Don’t be tempted to sign multiple purchasing offers on several homes in the hope that one will be successful – you may just find yourself in hot water
WORDS: HELÈNE MEISSENHEIMER – PHOTOS: SHUTTERSTOCK
If you’re in the market to buy a home, don’t make more than one offer on properties at the same time. Make sure you understand your legal rights and limitations; it could save you a lot of money and unnecessary stress.
Know your rights
Many people have the misconception that the Consumer Protection Act (CPA) gives them a cooling-off period when entering into a sales agreement. However, this is only applicable in certain instances, says regional director and CEO of RE/MAX of Southern Africa Adrian Goslett. “Many people don’t realise the implications of signing an offer to purchase (OTP). Once it’s signed by both the buyer and the seller, it immediately becomes a legal and binding sales agreement,” says Goslett. According to him, the cooling-off period, during which a buyer may cancel the agreement within five days from the date of signing the initial offer, is seldom applicable. “Buyers should never falsely assume that they can get out of an offer without any legal recourse. Instead, they should only sign one offer at a time and wait to hear the outcome before committing to any other offers,” he says.
What the law says
Section 29A of the Alienation of Land Act states that residential property transactions of R250,000 or less are subject to a cooling-off period of five working days from the signature of the offer to purchase. However, the cooling-off period doesn’t apply to residential homes that are sold for more than R250,000. Even in terms of section 16(3) of the Consumer Protection Act, a purchaser has the right to cancel the purchase of a property within five business days but only if the sale is a result of direct marketing. Direct marketing means that the person has been approached directly either in person, by mail, or by electronic communication for the purpose of promoting or offering to supply goods or services.
The cooling-off period will not apply to any sales that are a result of any other type of marketing, such as print advertising and show houses. Goslett says that it will also not apply if the purchase is made by a client with whom the estate agent is already working. The CPA also doesn’t offer protection to buyers who are purchasing from a private seller. “This means that sellers who don’t earn a living from selling or buying property are excluded from the CPA,” says Goslett.
Unlike the Alienation of Land Act, the CPA states that if the cooling-off period does apply, the five days don’t start from the date that the offer is signed, but rather the day the property is transferred into the buyer’s name. “Considering the transfer can take between three and six months after the offer is signed, cancellation of the agreement at this point could prove to be extremely problematic for all parties involved,” says Goslett. “If a buyer has signed an agreement, but he or she has had a change of heart, it’s best to be upfront with the seller and let them know as soon as possible, rather than breaching the contract.” It’s possible that the seller might be willing to let the buyer off the hook and look for another buyer. However, the seller could pursue the matter legally, which may leave the buyer with a very expensive impulse purchase on their hands
Before you sign
Ooba home loans CEO Rhys Dyer says buyers should take the following steps before signing an offer:
1. Ensure your finances are in order
Before you make an offer, ensure you have a bond pre-approval for the price range you qualify for. Also, ensure all the funds for your deposit, transfer and bond registration will be available when due.
2. Read the fine print
Make sure you read the offer to purchase carefully to understand what’s included and excluded in the sale, says Dyer. Every agreement has a section that lists fixtures (attached to the property, such as sanitaryware) and other belongings (not permanently fixed, such as electronic appliances).
3. Ask the right questions
Sellers may not legally hide defaults that they are aware off. However, if they believe a damaged area has been repaired, they’re under no obligation to mention past issues. That’s why home inspections are so important, says Dyer.
The 72-hour clause
Usually, as the buyer, you will stipulate in your offer to purchase the conditions that need to be met before transfer can take place, such as selling your own home first. However, the seller may invoke the 72-hour clause after you signed the offer to purchase.
