An Offer to Purchase, termed an OTP, is essentially the agreement that is signed by an interested buyer and the seller of a property, and contains all the conditions of the sale of property between the buyer and the seller. It is also called an Agreement of Sale.

It is critical that you, as the buyer, understand the purpose and criteria of an Offer To Purchase before you sign it, as it is a legal document and you are contractually bound by the terms and conditions contained therein once you have signed it.

The wording of an Offer To Purchase document will vary in different agreements used by Estate Agents, but there are common clauses in OTP’s.

Without going into extensive detail of each clause, an Offer To Purchase will commonly include clauses such as:

1. The parties that are involved in the sale, such as the buyer and the seller.
2. The legal description of the property that is been sold.
3. The purchase price that the buyer is offering the seller for the property.
4. Terms and Conditions of how the Purchase Price will be paid including:
   1. Source of funding
   2. Method of payment
   3. Payment deadlines
   4. Any guarantees
5. The conveyancing attorney, usually nominated by the seller, who will be handling the transfer of the property.
6. The transfer and registration details of the property:
   1. Expected date of transfer
   2. Estimated transfer costs
7. Occupation date: This is the expected date the buyer can occupy the property. In some instances, the buyer can move in earlier if the seller has vacated the property.
8. Occupational rent: This is an agreed rental sum that can be paid by either the buyer or seller depending on who is still occupying the property after it has been transferred to the new owner.
9. Occupation given to the buyer subject to any existing tenancy or whether the property will be vacant.
10. Details of fixtures and fittings that are included in the purchase price. This allows the seller to exclude any sentimental or unique fittings that will be removed by the seller before vacating the property.
11. Suspensive/special conditions, for example:
    1. OTP subject to the buyer obtaining a bond.
    2. The buyer needs to sell his/her property first, which is also known as a subject to sale, in order to finance the purchase of the new property.
    3. Subject to the buyer viewing the property, if the buyer has to travel from afar to view the property, and is making the offer based on viewing it online.
    4. The seller may want to successfully purchase another property before selling their current property.
12. 72 hour clause or marketing clause:
    The 72-hour clause is a clause that the seller is entitled to include in the OTP, especially in the case where there is a lot of demand for the property. It allows the seller to continue marketing the property for back-up offers. Should the seller receive a better offer than the previous offer, then the seller can activate the escape clause by notifying the original buyer about the back-up offer. The original buyer will then have 72 hours to comply with the suspensive conditions in the Offer to Purchase.
13. Agents commission: This is the commission that the seller has to pay the estate agent when the property is transferred to the new owner.
14. Breach of Contract details Most OTP’s have several breach of contract details, and while considered part of the agreement, one should read these breach terms carefully
15. Warranties and undertakings: This covers any obligation that the seller or buyer has to fulfil during the term of the Transfer.
16. Compliance certificates: There are numerous compliance certificates that the seller has to pay for as part of the sale. The details of which compliance certificates are required, will be indicated in the OTP.
17. ‘Voetstoots’ clause
    This clause effectively states that the buyer is buying the property ‘as it stands’ with all existing defects and that the seller is not responsible for any hidden defects.

Having said this, the seller cannot knowingly hide a latent defect and the buyer must be notified of any defect that he/she would not have seen when viewing the property.

You must understand the clauses contained in an offer to purchase to avoid any costly disputes.

It is advisable to consult with an attorney should you not understand the contents of an OTP BEFORE you sign any Offer to Purchase/Agreement of Sale.