Whether you’re a buyer or seller of a property, it is important to get independent legal advice from your attorney before signing an offer to purchase.
While it is possible to sell one’s property privately, the seller will still need to have a conveyancing attorney attend to the transfer, and while an estate agent might see to the sale, an attorney is still needed, again for the transfer – so it makes sense to seek the attorney first, who will oversee the drafting of the contract and explain the terms therein to you, says Charlene Joubert, of Henkes Joubert Barry Inc. Attorneys & Conveyancers.
In terms of South African Law, it is the duty of the appointed conveyancer to protect the seller’s best interests when attending to the conveyancing process, even though the buyer pays the conveyancer’s fees. The conveyancing attorney also has a duty to act fairly towards the buyer, but a buyer can seek independent advice to help guide him through ensuring that the offer he submits is the best offer possible and that the implications of signing the offer do not put him at risk in any way, she said.
In a typical contract, various clauses are included which will dictate the conditions of the sale, that either buyer or seller might not understand or can have certain implications which might not have been intended.
“In light hereof, it is advisable to peruse the offer carefully with your attorney (whether you are the buyer or seller) so that they can ensure the conditions imposed in the contract correctly reflect your intention,” said Joubert.
A typical example of a clause that sometimes causes confusion is the 72-hour clause, often known as the “continued marketing” clause.
It will possibly read as follows:
“1. The Seller may continue to market the property until the fulfilment of all suspensive conditions contained herein.
- Should the Seller during this time receive an acceptable offer the Seller shall have the right to call upon the Purchaser by notice in writing, to waive all suspensive conditions to which this offer is subject within 72 (seventy-two) hours (which shall exclude Saturdays, Sundays and Public Holidays). If the Purchaser fails to waive the suspensive conditions within 72 (seventy-two) hours the Seller shall be entitled (but not be obliged) to accept the second acceptable offer, upon which this offer shall cease to be of any further force and effect and shall accordingly be void ab initio.”
Suspensive conditions relate to the conditions to which a sale has been made subject to, such as the purchaser having to sell his property or having to obtain mortgage finance to purchase the property. If this uncertain future event does not occur, it will be as if the offer to purchase was never concluded between the parties. Should the 72-hour clause be contained in the offer to purchase the seller may continue marketing the property until the offer is no longer conditional i.e. the suspensive condition is fulfilled or is not fulfilled within the specified period. Should a seller receive a more acceptable offer during this time the purchaser is effectively given 72 hours written notice to waive the suspensive conditions or to ensure fulfilment thereof. If the purchaser cannot do this the contract is void ab initio (to be treated as invalid from the outset) and the seller may accept the second offer.
A more acceptable offer is one where the buyer either submits a cash offer, has a higher deposit with a guaranteed finance source, or doesn’t have a property to sell first. This clause gives the seller a further opportunity of concluding an offer to purchase, rather than having to rely on the first offer only, which could fall through if the suspensive conditions are not fulfilled, and then as a consequence lose out on a ‘more acceptable offer.’ A more acceptable offer can also be a higher offer, so if a second buyer does offer more money, the first buyer is given an opportunity to meet the current offer within the 72-hour period or walk away, said Joubert.
Meeting the current offer will not mean the first buyer has to match the offer of the second buyer, it will simply mean he has to waive his right to rely on any suspensive condition, in other words, he can possibly arrange to buy cash if he does not obtain a bond and therefore sign an addendum to the agreement to waive his right to walk away if no bond is obtained.
“What the attorney will often tell you is that you, as the purchaser, are the one in control of the offer at the time that you are considering submitting it and that you don’t simply have to accept a pre-drafted contract. You can dictate the content of the clauses (within reason) and the seller will usually have two days to accept, decline or submit a counter offer.
“If the deletion of the 72-hour clause is not accepted by the seller and he counter offers by inserting the deleted clause in the counter offer, it does not necessarily mean that all is lost. By getting the first offer in, the purchaser still has the advantage and the chance to get the finance in the 72 hours or come up with alternative funding. Strengthen your offer as much as possible, by putting down a larger deposit, shortening unnecessary lengthy time frames for bond approval, or applying immediately for your mortgage finance helps. Your attorney will be able to advise you on ways in which you can strengthen your offer.
“By consulting a lawyer to represent your interest on a contract, you basically improve your chances of getting your offer accepted but at the same time protect your interests. The seller, too, can be assured that his attorney will look out for his interests and will ensure that all the conditions placed on the buyer are met,” said Joubert.
Source: Henks Joubert Barry Attorneys; email email@example.com.