The offer to purchase agreement. An attorney explains what should be in a sales agreement and unpacks the various clauses a first time buyer should be aware of.
Presenter: Welcome back. We're live on SACBC 3. This is your feel-good breakfast show, and we're calling all first-time home buyers. Yes, calling on you to sit a little bit closer as we continue our series in giving you expert advice on making that very important first home purchase. And this morning, we're joined by Attorney Lisa Boniface who's here to give us advice on making the offer to purchase, all that it entails and, of course, all the all-important clauses that you need to consider when it comes to that contract. Listen up.
Once the buyer has decided the property they want to buy, it is time to make the offer to purchase, making an offer to buy the home. Now we have Attorney Lisa Boniface in studio to take us through the various clauses you need to go through.
I know buying property is a huge commitment, but first of all, what is the offer to purchase?
Lisa Boniface: So, Zoey, the offer to purchase, otherwise known as the deed of sale, it must, at the very least, contain all the [essentialla?] in terms of the Alienation of Land Act. So it's a binding agreement between purchaser and seller setting out the parties, the property description, and obviously the price that's been decided upon. And it must be reduced to writing.
Now let's talk through some of the clauses when it comes to finalizing your property.
Lisa Boniface: I think what's very important for first-time buyers is the voetstoots clause. We've all heard the phrase voetstoots, I'm sure, at some stage of our lives. It's found in many sale agreements. And what first-time buyers must realize is that you're buying the property as is. As it stands, with all the patent and the latent defects. So the patent defects could be things that you can see with the naked eye. For instance, a tile is missing or a crack in the wall. The latent defects may be something that's found at a later stage. For instance, leaks in the pool, or after a thunderstorm when the rain comes through, that could be seen as a latent defect. But when you sign that sale agreement voetstoots gives the seller a huge amount of protection, and you're buying that property as is, with all of those defects. And I think for a first-time buyer, make sure you go into every single room, ask all the right questions, get your seller to fill out the seller's declaration, which all agencies hold, and just to make sure that they are protected.
Okay. So I think for us as the buyer, we also want to be protected in some way. What protection is there for the buyer?
Lisa Boniface: Disclosure, disclosure, disclosure. So you need to ask the right questions. The seller may not be aware of certain defects. So if you want to get a home inspector in, do that. Bring in an engineer if you're concerned about the roof. But really just safeguard yourself. Don't walk into the property in the evening and sign an offer to purchase.
And when it comes to occupational rent, let's say the seller still has occupants or they're still in the home. What is in it for the buyer?
Lisa Boniface: The occupational rental clause is there for two reasons, Zoey. The first one is that the buyer may need to occupy the property prior to registration. For instance, he's relocating. He may be selling the property he's currently in. The second big reason we have an occupational rental clause in all our offers to purchase is that the seller may need to remain in the property after registration. We've often had cases in our office, Zoey, where the purchaser may think he's moving in at 8 o'clock in the morning and all the trucks have arrived, but in fact, the seller's only moving out that night. So that can cause some difficulty. So I think things to remember there would be your amounts negotiated upfront, as well as the time on a specific date.
Okay. So at least everything has been decided upon upfront. And I've heard of the suspensive clause. You mind shedding some light on that?
Lisa Boniface: There's two types of suspensive conditions-- well, two most common types, Zoey. The first one is the sale is subject to the purchaser obtaining a bond. It's a future event that needs to occur, and it's unknown when signing that offer to purchase. So it allows that purchaser to send the OTP to the bank and obtain the finance without being liable in terms of the agreements. The second most common type of suspensive condition is the sale is subject to the purchaser selling his property. Important here for first-time buyers to realize that there's a time frame attached to these. If the suspensive condition is not fulfilled within the time frame then the deal becomes null and void. It's unenforceable in law. So as attorneys, we ensure that all the time frames-- we keep a diary of all the time frames, and we constantly watching those suspensive conditions.
So you need to keep that in mind.
Lisa Boniface: Yes. Definitely.
Okay. Well, Lisa, thank you for shedding light on that. I think it's really important, and also for you to make sure that you understand all the clauses and that you are prepared for each. Now buying a home, it is exciting, but if it's not done right it could potentially have difficult implications.
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