On the road to property ownership: The Offer to Purchase and Sale Agreement.
Category Advice
What is the difference between an Offer to Purchase and a Sale Agreement?
When a prospective buyer agrees in principle to purchase a property, he/she will sign the Offer to Purchase. The OTP will outline the offer and other things such as price, and any conditions attached to the purchase. An OTP becomes a Sale Agreement from the moment the purchaser signs the document. It is important to note that a Sale Agreement does not give legal ownership to the purchaser - that will only happen once the other necessary steps have been taken and conditions fulfilled.
In practice, there is little difference in meaning between an Offer to Purchase and a Sale Agreement; you may even hear it referred to as a Deed of Sale. These terms are used interchangeably therefore it's important that you understand the subtle differences between them, and the conditions of each before you sign anything.
What are the legal implications if I renege on a Sale Agreement?
If, for whatever reason, you decide not to go through with the Sale Agreement, this may have serious financial implications for you. Once signed, the Sale Agreement is, in effect, legally binding and therefore there will be penalties if you do not fulfil your share.
Depending on the conditions attached (which you have signed for on the document), you may have paid a deposit in good faith and to secure your property. If you are not able to fulfil your share, you will likely forfeit this deposit. A Sale Agreement will most likely also outline what the sale agent's commission on the sale is, and if this forms part of what you have signed, then you will be liable to pay this fee as well.
For the reasons above, it is imperative that you understand the terms and conditions of the Sale Agreement before you sign it. Unfortunately, if you do have to renege on the agreement, ignorance of the terms and conditions will not stand up to any legal scrutiny and you are liable for the cost attached to your share of the agreement.
Buying a new property is exciting, especially if you are a first-time buyer but the legalities and paperwork can be daunting. This is the time when you should approach your sales agent to ask all necessary questions - you do not have to sign anything unless you are comfortable to.
Always exercise caution, do your homework, and clarify any doubts - the sales agent wants to conclude the deal as much as you do and is therefore there to help you. It is reassuring to know that the Devmco Realty team is a hands-on team who are there to guide you at any time. Their sales office is open 7 days a week and you can book a face-to-face meeting or discuss your concerns on a Zoom call
Author: Devmco Realty
