Author: Tyson Properties
20 March 2020
7 Essential Checks To Do Before Youi Sign an OTP
You’ve fallen hard for the perfect family home nestled along the shores of Cape Town’s Atlantic Seaboard. Your finances are in order, and you’re ready to put in an offer to purchase. But it’s easy to get caught up in the moment and make mistakes when buying a home, which is no surprise as most new homeowners have a lot going on. So, before you sign on the dotted line, here’s what you should know.
1. Read the OTP carefully to see what you’ve agreed to buy
Buyers should know that a signed Offer to Purchase constitutes a legally binding document once accepted by the seller. If the buyer defaults, the seller can take legal action to ensure that they uphold the conditions of the agreement. With such enormous implications at play—make sure you thoroughly understand the offer to purchase before you sign the dotted line. Inaccuracies lead to void contracts.
2. Inaccuracies lead to void contracts
Mistakes can easily cause setbacks, so start by checking the details throughout the contract. Make sure that your details, the seller details, commissions, date of the offer, date of occupation, and the offer expiry date are all correct and defined.
3. The property description must match the title deed
When you purchase a property, you purchase the surrounding land and any structures attached to the property. The OTP must record all the necessary information as reflected on the deeds, such as a detailed description of the property, erf number, its exact measured size, the original purchase price, and any sale restrictions.
4. Verify the purchase price is listed correctly
Naturally, the purchase price is the most important part of the clause. Ensure that it is listed correctly, and do not overlook to create an offer expiry date to limit the time for the seller to accept, reject, or make a counteroffer.
5. The “Conditions of Sale” Clause
The buyer is permitted to add clauses to the contract stipulating that the seller must meet certain conditions and repair defects before the sale goes through. It is also necessary to attach a list of movable items that the seller has agreed to include in the sale, such as satellite aerials, light fittings, security cameras, swimming pool equipment, garden furniture or solar panels.
6. Deposit and Occupational Rent
Most times, buyers put down a deposit for the property which is held in an interest-bearing account until the transfer is complete. If you do so, include it in the Offer to Purchase. Also, specify the date on which you will move in. Should the seller need to remain in the property, you may charge them occupational rent. Should you need to stay the house before the occupancy date stipulated, it entitles the buyer to charge you an agreed-upon occupational rent.
7. List all certifications in the OTP – and who’s paying?
Home inspections and assessments are an essential part of the real estate transaction. Assessments and compliance certifications such as an electrical certificate, rates clearance certificate and pest control certificate must be listed in the OTP.
The agreement must also state that the seller or the buyer will pay for these assessments and certifications. Once you have considered the Offer to Purchase and are satisfied with all the stipulated conditions and details, you can finally sign the document. Within a few weeks, you will be notified whether the offer has been accepted – and then you can apply for your home loan.
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