 You dream home and are ready to sign on the dotted line of that OTP while tonight We talk everything you need to know before you put that offer to purchase in. This is the private property podcast My name is to me. Let's unpack My guest tonight is Gary C8 at Stegmans Incorporated. We're going to be talking everything and anything you need to know before you sign that OTP Gareth good evening, and thank you so much for joining us Hi to me. Thank you so much for having me It's an absolute pleasure So I just found my dream home and I'm ready to put in that offer to purchase so that I can move in What are some of the things that I need to start with the title deed? The title deed is what tells you who the current owner is what type of property it is What title conditions or anything they are so if you looking to enter into an OTP and you want to maybe Draft it yourself if you haven't got a state agent or even if the state agent comes to you and you want to check it You should always check it against the title deed just to ensure that the that the nature of the owner is correct Sometimes people think the owner property, but it's actually For example in a company or a trust instead of the owner's name a personal name and The property description and things like that So we would always start with the with the with the title deed and perhaps a deed search Just to check exactly what the true status is of the property and the ownership And is this standard process that's followed for for all properties or when one is Starting and embarking on the process of of putting in an offer to purchase and how long and particularly is this is this process Okay, well how long is a piece of string Put a put a time frame to property transactions because everyone's unique and therefore to your first question as to What was the process that we would we would follow? When entering into an offer to purchase an offer to purchase is is made by the purchaser to the seller when the seller accepts it becomes a deed of sale and Is able to be registered in the deeds office in other words the transfer of ownership is able to be registered So so the process would basically be to determine the nature and description of the property as I mentioned before the Nature of the seller whether their company trust whatever it is and the same would apply to the purchaser Are you going to buy it in your own name or you're going to buy it in a in a trust in a company? You need to decide who's going to be the owner And then you would obviously need to know the purchase price And not only need to know the purchase price. You would know how it's going to be paid Is there going to be a 10% deposit 20% deposit zero deposit? And is the balance going to be financed or From the sale of another house So you would need to know not only the purchase price, but how you're going to pay it Then you would Perhaps put in some suspense of conditions and suspense of conditions are basically conditions that hold up the contract Temporarily hopefully Until they are fulfilled if they are not fulfilled the contract Falls away and becomes null and void If I can give you an example the most obvious example is that it's subject to finance So if I can get a bond for the 80% that are over above the deposit Then the transfer will proceed if I don't it falls away and my deposit is paid back to me and the seller can go and try and find another purchaser So, yeah, and then every transaction is unique. So sometimes there's a few special conditions Maybe relating to the fixtures or fittings or something like that So, yeah, that's that that would be the the basic process in entering into An offer to purchase and as I said that becomes your deed of sale At sometimes or in some instances Individuals are doing this themselves. You mentioned earlier that property practitioners sometimes are not involved in this process of One entering into offer to purchase. What advice would you give to somebody who is facilitating this process themselves? My first advice would be don't do it The second thing, yes, okay in all seriousness, you should get Expert assistance, whether that be through an attorney or an experienced estate agent You are better off to have someone who has done many many many many transactions Rather than trying and do it yourself. But if you're going to do it yourself Bear in mind those elements that I I discussed earlier the nature of the party's description of the property The purchase price, how it will be paid and so on And then look very carefully at whatever example you're going to use for your offer to purchase and make sure that you get it from a reputable source I'm sure that private property is has got many resources that that they make available Um But there are there there could be some one or two others don't get it from your Mother's uncle who once sold the house 20 30 years ago the law changes on a daily basis. Yeah, make sure you've got an up-to-date example that you are going to use If you decide to do your own but as I said Keep that as a final resort most estate agents If you're selling your property through an estate agent, yes, you'll pay Agents commission But I think it it could be well worth while in the end And also if you if you're not if you've got a private sale rather go to an attorney Most attorneys if they're going to do the transfer don't charge too much or sometimes even give a way that offer to purchase for free On the basis that they will be Belling for the transfer Sure. No, definitely. And thank you so much for that. You know, um, we we've heard these at these bright conversations or by the grapevine that most people want to do private sales because they think Property practitioners are going to take money away from me and they're going to give me less You know what obligations do property practitioners have to those people who are actually selling homes? And are there specific things that they are meant to have in terms of the offer to purchase Look, I think you need to make sure that your property practitioner is a registered property practitioner Um, with the, um, I think it's a property practitioner's counsel or something. Now the old EAB estate agents affairs board Um, and you need to definitely make sure that they have a valid fidelity fund certificate In order to ensure that it's a legitimate and reputable agent that you are dealing with Um, we hear so many stories of agents taking a deposit or something and and Moving off with it and the same actually applies to attorneys. I'm Very sad to report that that there are horror stories out there and you can only do your own due diligence on the Experts that you choose to use whether that's an estate agent or an attorney or any other person in the process of a valuer property inspector Bond originator evidence that you use you you can uh in these this time age relatively easy very far very far their reputation and also just see that they have the Valid certificates and so on in order Sure, um, you know coming to the actual contracts or coming to the actual Closers that are involved in the contracts or of the offer to purchases. There's often a 72 hour provision that is given to to That is used in contracts, you know, rather that provides information for for people who actually Who that facilitates that conversation? Um, are there any other things or any other clauses that That should be in the offer to purchase that sometimes one should look out for to understand Exactly how the offer to purchase supposed to be Okay, um look Obviously the if we just go first into the 72 hour Closer 72 hour clause basically says that if you have a offer that is subject to suspense of conditions Then the seller can take other offers And if they receive an offer that is not subject to any suspense of conditions Then the person in the the buyer in the first offer must immediately perform in other words If it's suspensive upon the buyer Putting down a deposit Or or something like that or selling the other house. They must immediately perform Within 72 hours. That's what's called that that that clause and then The the sellers obviously more advantageous for the seller to have a non-suspensive offer So so they would then move on to the second offer because it's highly unlikely that you Either can obtain finance or sell your house or whatever the suspense of condition is within 72 hours So that's so that's that that clause Regarding your question as to what other clauses people should look out for the clause that is most Subject to litigation and if you if you go and search footsteps and latent and patent defects And and even since the introduction of the consumer protection act that was meant to Clarify to a certain extent There's such a vast amount of of litigation from The beginning I don't know the early 1900s until now And it's quite obvious why that is because Something that might be an obvious defect to me might not be an obvious defect to the next person and So there's a debate to erupts as to whether it's a latent patent or or what kind of defect it is and and whether the It's covered by the foots to its claws or the consumer protection act. So obviously that that is a A clause that leads to a lot of disputes between buyers and sellers and a lot of it ends up in the courts But I think the the most important ones for me that that people don't seem to realize Is firstly that by signing the offer and accepting the offer you're entering into a legally binding contract It's it's just because it's called an offer and not an Contract or an agreement of sale or something doesn't mean there's not legal consequences to you signing it So please please please don't get signing things And assume that there can be no consequences in the law generally if you sign something there are consequences. So Yeah, that's that's the one thing about it is is is realize that when you sign and read all of the terms to to know what you're signing And the second one is people often see the suspense of condition of obtaining finance as a route to get out of a deal in other words the they enter into a deal And they find another house the next day that they would prefer and and then they they say Okay, no the suspense upon them getting finance. They couldn't get finance If you don't try and get finance the seller can still hold you to account. You actually got to make an effort It's called constructive fulfillment in law, but it basically means that that if you undertake You can you cannot rely on your own laziness or whatever as an excuse to escape a contract Sure such great insights there and I'm already learning a lot and it looks um well the The the assumption a lot of times is that only the the buyer is protected And I think now with what you're telling us now is that also the person who is selling the house can Form or get some kind of protection in terms of this agreement What other things in terms of this from the seller's perspective? Would they be able to to to get protection from like in terms of That that offer to purchase once they have received the offer to purchase. Can they start looking at this as as a done deal Well, once they accept the offer to purchase. Yes, they can start looking at as a done deal As I said, there could be suspense of conditions that hold up the implementation of the of the contract um And if those conditions are legitimately not fulfilled then Both parties would walk away and in law we use a nice latin term Null and void ab initio and ab initio basically means from the beginning So so it would be as if the the contract never existed And the parties are entitled to be restored Again, there's another latin terms to the status quo anti which basically means to the status quo before In other words the position they were in before they ever signed anything sure Now let's just bring it back for um the the seller in terms of what what are some of those reasons that They could decline on which basis could they now decline or some of the things that they need to They need to look out for in the offer to purchase that can allow them to decline or See if a deal might just go south From a seller's perspective that is From the from the seller's perspective. Okay. Um, look, we've we've We've already discussed the 72 hour clause. Um, there are other there's a there's a clause Cooling off clause is is generally what it's called Where it says that um if within five days the seller wants to walk away they can Um, generally that clause is either inserted In terms of section 29a of the alienation of land act Which means that the value of the of the transaction must be less than 250 000 rand and as you know in this day and age There's a really really Property transaction below that value Or alternatively in terms of section 16 of the consumer protection act, which Um also allows the the the purchaser to walk away from the contract within five days Um, but again, there are there are Conditions in the For example, it must be as a result of direct marketing and and others that that would allow the the the seller to escape As we've just discussed all along now is generally Once you've signed something there are consequences and uh, and yes They are always loopholes and and so on and uh clever attorneys might find a gap for you, but don't count on it Sure No, thank you so much for for such great insights gareth and just any more advice before we wrap up our conversations, right? Yes, uh, always read the contract whether it's your own attorney your own estate agent your own You dirt your obviously gonna read if you dirt yourself Or the example that you're using and and read every clause because yes a lot of them are standard and Um, for example, it says if it applies to a male that applies to a female one gender and the other That's all standard clauses and they're in all the contracts in there But just read through everyone just to make sure there's there's nothing hidden in there That could meet your detriment and if you can obtain expert advice Well, thank you so much for that and you know, you don't want to turn A dream home into a nightmare. So thank you so much for the insights that you've given us tonight and have a good evening Thank you very much to me. Cheers everyone. Cheers And that's how we wrap up the conversation tonight read that offer to purchase through and through whether you are the buyer or Ensure that you know exactly what you're getting yourself into and remember The right amount of property information might just be what you need to get yourself back on that property a game Thank you so much for joining us tonight as we talk everything and anything property Till we see you again right here on the private property podcast. Have a good night