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The Offer to Purchase Agreement – A brief overview (Part 3)

This is our final article on the Offer to Purchase Agreement – A quick overview.  If you’ve missed parts 1 and 2 of this article, kindly follow the following links to our website, where you can read both: https://oreillylaw.co.za/the-offer-to-purchase-agreement/ and https://oreillylaw.co.za/the-offer-to-purchase-agreement-part-2

Delay / Breach


Numerous factors can influence how quickly property is transferred from a buyer to the seller.  However, the idea is that these factors are identified before the offer is signed to prevent unnecessary delays.  Such factors can include, but are not limited to:


  • Outstanding certificates and building plans
  • Arrear rates and taxes
  • Unknown structural defects
  • Tenants
  • Change in buyer’s financial situation etc.


Although the list mentioned above is not always necessarily due to either party’s fault, there have been situations where a buyer or seller caused the delay on purpose.  If either party causes a delay, the aggrieved party may be entitled to place the party in breach on terms to rectify such breach within a certain period (usually 7 days).  If the defaulting party remains in breach, the aggrieved can claim specific performance or cancel the agreement and claim damages.  It is therefore essential that both the buyer and seller are well-advised beforehand what they need to get in place to have, first of all, the property ready to be sold, and on the buyer’s side, getting clarity on the financial and legal requirements to effect a successful and seamless sale.


Transfer and Costs


In practice, the seller has typically the privilege to choose the conveyancer, even though the buyer is liable for the transfer fees and disbursements.  Nothing prevents the parties from choosing a conveyancer who has either been requested by the buyer or suggested by the estate agent.  This is a matter of discussion and negotiation during the signing of the OTP.


Transfer costs are calculated on a sliding scale depending on the purchase price.  The higher the purchase price, the higher the transfer fees will be.


The same rule applies to transfer duty, although no transfer duty is payable on a property below R 1000 000.00 (One Million Rands).




The warranty clause contains warranties by the seller, given to the buyer regarding its authority to sell and the condition and encumbrances on the property that could affect the buyer’s decision to make an offer.


For example, it would be unfair to a buyer if a seller tries to sell a property to them, where the seller has received an expropriation notice or has a binding lease agreement with a tenant. In contrast, the seller is aware of the buyer’s intention to move into the property himself after transfer.


From the seller’s point of view, it should be warranted by the buyer that they can indeed purchase the property, or at least consist of the means to buy the property.


Warranty clauses should be clearly drafted and well explained to both parties to make an informed decision.




It is general practice for a buyer to make an offer on a property that expires within a specific period.  This will differ from situation to situation, but usually, the buyer will try to pressure a seller by making an offer but giving the seller only 24hours to accept.


The seller will not have much time to consider its options, and if they fail to accept within the given time frame, the offer expires. Whether this clause is used as a bargaining tactic or simply not to let the buyer hanging will vary, but it is essential to inform both parties of the implication of the expiry date.


We attempted to discuss the contents of the essential OTP clauses to give you an easy-to-understand explanation.  Should you require legal services regarding the drafting, illustration, or interpretation of OTP’s, please do not hesitate to contact us.