which affords the Seller the right to cancel the contract if he receives a more favourable offer from another Purchaser. This clause is usually present when the Purchaser is given time to obtain a bond or sell his existing property. In this instance a clause may be included stating that the Seller will continue marketing the property, and should a more favourable offer be obtained from a prospective Purchaser then the initial Purchaser will have 72-hours to remove the clause indicating that the offer is subject to obtaining a bond or the selling of his existing property and furthermore commit to the sale unconditionally, failing which the offer will be cancelled and the other prospective Purchaser’s offer will proceed.

Provided that both Parties comply with their obligations under the OTP, neither has the right to cancel the contract of sale. If obligations of the contract of sale are not fulfilled by either party, the said party will be in breach thereof. For a more in-depth explanation of this process, kindly contact the offices of VTC where our team of Property Law experts will be readily available to attend to any of your queries or assist you with the purchase and/or transfer of your property.

Like this article? Share it to your network.

Share on facebook
Share on linkedin
Share on twitter