Every Offer to Purchase is a legal document that will govern one of the most significant financial transactions of a person's life. Most OTPs follow a standard template, and most of the time that template is adequate. But in complex transactions, the template alone is not enough.
For Morné Prinsloo, local agent for REMAX Town and Country Roodepoort and Krugersdorp, there are specific provisions that he insists on, and one that he considers entirely non-negotiable regardless of how straightforward a transaction appears to be.
The clause that is never left out: A specific and time-bound suspensive condition
In South African property law, a suspensive condition is a provision that makes the operation of the agreement dependent on the occurrence of a future event. The most common are bond approval and the sale of the buyer's existing property. A suspensive condition that is vague, open-ended, or poorly worded is one of the most expensive mistakes an agent can allow into an OTP.
"I insist on two things in every suspensive condition I am involved in. First, the condition must specify an exact timeframe within which it must be fulfilled. Not a vague period, not a reference to reasonable time, but a specific date or number of business days within which the condition must be fulfilled or waived. South African courts have grappled extensively with ambiguous suspensive condition timeframes, and the consistent message from our jurisprudence is that vague timeframes invite disputes.
"Second, the condition must specify precisely what constitutes fulfilment. For a bond condition, this means specifying the loan amount, the lender category, and the rate parameters. An OTP that simply says the sale is subject to the buyer obtaining bond approval without specifying the required amount and terms gives neither party clarity on what constitutes a successful bond and what does not," he says.
Why This Matters More Than Most Agents Realise
Prinsloo says an OTP with a properly structured suspensive condition protects both the buyer and the seller in ways that become immediately apparent when something goes wrong. If a bond is declined, a clearly worded and time-bound suspensive condition allows both parties to understand precisely when the agreement lapses and when the seller's property is free to be remarketed. If a suspensive condition lapses and a party disputes this, a precisely worded clause is what the court or the PPRA will turn to.
"In complex transactions, I also insist on a properly worded breach clause. This specifies what constitutes a breach, the notice period within which the innocent party must notify the breaching party, the remedy period within which the breach must be remediated, and the consequences that follow if it is not. Without a clear breach clause, a seller whose buyer simply stops communicating may find themselves in a legal grey area about whether the agreement is still alive, which can prevent them from accepting another offer or remarketing the property," he says.
The 72-Hour Clause as a Companion Provision
In any transaction where the buyer has a property to sell first or where any other significant suspensive condition is present, I include the 72-hour clause alongside the suspensive condition. These two clauses work together. The suspensive condition defines what must happen and by when. The 72-hour clause gives the seller the right to continue marketing while the buyer fulfils their condition, and the mechanism to activate that right if a better offer arrives.
Together, these provisions mean a seller is never fully exposed during a waiting period. The combination of a specific and time-bound suspensive condition with a properly worded 72-hour clause is, in my view, the minimum standard of protection that any seller in a complex transaction deserves.
A Note on Occupation Date
One provision that receives less attention than it should is the occupation date and the terms of occupation before transfer. This clause needs to specify the exact date, the daily or monthly occupational rent, who bears rates, utilities, and insurance during the occupation period, and what happens if transfer does not occur on the anticipated date. "I have seen occupation arrangements cause more post-signing disputes than almost any other single provision in an OTP. Specificity here is not pedantry. It is protection," says Prinsloo.
Additional information that agents from the Seeff Property Group that agents can share with potential buyers:
#1 - You can only put one offer to purchase in at a time. It is legally binding, so be sure that you can meet the conditions.
#2 - Offer a competitive price for the property if you are a serious buyer, or you may risk losing out to another buyer.
#3 - Research the area and current prices before you start your house hunting to avoid disappointment.
#4 - Use online property portals or agency websites to shortlist a few properties which fit with your price range before you start viewing.
#5 - Always get a home loan prequalification done so that you are empowered with the knowledge of how much you can buy for.
#6 - Pay a deposit as extra security. While the current bank deposit requirements average at around 10% of the purchase price, it will depend on the bank and property itself.
#7 - Present a serious offer with minimal conditions to entice the seller to accept, and to avoid disappointment and misunderstandings.
#8 - Keep contingencies to a minimum by avoiding unnecessary requirements as these may be off putting to the seller.
#9 - Know that you are realistically able to afford and be responsive and quick with a counter-offer if needed to avoid disappointment.
#10 - Ensure your paperwork is in order, including all the necessary bank and FICA requirements, so that the deal can move forward quite quickly.
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