For many home buyers, the intricacies of making an offer to purchase (OTP) remain a mystery.
Essentially, an OTP is an agreement that contains the terms and conditions for the purchase and sale of a property. Both parties need to come to an agreement about all sorts of issues before the document is signed. Everything that is agreed upon must be listed in the OTP document, including the date of occupation, occupational rent, fixtures and fittings and the conditions of sale.
Date of occupation: This is the date that is agreed by the buyer and seller, on which the property will be vacated so that the seller can move in. Sellers need to move out of their homes by a certain date, so it is essential to clarify the date beforehand so that both the seller and buyer can make moving arrangements accordingly.
Occupational rent: Occupational rent is a monthly amount that is paid to the seller by the buyer, which allows the buyer to occupy the home before it is registered in his name. This rental price is agreed on by both parties. If the seller needs to stay in the home after it has been registered in the name of the buyer, he has to pay occupational rent to the buyer as he will be legally staying in the buyer’s home.
Fixtures and fittings: Both parties need to agree on what stays in the home and what goes with the seller. As a rule of thumb, anything that is nailed, glued or screwed down has to stay and everything else can go. Very often, the two parties will come to an arrangement about things like
specially-fitted curtains and pot plants. Everything must be written into the contract as, if not stated, confusion can cloud what was promised and what was not.
Conditions of sale: In order for a buyer to get a mortgage to finance the purchase of a home, the OTP may include a condition that the sale is subject to bond approval being obtained from the buyer’s bank within a realistic amount of time. This usually comprises a time limit of seven to 10 working days. In some cases the sale can be subject to the buyer’s home being sold first, and the time limit for this also has to be agreed upon. Once confirmation has been received that the loan has been approved or his home has been sold, then the buyer must notify the agent immediately to ensure that their offer becomes unconditional, enabling the process to continue. This is an essential part of any sale as, should the OTP terminate, the entire agreement will become null and void.
Written in association with RE/MAX
