The Offer to Purchase - usually called an OTP - is the document at the heart of every property sale in South Africa. When a buyer wants to buy your home, they submit an OTP. When you accept it, you have a legally binding agreement. Understanding what's in it before you sign is essential.
What Is an OTP?
An OTP is a written offer from a buyer to purchase your property at a specific price, subject to specific conditions. Once both parties sign it, it becomes a binding contract. You cannot simply change your mind after signing - there are legal consequences for pulling out of a signed OTP.
What Are the Key Elements of an OTP?
The purchase price. The amount the buyer is offering to pay.
The parties. Full names and ID numbers of both buyer and seller, and a description of the property (typically using the formal sectional title or erf number).
Suspensive conditions. Most OTPs are conditional on something - typically that the buyer obtains bond approval within a specified number of days (usually 21 to 30). If the condition isn't met, the OTP falls away and neither party is obligated to proceed.
The occupation date. When the buyer takes occupation of the property. This is not always the same as the transfer date. If the buyer occupies before transfer, they typically pay occupational rent to the seller.
Fixtures and fittings. What stays with the property and what the seller takes. Be specific here. If you're taking your curtain rails, light fittings, or built-in appliances, specify this in the OTP. Disputes over what was included are common.
Voetstoots clause. Most OTPs include a clause saying the property is sold "as is." This affects the seller's liability for defects.
Agent details. If an agent is involved, their commission and payment terms will be included.
What Happens After Both Parties Sign?
Once the OTP is signed by both buyer and seller, it's a binding agreement subject to any suspensive conditions.
If the buyer can't fulfil the bond condition: The OTP falls away. The sale doesn't proceed. The seller is free to relist.
If all conditions are met: The OTP becomes unconditional and the transfer process begins. The conveyancer receives instruction and starts the legal transfer.
Can You Cancel an OTP Once Signed?
Once signed by both parties and once all suspensive conditions are met, the OTP is a binding contract. Cancelling it has legal consequences.
If the seller pulls out: The buyer may sue for specific performance (forcing the sale to proceed) or for damages.
If the buyer pulls out (after bond approval): The seller may sue for damages. In practice, the seller's ability to recover damages depends on the specific circumstances and the OTP's terms.
The bottom line: don't sign an OTP unless you're serious about proceeding.
Tips for Sellers When Reviewing an OTP
Read the whole document. Don't just look at the price. Check the conditions, the occupation date, what's included, and any special conditions the buyer has added.
Check the bond condition timeframe. 21-30 days is standard. Shorter is better for you as a seller.
Clarify inclusions and exclusions upfront. If you're taking specific items, say so before the OTP is drafted to avoid disputes.
Consider using a conveyancer to review it. For a private sale, having your conveyancer review the OTP before you sign is worth the time.
Counter-offer in writing. If you want to change something - the price, a condition, the occupation date - counter-offer in writing. Verbal agreements are not enforceable in property sales.