- An offer to purchase is legally binding, and pulling out of it will usually incur penalties.
- However, if certain suspensive conditions aren’t met, the offer to purchase can be canceled without penalties.
- Don’t deliberately fail to meet a condition in order to release yourself from the deal; you’ll have to prove you can’t fulfill the condition and that you made an effort to do so.
The offer to purchase is the most important document pertaining to the house sale. Here, the buyer and seller agree on the terms and conditions for the sale to go ahead.
The signing of the offer to purchase by both parties then allows the buyer to apply for a home loan.
But what if the buyer or seller wants to pull out of the deal? Here’s what you need to know about canceling an offer to purchase.
Can the buyer or seller cancel an offer to purchase?
Yes, but it is a legally binding document, and doing so will incur penalties. Unless:
- A condition or clause included in the offer to purchase hasn’t been met by one of the parties.
- In the case of the 72-hour clause, the seller can accept someone else’s offer for the home, but they have to give the buyer 72 hours’ notice. Most sellers will refuse to remove this clause.
- The offer is less than R250 000. In order to protect low-income buyers, the law allows for a buyer to cancel the offer if it amounts to less than R250 000, but only if written notification is provided to the seller within five days of signing the offer to purchase.
What happens if the buyer cancels the offer to purchase?
- The buyer may lose their deposit.
- The seller may claim damages.
- The buyer will be liable for the agent’s commission.
- If the transfer of the property is already underway, the attorney responsible for it may also claim costs from the buyer.
What if the seller cancels the offer to purchase?
The seller can be sued or forced to go ahead with the sale.
Failure to by the seller or buyer to meet a condition of the agreement releases both parties from the offer to purchase. However:
You shouldn’t deliberately fail to meet a condition in order to free yourself from the agreement. You have to be able to prove that you aren’t able to meet it and that you at least made an effort. So don’t see it as an easy escape clause.
In summation, ensure you have the necessary funds and the commitment to fulfill the agreement before signing an offer to purchase.
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