Fine print in an offer to purchase

The offer to purchase a house could be the most important document you ever sign.

It will set out everything from when the property ownership should change hands to exactly what will be included in the deal, whether it's a couch or a cat.

Carol Reynolds, area principal for Durban North and La Lucia for Pam Golding Properties, said an offer to purchase must include who the seller and buyer are, a description of the property and the price that has been agreed, including any commissions.

It should be stipulated how the buyer plans to finance the purchase - a bond or cash - when occupation will take place, and occupational rental, if any. This is usually 0.5% of the purchase price a month.

Once the dates are settled, other key clauses include the voetstoots clause, the breach clause, and the obligations of the buyer and seller.

The seller's obligations include ensuring that building plans have been passed, and getting beetle, electrical and gas compliance certificates.

The buyer's obligations are to comply with the time periods stipulated for payment and to ensure that there are no unnecessary delays.

Buyers need to pay transfer costs before title deeds change hands. These costs are in addition to the purchase price. "First-time buyers are often unaware that they need to pay these costs prior to transfer and they cannot rely on their bond to pay for them," said Reynolds.

If the buyer has to get a bond approved, there should be a clause in the offer to make the entire agreement conditional on getting a bond.

"The sale becomes conclusive immediately upon the bank issuing a final grant quotation, regardless of whether the buyer is happy with the interest rate involved or not. The buyer cannot cancel the sale on the grounds that the terms of the bond grant are not acceptable to him or her," Reynolds warned.

Often buyers will need to sell their property first. "Offers that are conditional upon the buyer selling a property are not conclusive until the buyer has secured an unconditional sale on their property. All bond and other conditions in the purchaser's sale need to be met in order for the second sale to be fulfilled," Reynolds said.

This may mean the seller remains open to offers from other potential buyers. If they get another offer, the first buyer can be put on notice and given a week or two to either sell their house or waive the condition. It is better for buyers to try to sell their homes before house-hunting so they can "offer a clean deal to the seller", said Reynolds.

The clause pertaining to fixtures and fittings can often be highly contentious. Sellers should specify exactly which fittings are to be excluded from the sale.

"If all aspects of the sale have been covered and written into the document, there will be very little room for either the buyer or seller to negate anything at a later stage. For example, certain curtains or furniture may have been specifically manufactured for that particular home, so it would make sense for the seller to include those items with the home. However, the seller is not obliged to leave certain items.

"As a general rule, anything that is nailed, glued or screwed down stays and everything else can go," said Adrian Goslett, CEO of RE/MAX Southern Africa.

The most contentious clause is the voetstoots clause. "This clause means that the purchaser buys the property 'as is' in its current condition as a 'second-hand' property, thereby protecting the seller from patent and latent defects," Reynolds said.

But sellers cannot rely on this clause to protect against defects that are known to them and which they are hoping may be overlooked by the purchaser.

Sellers have to disclose all known defects. If they try to conceal these defects, the purchaser will have a claim against the seller for fraudulent non-disclosure, Reynolds sai d.

The seller must inform the estate agent of any defects before the agent begins to market the property.

A critical final consideration is to ensure that the correct and authorised signatories have signed the agreement. "If the parties are married in community of property, then both spouses need to sign," said Reynolds.

Useful tips for buyers from Adrian Goslett:

Be absolutely happy before you conclude the offer. Once it has been signed and accepted by the seller you will be contractually obligated to that transaction. Read each section of the contract carefully and make sure you fully understand what the document is saying. If you are unsure of any clause in the document, ask your agent to clarify it. You could even get a lawyer to read it and give advice where necessary; and

Once the document has been signed, all negotiations have been concluded and any relevant cooling-off period has passed, your deposit should be placed into an interest-bearing trust account until transfer of ownership is complete. The interest on this account will be for the benefit of you, the buyer, when it is released once the sale goes through.