J. How to Complete an Offer to Purchase

For an offer to purchase (OTP) concerning the sale of immovable property to be legally valid it has to contain, at minimum, the following:

  • Must be in writing
  • The identity of the parties to the contract
  • The description of the property being sold
  • The purchase price
  • Must be signed by the parties.

No additional clauses need to be recorded in the written document for it to constitute a valid contract of sale of land. In the absence of an agreement to the contrary, the common law governs the relationship between the parties regarding those matters which the parties did not agree upon and which have been excluded from the contract. For example, the date of possession, latent and patent defect, etc. are included to avoid conflict from arising between the seller and the purchaser. OTP’s are generally more detailed and include common law clauses for ease of reference.

Must be in writing

(For sake of interest take note that if a purchaser is married in community of property, one purchaser can sign the offer to purchase, without the other one having signed, but it is always safe having both signs)

Unless the agreement between a buyer and seller of immovable property has been written and signed by both parties it is an invalid agreement. No verbal communication or agreement is valid when it comes to immovable property sales. Unless reduced to writing it will not hold up in a court of law should a dispute arise between the parties.

All verbal commitments and/or promises made by a seller to a buyer, or a buyer to a seller, must be reduced to writing and must be signed by both parties. If you, as the agent, have been party to hearing any commitments or promises made it is your duty to write them into the contract and to have the parties sign where you have included these items (also comments about tenants being in occupation of the property; purchasers requiring pet-friendly properties, and purchase prices which are to be paid from Road Accident Fund payouts need to be dealt with in writing). Failure to do so would constitute negligence on your part and an offended party could take you before the Estate Agency Affairs Board for damages. If the EAAB finds you guilty of wilful, unwilful, or simple negligence they could order you to pay for the damages incurred by the offended party. They would also impose a fine on you for contravening the Estate Agency Code of Conduct.

No matter how trivial the promise may seem, make sure that it is recorded in writing either in the OTP or on an addendum and signed by the parties.

The following notes are guidelines only. Please consult the training material for further information and education.

Every clause has a section in bold print. This is to assist you and your clients to determine what the purpose of the clause is. When you present an offer, you should be able to scan this with your eyes, reading upside down, while it is in front of your client. You should be able to explain each clause to your client without having to read them yourself.

Learn and know your Offer to purchase by heart!

Any changes or corrections you make to the contract must be initialled by all parties next to the change. Never initial next to each clause as this would leave room for someone to make a correction without the other being aware of it. Only initial next to clauses that have been inserted, changed, or a correction.

The notes in the document should be read and studied in conjunction with other training notes available in the training manual for further explanation.

If you do not understand anything contained in these notes, then consult your Principal for further training.

OFFER TO PURCHASE IMMOVABLE PROPERTY

Which on acceptance hereof shall become a

BINDING SALE OF AGREEMENT

 

No offer is legal and binding until it has been signed by both parties. Once signed both parties are obligated to fulfil the terms and conditions of the contract.

I/We ________________________________________________________________________________ (the Purchaser)

Hereby offer to purchase from you

_________________________________________________________________________________ (the Seller)

The undermentioned property through the agency of Y van Wyk t/a Golden Homes (the Agent).

In an OTP there are two parties, namely the seller and the purchaser. The parties can be either a natural entity or a legal entity.

Natural entities:

A natural entity is any person or persons operating in their personal capacity. There can be more than one person acting as the seller or the purchaser. In each case, it becomes important for you, as the agent, to correctly identify the parties signing the contract.

You will need to establish, via a deeds search, who the legally registered seller is. Whoever is registered on the title deed as the owner is the person/s who needs to sign the OTP. A seller or purchaser can nominate someone as their agent (not an estate agent) to act on their behalf. If this is the case, then you would need to obtain a copy of the agreement authorising the agent to act on behalf of the party. A Power of Attorney agreement is an example of such an agreement.

The person reflected as the owner on a deed search might not always be the only owner. If a party got married in community of property subsequent to acquiring the property then by operation of law the new spouse will also be a seller.

Once you have established who the parties are then you need to do a further identification of the party to verify who they are. The FIC Act requires you to get a copy of their identity document. Other documents you could obtain under the “know your client” requirements by FICA would be a copy of a proof of residence, income tax number, rates account, etc.

When completing the details in the OTP all the parties must be clearly identified by their names. We advise that you use their first name, initials, and then surname (i.e. Susan JPL Snyman). This is applicable to all parties to the contract. The FICA information form at the back of the OTP are part of the OTP and need to be comprehensively filled in as this fully identifies each party.

Legal Entities:

A legal entity consists of either a trust, close corporation, or company.

The legal entity’s registration documents would be required to identify the entity. If there are more than one directors/members/trustees then a resolution permitting the person signing on behalf of the legal entity must be obtained before completing the OTP. If you do not have this resolution then your OTP would be considered null and void as the entity’s signatures would not be valid and your OTP would not have been signed by both parties.

The person signing on behalf of the legal entity must be correctly identified and a copy of their ID and other “know your client” details would be applicable.

Any legal entity that does not want to give you their FICA documents is considered suspicious under the FIC Act. Continue with the transaction, however, it would be your responsibility to do an anonymous report thereof to FIC. Consult your FICA training notes.

Another thing to check for when identifying the parties is their marital status. If any parties are married in a community of property, then their spouse would have to give consent. You would need to obtain a copy of this consent or have the spouse included in the contract. In the event of a trust, I strongly recommend that you get a copy of the trust deed, as well as the Letter of Appointment to ensure that the trust can act and can purchase or sell the property. In the event of a company or a close corporation, I suggest that you conduct a deeds office search to ensure that the person signing is indeed a director of the company.

Note: The Agent is ALWAYS the agency and/or its principal. The agent is NEVER the person facilitating the agreement. An estate agent is a representative who represents the AGENT being the Company and the principal they work under.

PROPERTY DESCRIPTION

A freehold ERF no: ______________ in the Township of ___________________________________

Situated at ________________________________________________________________________ (the Property)

In real estate, an erf is a legal term used to describe a piece of land registered in a deed’s registry as an erf, lot, plot, stand.

Check carefully that the property description does not include “a portion of” or “a portion of or a portion of” as it will result in an amendment to the bond if it was recorded incorrectly.

Every property has an erf description which you would find on the title deeds as well as the local authority rates account. Properties are classified as freehold erf, sectional title, lot, plot, or farm.

It is important to correctly identify which piece of property is being sold and that the description is correct. Every property, even sectional title properties, are situated on a piece of land that has been zoned by the local authority through the zoning and subdivisions of land the local authority gives a legal description to that piece of land for future identification. This is then registered in the deed’s registry.

In the OTP you will see the word erf and a space for the erf and portion numbers, situate in the Township (this is the suburb in which the property is situated), and then situate for the actual street address. This will complete your property identification.

 OR

A Sectional Title unit consisting of Section number _______   being unit/door number _______in the building known as __________________________________________________________________ situated at _________________________________________________________Erf: __________   As more fully described on the sectional title plan of which the floor area is show in the plan and an undivided share in the common property of the ground and building as described in the Sectional Title Plan, in accordance with the participation quota of the section.

Exclusive use areas comprising:

Lock up/under cover/open parking bay no:  _____ and/or garden area ________________and/or storeroom area _______ and/or staff quarter no _______Pets…Yes/No _______________ And any other parts of the common property situated on the land more fully described in the said Sectional Plan.

Managing agents: _________________________________________ (Tel) ____________________

The section number is not the door number. Often, they may be the same but do not take this for granted. The section number is as per the description on the sectional title plan. Just like an Erf number identifies a piece of land, a section number identifies a section of the common property in a sectional title scheme. This is usually a specific section in the building together with any exclusive use areas.

The participation quota is determined by the square meterage of the unit as per the plan. This quota is calculated according to the sizes of the units. A unit with a larger square meterage will pay more than one with less. This will then determine the amount the occupier will pay for levies.

Exclusive use areas are areas on the common property (the whole property) which the purchaser will have to himself and does not share with someone else. This could be a closed-in garden, a parking bay, storerooms, etc. You will need to check whether these exclusive use areas have been allocated with a section number and include the section number above where it asks for a section number. For example, a garage may have its own section number if it is not joined to the unit. Then your section number field would read. Section 1 and 14.

The managing agent could be either a real estate company or the Body Corporate itself. In either case, you need to determine who they are and their contact details as they would be the person responsible for issuing a levy clearance certificate. A levy clearance is similar to a rates certificate. Some Body Corporate’s collect and pay rates on behalf of their owners and some do not. It is the purchaser’s responsibility to make sure he is registered with the local authority and that his rates are paid. Check this with the body corporate and notify your purchaser accordingly.

Remember clause 10 of the OTP the wording changes to Body Corporate instead of Homeowners Association.

Sometimes, not very often, a sectional title scheme is within a development governed by a homeowners association. In a situation like that, clearance would be required by the homeowners association as well as the body corporate. The way one would identify this is by looking at the title deed, if the title deed contains a homeowners association condition clause over and above the normal sectional title clauses, you would know to bring this to the attention of the attorney  You also need to request the client in a situation like this for copies of both or information on both the body corporate and homeowners association.

  1. PURCHASE PRICE

The Purchase Price is the sum of R ____________________________ (____________________

_____________________________________________________________________________)

The purchase price is always the gross purchase price which would include the agent’s commission (if applicable) and any other amounts agreed to by the parties. This does not, however, include any of the purchaser’s costs for transfer.

The amount is always to be in numbers and then described in words to avoid any misunderstandings.

PAYABLE AS FOLLOWS:

  1. _____________(____________________________________________________________)

As a CASH PAYMENT (i.e. not bond finance) either as:

If there is no deposit insert the words “nil” in both sections.

If there is a deposit, then insert the amount in words and then write the words out in full. Never cross this clause out as it is relevant to clause b below.

If no deposit is payable then cross out points I, ii, and iii below and have both parties initial next to your change.

  1. A Deposit payable by way of EFT on or before ______________, or to be secured by a bankers guarantee, to the satisfaction of the Seller’s Conveyancer, payable on registration of the property into the name of the Purchaser. The funds for the above-mentioned deposit are emanating from ____________________________________

Deposits are never collected in cash by the estate agency. All deposits need to be paid via an electronic bank transfer to avoid and FIC reporting. All cash deposits over R25 000 (twenty-five thousand rand) need to be reported to the FIC. Once you (the agency) have reported the deposit to FIC they will take it further for investigation.

Determine the date by which the deposit needs to be paid to the transferring attorney and insert it in the space provided. Should the deposit not be paid by such date the attorneys can then take further action against the purchase in regard thereto.

A banker guarantee is a document issued by a financial institution on behalf of the purchaser to the seller by way of the transferring attorney. This guarantee will be paid out by the bank upon fulfilment of the OTP which would be the date of registration of transfer. Once the funds have been received by the transferring attorney, the attorney will pay the seller, the agent and any other person to whom a financial commitment has been issued by the attorney on behalf of the seller.

Under the FIC Act, “know your client” you, as the agent acting on behalf of your seller need to know where the purchaser’s funds are emanating from. You do not need any documentation. Ask your purchaser and fill in his response (i.e. savings account). his signature on the contract confirms his word to you. This is sufficient.

Unless part of the funds making up the purchase price is emanating from a further cash payment or from the proceeds from the sale of a property, then delete points ii and iii below.

  1. Payment of R_____________ (_____________________________________________) being the balance of or FULL PURCHASE PRICE by way of EFT on or before _______________, or to be secured by a banker guarantee, to the satisfaction of the Seller’s Conveyancer, payable on registration of the property into the name of the Purchaser. The funds for the above-mentioned deposit are emanating from ________________________________________________________

Same as point i. above. If the is an initial deposit less than the full purchase price, then the balance would be inserted below. It is always advisable to get an initial deposit from a purchaser when you are doing a cash transaction which would be payable upfront or soon after the date of signature by the seller. If no initial deposit is payable, then the full purchase price would be inserted in clause ii above and an amount of “nil” would be inserted in clause a.

Familiarize yourself with the different payment options so that you can correctly complete the contract.

  • A Payment of R______________ (________________________________________) being the full/a portion of the purchase price emanating from the SALE OF A PROPERTY (see clause 3) which is payable on registration of the said property by the Purchaser’s nominated Attorney attending to the transfer of the said property. The undertaking or guarantee for the payment of the purchase price from the said sale issued by the nominated conveyancer of the transaction referred to in clause 3 is due on the ___________________.

If the deposit or full purchase price of the property will come from the sale of the purchaser’s property (see clause 3) insert the amount in the space provided. The transferring attorney will contact the purchaser’s attorney and obtain a guarantee for the purchase price from them. The purchaser’s attorneys will then be obligated to pay the said amount to the transferring attorney on the date that the purchaser’s property is registered into his buyer’s name. thereafter, the seller’s attorney can complete this transfer into the purchaser’s name.

Sometimes the attorneys will do what they call a simultaneous transfer, that is they will do all their paperwork and lodge both transactions in the deed’s office for registration at the same time. If this is the case the purchaser’s property MUST always register first in order for the attorneys to make payment to the seller’s attorney for the full purchase price. This may mean this transfer into the purchaser’s name may be delayed by a day or two if unforeseen circumstances arise.

The due date for obtaining the undertaking or guarantee on the simultaneous transaction needs to be inserted to avoid the agreement being vague.

All deposits and payments are to be paid to the Seller’s Conveyancer who shall hold the same in trust for investment in an interest-bearing account, which interest is to accrue to the Purchaser on registration of transfer.

While it is permissible for an estate agency to collect the deposit and later transfer it to the transferring attorney, we do not recommend this. With the number of fraudulent transactions that take place, it would be to the benefit of the purchaser to have his funds transferred to one place at one time. This would make it easier for him to confirm that his money is being paid to the correct account without having to verify multiple bank accounts.

The attorney is also then responsible to invest the purchaser’s money and account for the interest earned thereon to the purchaser. Our contract states that the deposit and/or full purchase price is to be paid to the transferring attorney and this then prohibits the estate agency from collecting these funds.

Proof of availability of funds for the deposit or in payment of the full purchase price will be provided by the Purchaser within 5 calendar days, including weekends, by way of a bank statement or a letter from a financial institution. Failure to produce the required proof shall constitute a breach of contract.

Many purchasers make cash offers and then turn out to not have the monies they are committed to paying on hand. Proof of the availability of the funds becomes important so that the attorneys can proceed with any breach of contract and prevent the deal from dragging on for months on end. (See clause 8)

  1. The BALANCE OF THE PURCHASE PRICE being R_____________________________ (_________________________________________________________________________) to be secured by approved Bankers GUARANTEES in favor of the Seller or his nominee, delivered to the Conveyancer within 30 (thirty) calendar days of acceptance of a mortgage bond/s referred to in clause 2.

The balance of the purchase price is determined by the purchase price less any deposit stipulated in clause 1a. This balance would then be secured by a banker’s guarantee by way of a mortgage bond, as per clause 2. If there is no deposit, then the amount above would be the same as the purchase price.

  1. BOND FINANCE

This offer is subject to the Purchaser obtaining a BOND from a registered financial institution, by the (date)_____________of a mortgage loan of not less than R___________ (_________________________________________________________________________)

This offer is SUBJECT TO the purchaser obtaining finance from a financial institution. If he is unable to obtain a bond by the date stipulated, then this sale would be of no further force or effect as this is a condition of sale that was not fulfilled. The seller is free to accept any other offer after the expiry of this date unless an extension has been granted to the purchaser by the seller. Any such extension must be reduced to writing, agreed to, and signed by both parties.

The date is a variable that needs to be agreed upon by both parties. Generally, 30 days is enough time for obtaining a bond, however, if the client is self-employed or a legal entity then a longer term may be necessary. If there are multiple offers on the table, the seller may choose to reduce the time allocated for a bond. There is no hard and fast rule regarding the time stipulated.

However, leaving this date blank will render your OTP null and void as no agreement was reached between the parties.

A condition such as bond finance makes an agreement conditional in other words it suspends the operation of the agreement until such time as the bond is in place. Thus, if the bond does not get approved or is not approved for the correct amount or by the date specified, the agreement will lapse.

  1. The Purchaser hereby appoints GOLDEN HOMES to make an application for a Mortgage Bond, to be registered over the property on his/her behalf, subject to the conditions currently being imposed by the Financial Institutions.

The appointment of Golden Homes as the agent that handles the bond application is crucial to you as an agent. This is not something that you want to leave in the purchaser’s hands, regardless of his/her insistence that you use their originator or bank consultant. As an agent, you act on behalf of the seller and as such you are responsible to update the seller regarding the purchaser fulfilling his terms and conditions. Once you allow this to become the purchaser’s responsibility you have renegaded your responsibility as the seller’s agent. DO NOT DO THIS!

This clause forces the purchaser to comply with his terms and conditions and enables you to monitor and track the progress of the bond application. If you have reneged this to the purchaser, you will find yourself in a position where you struggle to get information and have no way of giving your seller any feedback. This is negligent and should the seller wish to reduce or cancel your commission for neglect, he could do so. If you are found guilty of this neglect, even if it was not intentional, can leave you in hot water. DON’T DO THIS!

Should the purchaser wish to use his own originator or bank consultant, he has the right to do so. You cannot force a purchaser to use your contacts of bond originators. When a purchaser wants to use his own contact then you need to request the name and contact details of the person they are wanting to use. YOU then send the necessary documentation to their appointed person who will then become responsible to you to update you on the finance application.

If a purchaser is unwilling to furnish you with this information, then you have a “suspect” purchaser and you need to become alert and vigilant. There are many scams going on where people are trying to gather personal information. They do this by making offers where after the agent sends them the OTP together with the seller’s information. In turn, they can use both the OTP and the seller’s information for fraudulent purposes. With the new POPI and FICA laws you could place yourself and your agency in trouble for not protecting your client and for not conducting a “know your client” procedure.

If you are ever found guilty by the EAAB or a criminal court, you could find yourself paying heavy fines and/or even do jail time. NO PURCHASER OR COMMISSION IS WORTH YOUR LIFE!

Make sure you enforce this clause AND NEVER CROSS IT OUT!!

The conditions currently being imposed by the Financial Institutions have to do with their terms and conditions, lending criteria, risk appetite, interest rates, and the financial behaviour of the purchaser. This is not an exhaustive list as each Institution may have other lending criteria in place as well.

  1. The Purchaser hereby undertakes to complete any loan application and supply all the relevant documents, including but not limited to copies of ID, antenuptial contracts, proof of residence, payslips, proof of tax registration number and financial records. Failure by the Purchaser to do so within 5 (five) working days from acceptance of this agreement by the Seller shall constitute a material breach.

As an agent, it is within your mandate as the agent to the agreement to obtain all of the above information. However, there are times where the purchaser may not want to give you his financial documentation due to sensitive information therein. Do not insist on this. They will, however, have to supply this information to the bond originator or bank consultant. This is in particular when dealing with a legal entity. However, should they refuse to supply this information to the bond originator or bank within the time specified, they would be in breach of contract. At this point, the contract is no longer subject to a bond and the commission becomes payable. In this case, the breach clause would make the purchaser responsible for the commission as he would be the defaulting party.

Five working days exclude weekends and public holidays. The attorney would work these days out when they prepare their “terms letter” to the purchaser. Placing a purchaser on terms means the attorneys will give the purchaser a letter to comply with the terms and conditions of the contract, in this case, to supply the necessary information and/or documentation to fulfil clause 2, remember when a purchase gets placed on terms and when a transaction with a purchaser gets cancelled, we must always ask the seller’s instructions preferably in writing to protect ourselves from litigation. If the purchaser supplies the documentation within the stipulated time given in the notice letter, then he will have fulfilled the terms of clause 2 and the deal will proceed. If he does not on instructions, the attorney will send out a letter of cancellation and the agent and seller can then proceed with legal action to approach a court of law for whatever legal claim they feel they are entitled to, the first step here again is a letter of demand.

A material breach means they have violated the terms and conditions of the contract and both the seller and the agent have the right to exercise legal recourse. The agent would obviously sue for their commission and the seller could sue for ‘specific performance,’ which when granted by a court of law would force the purchaser to take transfer. In the alternative, they can approach a court for an order as to damages. Damages claimed will only be damages that can be proved that were suffered.

Remember, once your OTP has been signed by both parties it becomes a legal and binding agreement enforceable by law. May buyers and seller get away with it because a party chooses not to proceed with any legal action and not because the contract is not enforceable. The contract will stand in a court of law and as long as you have not violated the law and have fulfilled your obligations in the management of the contract, a court will award you your commission.

Note: If you as the estate agent are an intern and you do not have a principal of full status agent physically present with you, the law would not uphold any commission claim as you have violated the terms and conditions laid down by the EAAB. The EAAB is a legal body that clearly states that no internal agent may fill in, sign or complete and offer to purchase without the physical presence of a full status/principal agent. Therefore, it is important for you to get your qualifications as an estate agent so that your commission never comes under threat.

  1. The condition, upon approval of the loan in principle, whether by pre-agreement, a quotation, or granted in writing, issued by a bank/financial institution, shall be deemed to be fulfilled.

“The condition” in this clause refers to the whole of clause 2, being the obtaining of finance, only. It does NOT include any other terms and conditions in the contract. An “approval in principle” or AIP is a letter from the bank confirming that the purchaser’s finance has been approved.

At this point clause, 2 is fulfilled, even though the bank still has to do a valuation on the property. At this point, any competing offers that may be waiting for this OTP to lapse will have to wait until the bank has done their valuation and has had time to issue a final grant, even though the purchaser’s time to obtain a bond may expire on the date of the AIP. Once a purchaser has obtained an AIP his offer has become secure.

Should the bank find value in the property, then they will issue a letter of grant which the purchaser must sign. Should the bank not find the value they may make a lower offer or decline the loan altogether, in which case this offer will have lapsed and a second offer that was pending would become applicable. If the purchaser has money for a deposit, he could accept the grant and pay the deposit. The deposit would, however, become payable on the date of the bond grant otherwise the terms and conditions of the contract have not been fulfilled. Even if there is no contending offer, the deposit would still become payable on the date of the bond grant, provided that it is the last day stipulated above. If it is not and there is still time, the deposit would become payable on the date above or the date agreed to by both parties via an addendum to the offer to purchase.

TAKE NOTE that the condition is twofold. We need to get the amount stipulated in the agreement in terms of a bond by the date stipulated in the agreement, so there are two legs to the condition and both need to be ticked.

  1. The Purchaser may at any time prior to the fulfilment of this suspensive condition, advise the Seller or the Conveyancer, or the Agent in writing, that he waives the benefit of such condition, in which event, this agreement will no longer be subject to the condition.

Prior to the fulfilment of this suspensive condition again ONLY refers to clause 2 of the offer. Waives the benefit means that the purchaser is no longer making the offer conditional to obtaining finance through a financial institution and will now pay “cash” for the property.

In such a case the purchaser must advise either one of the parties mentioned above in writing that he is no longer applying for a bond and that he will issue a guarantee from a registered financial institution instead. This guarantee would become payable to the seller on or before the guaranteed date stipulated in clause 1b unless amended via an addendum that has been agreed to and signed by both parties.

Any guarantee made by a financial institution will be made out in favour of the seller but will be issued to the seller’s nominated attorney. The attorney handles the guarantees on behalf of the seller and will distribute all the funds to settle any debts the seller may have had over the property (i.e. a bond) before paying the seller out on a date of registration of transfer.

On the date of registration of transfer, the attorney will notify the financial institution that the property has registered, and the funds are now due and payable as the seller has complied with the terms and conditions to give transfer. Upon confirmation of transfer, which is a letter of confirmation issued by the deed’s office, the bank will then transfer the monies into the attorney’s trust account. Once the attorney has received the funds into their account, they will make payment to all the parties concerned, including the estate agent (agency).

  1. The Purchaser warrants that he is aware and understands the prevailing requirements of banks/financial institutions regarding eligibility for finance based on income and credit ratings and further warrants that he is eligible for the loan amount.

It is the purchaser’s responsibility to make sure that they qualify for a loan and understand the financial implications thereof before making an offer and they should have checked that they qualify before making an offer. If they have not done so it still remains their responsibility and not yours as an agent. You can do an estimate for them but the responsibility for the fulfilment of this clause and the declaration they make here is theirs. Once they have signed the OTP this declaration stands, and they cannot use the excuse that they did not or do not qualify.

  1. The Purchaser hereby authorizes Golden Homes or any mortgage origination company or bank, to make inquiries to verify any information provided in this offer from the credit bureau in order to assess an application for a bond.

Permission must be granted by any purchaser before anyone may do a credit check against their name. This clause authorizes Golden Homes, a bond originator, and a bank to do the necessary checks in order to assess their credit application. This authority is to the principal of Golden Homes or their representative and not to you as an individual estate agent.

If a person’s credit history is considered too risky by the financial institutions, they will either decline the application altogether or offer an amount at which the financial institution is willing to loan.

  1. SUBJECT SALE
  1. This offer is SUBJECT TO THE SALE and subsequent successful registration of the Purchaser’s property, namely ERF/Unit______ Address _______________________________________________________ within _______ days of acceptance by the Seller. Should an unconditional offer, meaning an offer that is not subject to the sale of a property or where the subsequent offer has not yet fulfilled its suspensive conditions, be made to the Seller the Seller shall give the Purchaser __________ working days’ notice within which to declare this offer ‘unconditional,’ failing which the Seller shall be at liberty to accept the new offer and this offer will be regarded as null and void.

This clause is only applicable when the purchaser has to either sell his own house or has sold it but is still awaiting transfer. If the purchaser does not need to sell his home or has no home to sell, then this clause needs to be deleted and both parties need to initial next to the correction of change.

You will need to obtain the details of the purchaser’s property and fill those details in. This will identify the property that needs to be sold and avoids any misunderstanding. A purchaser could have more than one property and one should correctly identify which property is being sold.

You need to negotiate with the seller as to how much time he would like to afford to the purchaser to sell his property and specify the number of days in the clause above. There is no law or rule that dictates what time period is allowed, therefore you will need to negotiate this point with both parties.

This clause makes the entire contract subject to the sale of the purchaser’s property within the specified time. Should the purchaser not have sold his property, which would include the purchaser of the purchaser’s property having obtained a bond grant and produced guarantees, then this offer will automatically lapse on the date determined between the parties.

If the purchaser has successfully sold his property within this time the deal would be considered valid or concluded. However, the entire agreement would still be subject to the purchaser’s property transferring out of the purchaser’s name before this offer can register into his name. If at any time the sale over the purchaser’s property lapses then this offer would also lapse. Make your seller aware of the risk he incurs as a result of accepting an offer that is subject to another property having to transfer first.

If the seller receives another offer within the time that the purchaser is busy selling his property, the seller would be at liberty to do so. However, the seller cannot cancel this offer. He has to give the purchaser 72 hours’ written notice to either cancel or declare this offer unconditional, he can only do so if the second offer already has his finances in place.

Only once the second offer has fulfilled all its suspensive conditions is the seller at liberty to give the first purchaser notice to cancel or declare the purchase unconditional.

Should the purchaser declare this offer unconditional then he will need to produce guarantees by the date stipulated in clause 1. Alternately he can notify the seller that he is unable to make his offer unconditional in which case the offer will cancel, and no penalties are payable by the purchaser.

Proof of any such offer together with proof of payment will be sent to Golden Homes prior to any notice being issued. (See clause 8.d)

If the seller has accepted a second offer, proof of the offer together with proof of payment or a bond grant must be given to Golden Homes BEFORE any notice will be given to the purchaser. If the purchaser sells his property and has received proof that his purchaser has finance in place, then this offer will supersede the second offer and continue on to transfer.

OR

If the purchaser has already sold his property and the finances are in place, then this section below will become applicable. In such cases, you will need to delete the clauses above and have all parties initial the change.

This offer is subject to the successful registration of the Purchaser’s property, namely ERF/Unit _________ situated at _____________________________________________

which the Purchaser warrants has already been sold and being transferred into the Purchaser’s name through __________________________Contact__________________

Email Address: ___________________________________________________________

As above except that in this case the purchaser warrants (guarantees) that his property has been sold and is in the process of being transferred. In this case you will need to obtain the details of the purchaser’s transferring attorney and complete the section above.

Note: Many purchasers and agents often request the seller to use the same attorney to do this transfer as it “will save time and the deals can work together smoothly.” This is in direct violation of the EAAB Code of Conduct. If you are found guilty of recommending the appointment of such an attorney and things then go wrong with the deal the seller will have the right to hold you liable for any damages he has incurred as a result of this.

Always make sure that you insert the date by when guarantees from the sale of the subject must be in place. See clause 1a(iii)

The EAAB rules and regulations still stipulate that the Seller has the right to appoint his own choice of an attorney to process the transfer of his property to the purchaser. With the use of electronic devices and the internet, attorneys are able to efficiently communicate with each other and to join the respective transfers as they come up for registration. See clause 6a.

  1. VOETSTOOTS / FIXTURES AND FITTINGS
  1. The Purchaser acknowledges that he has been granted a fair opportunity to inspect the property, which he has done to his satisfaction on the __________________________ (date), which is sold VOETSTOOTS, that is in the current condition and to the extent and size as it now lies, without any warranties, expressed or implied together with its fixtures and fittings and servitudes and accepts the Property in the condition it now

It is important that your purchaser has had a fair opportunity to inspect the property to his satisfaction. This means he is allowed to go into the roof should he wish to do so, to open taps and cupboards, to test pool pumps, gate motors, and anything else he would like to inspect. As an agent DO NOT discourage him from doing so and make sure you ask him if he is satisfied with his inspection as he cannot come up with excuses or faults after the agreement has been signed. Make him fully aware that he is making a declaration to the fact that he is satisfied with his inspection. If he wants to go and do another one, then you are obliged to let him do so. The seller is also obliged to allow any prospective purchaser to do a full inspection to his satisfaction.  The seller is under no obligation to fix anything the purchaser might find fault with unless these things fall within the requirements of any certificates that the seller needs to provide. Should the seller undertake to do certain things, ensure that you include it in your agreement under “special conditions” and insert the date by which it should be done.

The word “voetstoets” means that the purchaser accepts the property in the condition that he inspected it without any repairs, warranties (promises) whether they were implied or not as well as the condition of the fixtures and fittings. If there are any servitudes on the property or conditions on the title deeds, he accepts those as they are as well.

  1. The Property is sold inclusive of all existing FIXTURES AND FITTINGS of a permanent nature which the Seller warrants are his exclusive property and fully paid for. These together with the following movable items which are separately included, are sold voetstoots: Including but not limited to:- Stove/oven ______________________________ (make) in working order, TV aerials, DSTV dish, and mount, wall to wall carpets, curtain rails, light fittings, built-in cupboards, kitchen units, keys and remotes, municipal bins, pool pump and equipment and gas bottles for gas installations.

The sale of the property would automatically include all fixtures and fittings which are physically attached to the property. For example, light fittings, curtain rails, and others specified above. There could also be other items like air conditioners, fishponds with pumps, gates, and garage motors, etc. As an agent make a note of what fixtures and fittings you see while doing your own inspection of the property and include them below if they are not listed above.

An easy test to determine whether something is a fixture and fitting or not is to turn the property upside down and shake it, whatever remains attached, those are fixtures and fittings, and whatever falls off are items that may be taken by the seller when he vacates the property.

PLEASE NOTE: If any of the fixtures mentioned in the clause above are NOT applicable, meaning they do not exist in the property then you MUST delete them and have the parties initial the change. If you do not, then the purchaser can hold the seller liable and the seller must provide them. The seller can then “sue” you for his damages at the EAAB or in a court of law. If you are found guilty of being negligent you will be fined and forced to pay for the seller’s damages.

Many agents have had to replace stoves, DSTV dishes, etc. because they neglected to negotiate these items properly. You are considered to be the professional person drawing up this agreement. Do not take your position lightly. Be watchful and vigilant when you are completing the offer and make sure you protect all the parties involved.

Includes: _____________________________________________________________

________________________________________________________________________

Include any other items that the seller has agreed to include in the purchase price. If the seller has agreed to leave anything for the purchaser or do anything for the purchaser, it MUST be included in the offer. If you run out of space to write, then do an additional clause under special conditions or draw up an addendum. Whatever you do, do not be neglectful.

Excludes: ________________________________________________________________________________________________________________________________________________

If there are items that the seller will be removing and taking with him which are of a permanent nature (fitted to a wall or floor) these items must be specified. If the seller is removing a chandelier for example, then he needs to declare it and replace the item with another. MAKE SURE YOU DISCUSS And NOTIFY THESE THINGS IN DETAIL! We offer encounter problems with plants, especially cycads. If the plants have been planted in the soil in the garden, then they must remain, if the seller wants to take them it has to go on the after purchase. Usually, plants in pots that are standing around, are allowed to be taken.

  1. The Seller hereby warrants to the Purchaser and the Agent that the Seller is not aware of any LATENT defects in the Property and which have not been disclosed and that all buildings are erected according to the rules and regulations of the Local Authority.

A latent defect is a fault that the seller is aware of but has not disclosed to the purchaser or to you as an agent. For example, there could be dampness behind a wall unit, or a hole in the floor which has been covered by a carpet, or a leaking roof. These would have to be things that would not have been visible when the purchaser did his inspection. If the purchaser can prove that the seller knew about it and deliberately withheld the information then the seller would become liable to replace, fix and repair the damage.

It is the seller’s responsibility to disclose these things and it is also the seller’s responsibility to make sure that the house plans are in order and that all buildings and additions are reflected on proof building plans and that the house has been built according to the local authority’s rules and regulations.

You as the agent cannot be held liable for the non-disclosure of the defects as you are an estate agent negotiating a contract, not a building inspector inspecting and verifying the condition of the property. It is not your responsibility to check that the house plans are in order.

Please do not create the impression that you’ve checked everything and that all are in order.

  1. The Parties hereby declare that as per the Consumer Protection Act, the sale of the property does not fall within the ordinary course of business of the Seller, and thus Act No 68 of 2008, does not apply to this agreement.

Most seller’s that you come across in residential property sales will not fall under the supervision of the CPA. The CPA is designed to protect the public from retailers that sell multiple items of the same nature. These would be done under consumer agreements and are not applicable to private and personal sales where the seller only has one item for sale.

However, if a purchaser were buying directly from a property developer or a property speculator (someone whose business is to buy and sell houses for a living), then the CPA would become applicable. Purchasers are protected by other property and contract laws and regulations.

  1. The Parties further confirm that the Agent has not made any representations that are in conflict with any of the provisions in the Consumer Protection Act No 68 of 2008, or the Estate Agency Affairs Board’s Code of Conduct. Furthermore, the Parties hereby acknowledge that the Agency and Agent’s function is to facilitate the Agreement and therefore cannot be held liable for the condition of the property being sold in the event of the Seller having omitted/misrepresented to the Agency or the Agent the condition of the property being sold, including latent and patent defects. In the event of any disputes, the Purchaser’s recourse will be against the Seller and not against the Agency/Agent.

As an agent negotiating a sale agreement the service you offer as an estate agent does fall under the jurisdiction of the CPA and either party can report an agent/agency to the CPA but only in as far as it has to do with the OFFER TO PURCHASE which they are facilitating. You cannot be held liable for the condition of the property, any misrepresentations made by either party or for the legal enforcement of the contract. Your only responsibility is to make sure that you, as an agent, do not violate the terms and conditions of the EAAB Code of Conduct.

If the purchaser is unhappy with any defects in the property or how the agreement is being handled by the seller’s attorney his recourse is against the seller and not against you as the agent. Do not take responsibility for something that is not yours. This will only get you into trouble! Refer any defect complaints etc., to the seller’s attorney. The attorney is responsible for the legal enforcement of the contract. You can help and assist but it is never wise for you to give legal advice to either party, even if you know the answer.

However, if the problem has to do with the contract and its terms and conditions where an addendum has to be drawn up because of a change in the agreement between the parties, this will fall under your responsibility. Some attorneys will assist in this regard and some won’t. Either way, it is part of your mandate with the seller and you should take responsibility for it.

  1. The Purchaser declares that he has been granted a fair opportunity to inspect the property which he has done to his satisfaction and further that this Agreement and specifically this clause has been explained to the Purchaser who declares that neither the Seller nor the Agent has made any representations regarding the condition of the Property which are not contained in this Agreement.                                                             Initial …………….

This clause is crucial to you as an agent as many purchasers and sellers blame the agent when problems arise. Purchasers love holding agents responsible for the condition of the property and come after the fact and blame the agent for not disclosing the faults to the purchaser. Again, this is NOT your responsibility. In this clause you are again making him aware of his responsibility regarding his inspection of the property and that he is happy with it. He is also declaring that you have not made any promises or representation to him about what the seller is going to do for him which has not been written into the contract. (Make sure you write everything that has been said or promised down and insert the date by which it should be done. If you don’t it is not valid and will not be enforced by the law). MAKE SURE YOU GET ALL PARTIES TO INITIAL THIS CLAUSE.

  1. VACANT OCCUPATION

Vacant occupation of the said Property shall be given and taken by the Purchaser on date of REGISTRATION OF TRANSFER or ________________________________________ (date) (delete whichever is not applicable).

Vacant occupation means that the property has to be empty of all goods and possessions of the seller, including any tenants and their goods and possessions, on the date of registration or the date specified above.

Cross out whichever is not applicable in the above clause. If occupation will be on the date of transfer, then cross out from the “or _____________ (date). And have both parties initial. If the purchaser will be taking occupation on a specific date, which could be before or after the transfer, then delete “date of registration of transfer or” and have both parties initial next to the change.

The date of registration of transfer means the date upon which the property is transferred into the name of the purchaser by the registrar of deeds. This is done in the deed’s office. On the date of registration, the property officially belongs to the purchaser.

  1. The Purchaser acknowledges that he knows the said Property is let to tenants, whose lease agreement expires on the _____________________________ (date) and that this offer is made subject to the Tenants’ Rights under the Rental Housing Act. If the Purchaser requests occupation prior to this date, he shall be required to make separate arrangements for occupation with the tenants.

This clause is only applicable when there is a tenant in the property. If there is no tenant, then delete this clause and have both parties initial next to the change.

If there is a tenant in the property, then the purchaser acknowledges that he is aware that there is a tenant who would have to vacate the premises before he can take occupation. This offer is made subject to the rights of the tenant that he has at law. There is a law that states, “Huur gat voor koop” which means that the lease agreement holds a higher position of legal right than the offer to purchase. If the tenant has a current and valid lease let’s say for another year, then neither the seller nor the tenant has the right to give him notice. This offer would then include the tenant and his lease which would be transferred to the tenant upon the date of registration. The vacant occupation would then become the responsibility of the purchaser and not the seller.

However, if there is a clause in the lease agreement that gives the seller the right to sell the property and to give the tenant notice to vacate by terminating the lease agreement as per its terms and conditions, then the seller would remain liable to give the purchaser notice and to make sure that the property is vacant on date of registration of transfer.

Therefore, it is vital for you as the agent to establish what the terms and conditions of the lease agreement are before you negotiate the offer to purchase. If the lease is valid and the seller cannot give the tenant notice, then the purchaser may choose not to take the property. It is important for you to inform both parties of their contractual obligations herein.

Also, enquire about whether the tenant paid a tenant’s deposit.

  1. On taking occupation before transfer, the Purchaser shall pay Occupational Rent in the sum of R___________________(____________________________________________) per month, payable in advance to the Conveyancer, from the date of occupation to date of transfer. If the transfer is registered and the Seller remains in occupation, the Seller shall pay to the Purchaser the same occupational rent from date of transfer. Such rental amount is to be paid by the Conveyancer to the Purchaser from the proceeds of the sale due to the Seller.

If the purchaser takes occupation before the transfer, then he will become liable to pay the seller occupational rent up until the property is registered in the purchaser’s name. The amount of occupational rent is something you will have to negotiate between the parties. A general rule of thumb is 1% of the purchase price but there could be many circumstances surrounding the occupational rent being lower or higher.

The occupational rent is payable to the seller’s attorney and not to the seller directly, unless this has been agreed to in an addendum to the offer to purchase. This is so that there is a proper record kept of the purchaser’s money and the attorney can then refund any rent due to the purchaser once the property has transferred into his name.

Should the seller stay on in the property past the date of registration of transfer, then the seller shall become liable to pay the purchaser occupational rent to the same value as stipulated in the clause above. Whatever rental is due to the purchaser can be deducted by the attorney from any monies payable to the seller and paid to the purchaser. The clause above authorizes the attorneys to do so.

Make sure you draw up an addendum should the seller not be vacating on the date of transfer and establish a date on which he will vacate. If you neglect this then the seller could stay on for as long as he likes. Do not neglect your responsibility as an agent to do your addendums.

Always ensure that you insert an amount for occupational rent even if the occupation is unlikely.

  1. The Purchaser may not at any time prior to the registration, make any improvements, alterations, or any other repairs to the property unless agreed to in writing and signed by both parties.

Should the purchaser move in before registration HE MAY NOT make any changes to the property without the signed written permission of the seller. He may not even paint!

  1. The Party in occupation of the property whilst it is registered in the name of the other shall be liable to pay the registered owner of the Property a pro-rata share of water, electricity, refuse, and sewage for the period of such occupation.

Whoever is in occupation, whether it is the purchaser or the seller, they will be responsible to pay the water, electricity, sewage and refuse levied by the municipality against the property, or a portion thereof, depending on how long they have been in occupation.

  1. The Seller acknowledges that there is a tenant in the Property but undertakes to give VACANT occupation to the Purchaser upon the date of registration or occupation, whichever is relevant, and will ensure that the Property is vacant PRIOR to that date. The Seller further irrevocably agrees that the Agent/Purchaser may delay the registration and instruct the Conveyancer to act accordingly until such time that the tenant has vacated unless otherwise agreed to by both parties in writing. This clause will operate in favour of the Purchaser, even though the Seller has appointed the Conveyancer. The Seller agrees that the Conveyancer shall follow the Agents/Purchaser instructions in this regard.

If the seller is not able to give vacant occupation to the purchaser because of the terms and conditions of the lease agreement which prevent him from doing so you MUST cross out this clause and have both parties initial the change.

If the lease agreement does allow for the seller to give the tenant notice in accordance with the lease, then the seller will be responsible and liable to make sure that the tenant has vacated. If the tenant refuses to vacate the seller will remain responsible for any legal cost to have the tenant evicted.

  1. TRANSFER
  1. Transfer of the said property shall be effected by the Seller’s Conveyancer. All transfer costs, bond costs, and VAT shall be paid by the Purchaser upon request by the Conveyancer.

While there is no law that says the seller has the right to choose the attorney (it is only stipulated in the EAAB code of conduct) the clause above makes it the seller’s right. Also, remember that you as the agent have been appointed by the seller to find him a willing and able buyer, and the seller is paying your commission. This is true even when you sell another agent’s listing, or they sell yours. Your mandate to sell the property has been given to you by the seller and not the purchaser.

  1. The Seller herby nominates ________________________________________________ (the Conveyancer) to attend to transfer.

Insert the name of the conveyancing attorney the seller has chosen above.

  1. The Seller shall pay all arrear municipal charges relating to the Property, including tenant accounts. The Seller shall further provide the Conveyancer with the details of all tenant accounts.

The seller is responsible to pay all monies due to the local municipality including any amounts owing by any tenants. Whatever is outstanding must be paid BEFORE transfer can take place and no arrears can be transferred to the purchaser. The municipality will issue the amount due to the attorney and will, once paid, issue the attorney with a clearance certificate confirming that the account has been paid. They will always add approximately three months average use on top of the amount due to cover any amounts that the seller may neglect to pay during the transfer process.

The seller is responsible to provide the attorney with all the municipal accounts registered against his name for the specified property.

  1. The Seller warrants that a Section 118 procedure in terms of the Municipal Systems Act 32 of 2000 has NOT been followed, nor has an acknowledgement of debt been signed in favour of the council for any arrear municipal charges.

This clause has been inserted to avoid a seller following an acknowledgement of debt procedure with the municipality and not disclosing it to the purchaser. Most Parties follow this process and reduced clearance figures are issued to the attorneys and the attorneys make payment thereof. Everybody assumes that all the rates including the arrear rates have been paid only for it to transpire later that the section 118 procedure was followed and there’s a portion of the arrears of the seller that has not been settled. This clause has been included to prevent that from happening.

  1. Possession of the Property shall pass to the Purchaser on registration of transfer, from which date all benefits, risk, rates and taxes and any other imposts levied on the property, shall be for the Purchaser’s account.

Possession of the property changes hands between the two parties on the date of registration. Before registration, the seller had the exclusive rights and benefits of the property, as well as any risk involved. A benefit would be something like rental income and risk would be something like a geyser bursting. Whatever happens to the property, positively or negatively remains with the person that is the legally registered owner of the property.

On the date of transfer of the property into the purchaser’s name, the purchaser becomes the new owner and the one responsible for any benefits and risks attached to the property. Should the geyser burst on that day it would be for the purchaser’s account and he would be responsible for any damage and not the seller. However, I the geyser bursts the day before registration then the seller would remain liable, even if the property has transferred to the purchaser.

The purchaser has to ensure that the property is insured from the date of registration going forward in addition to his movable items.

  1. The Parties declare that they have received an Estimated Costs Summary relating to a transfer from the Agent. The final cost summary shall be supplied by the relevant attorneys involved. Initial…….….…

An estimated costs summary is not a requirement; however, it is a good service that we provide to our clients as it gives them a good indication of what costs each party can expect to incur in order for the transfer to take place. Many agents tell their sellers that they have no other costs besides the commission, which is not true. The relevant costs incurred by each party are stipulated in the cost summary. This avoids many misunderstandings when the parties are presented with their costs by the attorney. Neither party can blame the agent for not informing them of their costs. This cause protects you against any negligent claims.

If you are not going to do a costs summary, then cross this clause out. Either way, make sure all parties initial next to this clause. Once initialled they have no recourse against you as the agent because they hereby declare that they have received it.

Also, note that this is only an ESTIMATION as you are not the attorney. The parties will receive their accurate cost summaries from the attorney.

If a party does not want you to do a costs summary, then put a line through it and have the party initial and sign where you have crossed it out.

  1. PROFESSIONAL FEE
  1. The Seller shall pay the Estate Agents Professional Fee of _____________________% (________________________________) being a gross commission calculated on the Purchase Price, which shall be paid as stipulated in the transfer instruction to the Conveyancer upon registration.

The seller is the one responsible to pay the estate agent’s commission which becomes payable on the date that the suspensive conditions of the contract have been fulfilled. However, it may only be paid out on registration of transfer and it is illegal for an attorney to pay commission to an agent before registration of transfer. This is to protect either party should the sale be cancelled for any reason and monies need to be refunded to the parties.

The commission is a gross commission, meaning it is the full commission including VAT if it is applicable. This is the full amount of commission the seller will be paying to the agency for commission.

  1. Should this sale be cancelled by mutual consent or repudiated by the Seller, the Agent shall be entitled to the professional fee in terms of this clause.

If the seller and the buyer agree together to cancel the sale, then the commission is still payable to the agent by the seller. Once the suspensive conditions of the sale have been fulfilled then the agent has earned his commission according to the mandate given to the agent to sell the property. The cancellation of a sale does not automatically mean the agent’s commission is also cancelled. The agent, if they have complied with the law and their mandate are entitled to their commission.

If the sale is repudiated, meaning one of the parties refuses to go ahead with the sale once the suspensive conditions were met, then the commission is also still payable. The breach clause below makes the party responsible for repudiating the sale the one responsible to pay the agent commission.

  1. BREACH
  1. The Seller shall continue to be liable for the Professional Fee if the sale is cancelled by mutual consent or by reason of any breach of this Agreement by the Seller.

The seller is always the primary party responsible for paying the agent’s commission as he is the one that appointed the agent. Therefore, if the sale is cancelled by mutual agreement, then the seller must still pay the agent’s commission.

  1. The Purchaser shall become personally liable for payment of the Professional Fee for any default or breach by the Purchaser which results in the cancellation of this Agreement. The Purchaser hereby agrees that the Professional Fee may be deducted from any deposit held in trust by the Conveyancer on behalf of the Purchaser and irrevocably instructs the conveyancer to effect payment of the professional fee to the agent upon cancellation of this agreement as a result of the purchaser’s breach.

If the purchaser is the party responsible for the cancellation or repudiation of the sale, then the purchaser will be held liable for the commission. In such a case the agent can claim the commission from the purchaser. If the purchaser has paid any deposit then this clause authorizes the attorney to deduct the commission from any deposit the purchaser might have paid and is in the attorney’s trust account. The purchaser gives the attorney the right to do so in this clause.

  1. Should any Party breach any provision of this Agreement and fail to remedy such breach within 7 (seven) calendar days after dispatch of written notice, the aggrieved party shall be entitled, without prejudice to any other rights at law, to cancel this Agreement forthwith and claim damages as determined by a court of law or any other Legal Body or enforce specific performance.

If either the seller or the buyer is refusing to comply with any provision stipulated in the contract, the other party has the right to ask their attorney to put the other party on terms, meaning to give them notice to comply. This notice would be 7 calendar days, which would include weekends and public holidays. If the defaulting party does not comply with the contract at that time the other party can cancel the contract and claim damages from the defaulting party. These damages, however, must be determined by a court of law to be enforceable. Commission would be considered damage incurred by the seller if the purchaser was the defaulting party.

  1. Notices in terms of this Agreement are to be in writing and delivered either by email, or fax, or by hand, in which case it shall be irrefutably deemed to have been received when the notice was sent/delivered.

Any communication or change affecting the terms and conditions of the contract must be reduced to writing and sent out in some form of written or electronic communication. Once the notice has been sent it is deemed to have been delivered to the defaulting party provided that the communication has been sent to the address/es that has been supplied on the information page which forms part of this agreement.

  1. COMPLIANCE CERTIFICATES
  1. The Seller shall at his expense, within 21 (twenty-one) days of all suspensive conditions being fulfilled, provide the Conveyancer with a new Electrical Certificate of Compliance in accordance with the Electrical Installation Regulations. If for any reason the Seller has not arranged the certificate within the 21 (twenty-one) days prescribed, the Seller gives the Conveyancer the authority to obtain the certificate at the Seller’s expense, such expense shall be deducted from the proceeds of the sale.

The Law does not specify who is responsible for the obtaining of any certificates, it states that the “occupier” is required to have one. This means that either party can take responsibility for obtaining the certificate. However, because the above clause specifically states that the seller shall obtain the certificate and thus it becomes the seller’s responsibility according to the contract.

The seller is only responsible and liable to obtain the certificate within 21 days after the purchaser has fulfilled all his suspensive conditions. This protects the seller from incurring costs and then the purchaser thereafter is not able to fulfil his suspensive conditions.

Should the seller not obtain the certificate then this clause gives his appointed attorney the right to obtaining the certificate on his behalf and to deduct the costs from the proceeds of the sale due to the seller.

  1. If applicable, the Seller/Purchaser undertakes at his cost to provide an Electrical Fence Certificate of Compliance in accordance with regulation 12(4) of the Electrical Machinery Regulations.

As per the notes above except that you as the agent need to determine who will be responsible for obtaining the certificate. When you have a purchaser that is trying to negotiate a lesser price you can use this clause as a negotiating tool. The purchaser, as the new occupier, can take responsibility. This is not a legal requirement for the transfer of property, but as above, the contract makes it a legal responsibility.

  1. If applicable, the Seller/Purchaser undertakes at his cost to provide a Gas Installation Certificate of Conformity as per the regulations set out in Section 17(3) of the Pressure Equipment Regulations in or on the property being sold. All gas bottles to remain as part of the property.

As per above, however, in this clause, any gas bottles become part of the sale and must be left attached to the equipment.

  1. The Seller shall, at his expense, within 21 (twenty-one) days of all suspensive conditions being fulfilled, provide the Conveyancer with an Entomologist Certificate of Clearance. If for any reason the Seller has not arranged the certificate within the 21 (twenty-one) days prescribed the Seller gives the Conveyancer the authority to obtain the certificate at the Seller’s expense and such expense shall be deducted from the proceeds of the sale.

An entomologist certificate certifies that the property is free from termite infestation. The seller must provide this certificate within 21 days of the suspensive conditions being fulfilled. Alternately, he gives his appointed attorney permission to do so on his behalf. These certificates are usually only valid for three months.

  1. The Seller shall, at his expense, submit a certificate from an accredited plumber to the City of Cape Town Municipality, certifying that the water supply to the Property conforms with the requirements stipulated in Section 14 of the City of Cape Town: Water By-law, 2010, namely that:-
  2. the water installation conforms to the National Building Regulations and this By-law.
  3. there are no defects that can cause the water to run to waste
  • the water meter registers; and
  1. there is no discharge of stormwater into the sewer system.

The Seller undertakes to submit the said Certificate to the City of Cape Town via fax or email and to furnish proof of such submission to the Conveyancer.

Insofar as the accredited plumber appointed by the Seller to provide such Certificate requires corrective work to be carried out as a precondition to the issue thereof, the Seller will procure such work to be carried out at his own cost and expense.

With the severe drought in the Cape, the City of Cape Town enforced severe water restrictions and plumbing regulations. Homeowners had to have all their plumbing checked for any water leaks etc. To ensure this the above certificate became a legal requirement and they would not issue any rates clearance certificates without it. It is currently still applicable.

  1. GENERAL
  1. For all purposes under this Agreement, the Seller and Purchaser respectively choose their legal domicile address as the address given on pages 7 and 8 hereof.

A legal domicile address is an address where the seller or the purchaser currently resides and where the sheriff of the court can deliver any notice to. These details must be comprehensively filled in on pages 7 & 8. As an agent, you are responsible to make sure all parties have completed these pages in full. If there is missing information, then obtain the information and complete your OTP. Also, if you are not filling in the details yourself then make sure you can read what they have written before submitting it to your principal. Please note that it is not a postbox address.  The courts require a physical address where the party can be found.

  1. The Parties agree that a Golden Homes “Sold” board may be displayed on the Property for a period of 90 (ninety) calendar days after the date of fulfilment of suspensive conditions.

For as much as is possible you as an agent want to display a sold board. Sold boards are part of the company’s marketing tools and are very important for market exposure. Exceptions do arise when this becomes a threat to the wellbeing and safety of the occupier.

  1. The Parties warrant to each other and the Agent that all Tax issues, both personal and otherwise, including but not limited to tax returns and tax payments, are current and up to date.

If either party’s taxes are not in order the deal will be held up by SARS when the conveyancers call for their transfer duty receipt. SARS will require the taxes to be sorted out before issuing the receipt for the deal to proceed.

  1. The Seller hereby warrants that the proceeds from the sale of the property are sufficient to cover the outstanding bond and disbursement costs.

The cost summary included in the offer to purchase should help the seller determine whether he has sufficient funds available to cover the commission, cancellation of any mortgage bonds together with interest, outstanding municipal accounts and clearances, cancellation attorney costs, as well as other incidental costs. It is the seller’s responsibility to make sure he can cover all this cost and/or to be able to make arrangements for the payment of these costs.

IT IS NOT THE AGENTS RESPONSIBILITY TO ENSURE THAT THE SELLER HAS SUFFICIENT FUNDS AND IS NOT, AND SHOULD NOT, FEEL OBLIGED TO SACRIFICE HIS COMMISSION BECAUSE OF A SELLER’S FINANCIAL SITUATION.

  1. The Purchaser declares that he shall acquaint himself with nature, zoning, extent, beacons, boundaries, and servitudes as per the current or prior title deeds on the Property.

It is the responsibility of the purchaser to find out about any municipal servitudes over the property and on the title deeds. While it is a good thing for you as an agent to obtain these things and to know if there are any issues that could arise, it is not within the duties of your mandate. These are legal issues and the purchaser needs to be satisfied that he will take care of these things should he wish to know about them.

  1. This Agreement constitutes the entire agreement between the Parties and no terms or conditions not contained in this Agreement shall be of any force or effect. Furthermore, any amendments to this Agreement shall be of no force or effect unless reduced to writing and signed by both Parties. Should any of the terms of this Agreement be found to be invalid or voidable then the balance of the Agreement shall remain in full force and effect.

All the clauses in this OTP are of force, legal and binding. However, anything that has not been written in the contract is of no force or effect. Neither shall any addendums that you draw up which are not signed by both parties be of any force or effect either unless both parties have signed them.

If there is a clause in the OTP that the law might find invalid, then only that clause needs to be sorted out and an agreement come to. It does not void any other clause in the contract and the rest of the clauses in the contract are enforceable.

In addition, emails are also not binding as addendums to the contract.

  1. The Purchaser, if purchasing a property which is being governed by Body Corporate or a Home Owners’ Association, confirms that he will become a member of the said Body Corporate or Home Owners’ Association on the date of registration of the property into the name of the Purchaser, and agrees to be bound by the rules imposed by the Body Corporate or Homes Owners’ Association. The Seller shall be liable for the payment of any special levy imposed prior to the date of registration of this Agreement. The Purchaser shall be liable for the payment of any special levy imposed from the date of registration into the Purchaser’s name. Should the Seller be aware of a special levy about to be imposed, and not disclose it, this non-disclosure shall be deemed to be a material misrepresentation and the Seller shall become liable for the full payment thereof, notwithstanding the foregoing.

If the property is situated in an Estate Complex or Sectional Title Scheme, then there will be a Homeowner’s Association or Body Corporate whose rules and regulations the purchaser must comply with. The purchaser must agree to these and by signing this OTP he has bound himself to them. A copy of the rules and regulations must be supplied to the purchaser BEFORE he signs this offer. It is your duty as an estate agent to obtain a copy of these rules and regulations and to have them on hand. Many agents have told purchaser’s that they can have pets and then the purchaser moves in and is rid to get rid of his pets! Check the rules! Make sure that you have the newest rules which have been filed and approved by the Ombud. Rules and amendments to rules only become enforceable once they’ve been filed and approved by the Ombud in terms of the Community Schemes Ombud Service Act.

There are levies payable by all owners in an HOA and BC and the purchaser will become liable for this levy once he takes to transfer. If there is a current special levy running, then the seller is liable for the payment thereof up until transfer and thereafter the purchaser will become responsible for the balance of the special levy until it has been paid in full. If the seller is aware that a special levy is being introduced and he declares it to the purchaser – in writing in this OTP – then the purchaser will become liable for whatever balance is owing at the time of transfer.  After the new legislation became of force the special levy has mostly disappeared and usually gets shown on the levy statement and the purchaser must pay the balance. So it’s no longer the responsibility of the seller to pay the entire special levy, it rather becomes shared if it continues after registration.

You can negotiate this between the parties at the time of doing the offer, just do not ignore them.

  1. In this Agreement, the words signifying the singular number shall include the plural and ‘vice versa’ and words importing the masculine GENDER shall include the feminine and the neuter gender.

Any words in the offer that imply a singular pronoun such as “I” also include, we, us, them, they, etc. Any words on the contract using the word “he” includes she and any other gender someone may wish to be referred to.

  1. The Parties acknowledge that they are aware that there will be certain personal information requested of them in the form of ID, proof of residence, marriage certificates and ANC contracts if applicable, income tax numbers, banking details, new or existing bond account details, and undertake to furnish the Agent and Conveyancer with such personal information upon request. The Parties furthermore acknowledge that the personal information requested from them for the purposes of the transfer procedure and confirm that the said information may be transmitted to the Conveyancers, the Banks, Bond Originators, Councils, and SARS.

With the new POPI Act, you are not allowed to give or send someone’s personal information to someone else. In our line of business, it is necessary for us to send personal information to third parties involved in the fulfilment of the contract. With this clause, each party is giving us as agents the right to transmit their personal information to the parties stipulated above. However, for any other person outside of the above, it is not permissible for you, as an agent, to transmit or give this information to any other persons.

Take note of the SAGH Code of Conduct and IT policy.

  1. The Seller and Purchaser hereby confirm that they are not a VAT vendor in terms of the Value Added Tax Act. Initial ………

If the seller is a VAT vendor then there are special clauses that need to be included in the agreement dealing with the payment of the VAT. If there is no stipulation regarding the VAT, then the law assumes the VAT is INCLUDED in the purchase price. Consult your special clauses notes for the correct wording.

  1. INDEMNITY

All monies payable in terms of this Agreement shall be paid to the Seller’s nominated Conveyancer’s Trust Account ONLY. The Parties hereby indemnify the Agent against any liability, loss or damage which may be incurred in respect of any payments made. Furthermore, the Parties declare that they shall take personal responsibility to confirm the Conveyancer’s banking details directly with the Conveyancer.                                                                                                                                                                      Initial …

Under no circumstances are you as an agent allowed to request monies to be paid to you or your company. You may not even send banking details for the attorney or another person. The seller and the purchaser are encouraged to verify the baking details of the person they are transferring any monies to. This clause protects all parties, especially the agent, from any type of fraudulent interceptions. Make sure the parties understand and sign next to this clause!

  1. ACCEPTANCE

This offer shall hold good until _________________________________ and is irrevocable until then, despite a counteroffer.

You as the agent need to determine together with your purchaser how much time the seller will have to make a decision to accept the offer. The shorter the better, however, sometimes your client may not be available immediately and you need to give extended time. Once the purchaser has signed, he cannot withdraw the offer until you have had time to present. This is irrespective of any counter-offer the seller makes. If the purchaser does not accept the counteroffer and this date has not yet expired, the seller can still opt to accept the original offer.

Remember, you have been doing your job and you are entitled to your pay!

  1. SPECIAL CONDITIONS

Any additional clauses to the contract can be filled in here. Each clause must have its own number and be initialled by both parties. Alternatively, draw a line through this section and have both parties initial. This prevents anyone from adding anything afterwards. Remember, if it is not initialled by both parties you have no agreement.

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

THUS DONE AND SIGNED BY THE PARTIES ON THE DATES AND AT THE PLACES STATED HEREUNDER

DATE: _____________________________                            PLACE: ______________________________

 

WITNESS: __________________________                           PURCHASER 1: ________________________

NAME: ____________________________

ID: _______________________________

 

WITNESS: __________________________                           PURCHASER 2: ________________________

NAME: ____________________________

ID: _______________________________

If the Parties are married in Community of Property signatories above constitute the necessary consent.

 

DATE: _____________________________                            PLACE: ______________________________

 

WITNESS: __________________________                           SELLER 1: ____________________________

NAME: ____________________________

ID: _______________________________

 

WITNESS: __________________________                           SELLER 2: ____________________________

NAME: ____________________________

ID: _______________________________

If the Parties are married in Community of Property signatories above constitute the necessary consent.

 

DATE: _____________________________                            PLACE: _____________________________

 

PRINCIPAL: ______________________________________

On behalf of the Agency in acceptance of the benefits.

If your principal does not sign this little clause above the seller has the right to reject the payment of the commission. DO NOT neglect to have this signed by your principal!

The following personal details pages are self-explanatory. Make sure ALL the details applicable are filled in. This is part of your job description as an agent and it is also your responsibility to obtain the FICA documents required for transfer. Estate agencies, and in particular estate agents, are legally responsible to FICA all their clients. If you have filled these pages incorrectly and obtained the documentation requested, you will have fulfilled your responsibility as an agent.

THE FOLLOWING INFORMATION IS FOR THE TRANSFER AND LOAN APPLICATION

PURCHASER

PURCHASER 1
FULL NAMES
ID NUMBER
MARITAL STATUS Single COP ANC Traditional Foreign
DATE OF MARRIAGE
INCOME TAX NUMBER
PHYSICAL ADDRESS
POSTAL ADDRESS
TEL NO. OFFICE
TEL NO. HOME
CELL NO
EMAIL ADDRESS
NEXT OF KIN NAME AND NO.
COMPANY NAME
COMPANY ADDRESS
OCCUPATION
PERIOD OF EMPLOYMENT
PREV EMPLOY IF LESS 2 YEARS
PURCHASER 2
FULL NAMES
ID NUMBER
MARITAL STATUS Single COP ANC Traditional Foreign
DATE OF MARRIAGE
INCOME TAX NUMBER
PHYSICAL ADDRESS
POSTAL ADDRESS
TEL NO. OFFICE
TEL NO. HOME
CELL NO
EMAIL ADDRESS
NEXT OF KIN NAME AND NO.
COMPANY NAME
COMPANY ADDRESS
OCCUPATION
PERIOD OF EMPLOYMENT
PREV EMPLOY IF LESS 2 YEARS

I/We hereby certify the above information to be correct

______________________________________                   ___________________________________

Purchaser 1                                                                                   Purchaser 2

 

THE FOLLOWING INFORMATION IS FOR THE TRANSFER AND LOAN APPLICATION

SELLER

SELLER 1
FULL NAMES
ID NUMBER
MARITAL STATUS Single COP ANC Traditional Foreign
DATE OF MARRIAGE
INCOME TAX NUMBER
PHYSICAL ADDRESS
POSTAL ADDRESS
TEL NO. OFFICE
TEL NO. HOME
CELL NO
EMAIL ADDRESS
NEXT OF KIN NAME AND NO.
SELLER 2
FULL NAMES
ID NUMBER
MARITAL STATUS Single COP ANC Traditional Foreign
DATE OF MARRIAGE
INCOME TAX NUMBER
PHYSICAL ADDRESS
POSTAL ADDRESS
TEL NO. OFFICE
TEL NO. HOME
CELL NO
EMAIL ADDRESS
NEXT OF KIN NAME AND NO
TRANSFER ATTORNEY
CONTACT NAME
TELEPHONE NO. FAX:
BONDHOLDER
ACCOUNT NUMBER
AMOUNT OUTSTANDING

 

I/We hereby certify the above information to be correct

_______________________________________                 ___________________________________

Seller 1                                                                                           Seller 2

ANNEXURE A

SELLER COSTS SUMMARY

The following is an estimation of costs involved in the sale of the property

Gross Selling Price – This is the purchase price mentioned in clause 1 R
Less: The following are deducted from the gross selling price stated above.
Agents Commission – calculate the commission (including VAT if applicable) R
Outstanding Bond – get this info from your seller R
Bond Attorney cancellation fees including VAT (always about R5000) – R
Bond Cancelation – Varies but normally about 3 months interest payments (refund)

Check the bond account to see what the monthly interest payments are, times this by 3. This will give you the cancellation amount that will go on top of the outstanding bond amount. This together with the outstanding bond will make up the bond cancellation costs. The bank will recalculate this amount on transfer and refund to the seller any amounts that were overcharged.

R
Pro-rata Rates & Taxes / Levies (typically 3 months in advance) Get a copy of the rate or levy account and determine this cost accordingly. R
Electrical Clearance Certificate Find out from your principal what the going rate is in your area R
FICA Costs These are around R1000 but get an estimated figure from your attorney R
Outstanding Taxes (if applicable) If applicable insert this amount as well R
NETT SELLING PRICE Gross Selling Price less than the above will give you your nett selling price. This is the estimated amount that the seller will receive in his pocket, provided that he has disclosed all the above information to you correctly. R

 

DOCUMENTATION REQUIRED FOR TRANSFER: Obtain a copy of all the documents below as they become due.
Copy of ID/s – upon acceptance of the offer
Copy of Marriage Certificate (ANC Contract) – upon acceptance of the offer
Copy of Rates (and Levies) Account – upon acceptance of the offer
Copy of Bond Account – upon acceptance of the offer (or within a day or so)
Proof of Residence (not older than 3 months) – upon acceptance of the offer
Income Tax Number/s – upon acceptance of the offer (or within a day or so)
Title Deeds (If in Seller’s possession) – if there is no bond registered over the property then the seller will have the title deeds in his possession. If he does not, then the attorneys will need to make an application for copies which will incur an extra cost to the seller. If a title deed is missing bring it immediately to the attention of the attorney as the missing title deed need to be advertised at a cost and it causes a delay.
Electrical Certificate of Compliance – depends on the electrician.
If a Company: Applicable to all Trusts, Close Corporations, (Pty) Ltd, and LTD companies.
All of the above – all documents mentioned above for the person/s signing the agreement on behalf of the legal entities
Letter on Company Letterhead confirming person signing contract authorized to do so – A resolution will be needed if there is more than one trustee/member/director
Company Registration Documents – Trust documents are held by the trustees, Company documents would be from CIPRO, which the company should also have in their possession.
Deceased Estate: Letter of executorship/appointment – The will if available – If there is a deceased or insolvent estate then there would be an Executor appointed, either by the High Court or in the person’s will.

 

Signed:    ________________________                                                 ____________________

Seller                                                                                              Agent

 

The cost summary pages are a requirement according to clause 6f. As such it is your responsibility to complete these pages on behalf of your clients. While it is only an estimate it assists your clients in knowing what additional costs, they will be incurred in order for the transfer to take place. Practice filling in these forms!

ANNEXURE B

PURCHASER COST ESTIMATION

The following is an estimation of costs involved in the transfer of a property

Purchase Price – The purchase price as per clause 1 R
Transfer Duty & Conveyancing Fees (Incl VAT, deeds office, petties, FICA) – Use your Ooba App or other cost calculation App you are using R
Rates & Taxes / Levies – 6 Months – From the seller’s rates account, calculate 6 months of rates

Usually, the council starts billing the purchaser from the date of registration going forward, however in provinces such as the Western Cape and the Eastern Cape, the purchaser gets billed with a balance of the rates and taxes until the end of the financial year which is usually in June. The purchaser does usually pay the application fee for the rates and taxes. As regards levies, it depends on body corporate to body corporate but usually, the purchaser at least pays for the application fee for the figures as well as the insurance certificate. Some body corporates require the conveyancing attorney to apportion the levies and others instruct a conveyancer just to advise them of the date of registration and they apportion it. It’s always safe though to provide for an amount of R2 000 or R3 000 in case they require the attorney to apportion. Sometimes this amount can get quite big like R5 000 if it’s a unit in a scheme that’s more expensive.

R
Bond Registration costs, Bond Attorney Fee (Inc VAT, deeds office, Petties, FICA) – Use your Ooba App or other cost calculation App you are using. R
Valuation/inspection fee (1% of Bond) – The bond amount is the amount stipulated in clause 2. R
TOTAL TRANSFER COSTS – add all the above except the purchase price. R
Plus: Deposit – if there is a deposit payable include it in this field R
Plus: Electricity & Water deposit – different for each local municipality so check with your principal or local council. R
Total Costs – add the deposit and the utilities deposit to the total transfer costs. This amount will then give the purchaser an idea of the total costs he will need in order to take a transfer over and above the purchase price. R
 
 

DOCUMENTATION REQUIRED FOR TRANSFER:

Copy of ID/s – they must be clear copies.
Copy of Marriage Certificate (ANC Contract)
3 Months Original Bank Statements  (6 MONTHS IF SELF EMPLOYED) – must be stamped by the Bank, internet statements are not accepted.
3 Months Payslips
Proof of Residence (not older than 3 months) – as per the residential address stated on the purchaser’s details page.
Income Tax Number/s – Not required as a physical document but is needed for your FICA “know your client” and for the purposes of transfer as per clause 10c.
If a Company: – See Seller cost summary for details.
All of the above
Letter on Company Letterhead confirming person signing contract authorized to do so
Company Registration Documents

 

Signed:    ________________________                                                 ____________________

Purchaser                                                                                       Agent

 

The cost summary pages are a requirement according to clause 6f. As such it is your responsibility to complete these pages on behalf of your clients. While it is only an estimate it assists your clients in knowing what additional costs, they will be incurred in order for the transfer to take place. Practice filling in these forms!

 

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