If the event does not occur, that is, the buyer does not obtain a borrowing authorization, no contract is concluded. This document protects the parties to the contract, as it contains conditions to which the parties have expressly consented and neither party can terminate the contract without being held liable for an infringement. With regard to the Alienation of Land Act, 68 of 1981, a cooling-off period is applied to OTPs for which the value of the property does not exceed R250,000. This means that a buyer can legally terminate the OTP within 5 working days of signing by written notice. This clause specifies when the buyer will move in. This is important considering that the buyer only becomes the owner on the day the transfer is registered. If the buyer intervenes before registration, compensation in the form of professional rents must be paid to the seller as the existing owner. The same principle applies when the seller remains in the property after the closing of the transfer registration. While each OTP may vary slightly in layout and content, there are 3 essential elements that must be included for the OTP to be valid and legally binding. This is a description of the parties to the contract of sale (i.e. buyer/seller/seller/n), the purchase price and the description of the property to be transferred. While these are the most frequently included sections, based on industry best practices, it`s always worth consulting with a real estate professional when entering into a purchase agreement or reviewing your purchase agreement who can advise you on your specific transfer.
If a buyer lends money to a bank to pay for the property, this information is recorded in the OTP.