CONVEYANCING
It ’ s every home buyer ’ s worst nightmare – you find your dream home ; your offer is accepted ; and you pay a deposit – only for the sale to fall through before the property is transferred into your name . The question now is , where does this leave your hard-earned deposit ?
The answer , says Jackie Smith , Head of Buyers Trust , a safe and secure bankhosted deposit solution for homebuyers and subsidiary of ooba Group , depends on the terms of the purchase agreement and the reasons for cancellation . It is also largely dependent on which party is responsible for the sale falling through ,” she adds .
“ If you , the buyer , are in breach of contract , and the breach cannot be rectified within a stipulated time frame , you could lose your deposit . The seller has the right to use the deposit to cover any damages , such as legal costs or agents commission , that have been incurred from the transaction falling through .”
A variety of factors may be considered a breach of contract under property law , with the most common one being a homebuyer backing out after signing an Offer to Purchase ( OTP ). “ Buyer ’ s remorse can be a massive factor ”, says Smith .
What constitutes a buyer ’ s breach of contract ?
While the sale of land in South Africa is governed by the Alienation of Land Act , and must be in writing , the buying of a home is most importantly a contract . The contract needs to list all conditions of the sale that are important to you so that there is no room for uncertainty . That can range from when occupation takes place and whether there is occupational rent or not , to whether the pool pump works , or the retractable washing line stays . The OTP or Sales Agreement usually also includes ‘ suspensive conditions ’ – certain conditions that must be met for the contract to be enforced . The most usual one is whether you will need a home loan approved to secure the finance for the purchase .
Once the OTP or Sales Agreement is signed by all parties involved in the property transfer , it is considered binding , and both the buyer and the seller are obligated to fulfil their parts of the transaction .
“ This means that if the buyer pulls out after signing , they may incur significant penalties , including the loss of their deposit ,” explains Smith . “ However , if the reason for the sale failing through is due to any of the
SA Real Estate Investor Magazine MARCH / APRIL 2023 45