The process of purchasing a home can sometimes feel never-ending. If you are working with a bond originator like O-YES Home Loans, you will have someone to guide you through the process. However, at some point, attorneys will become involved, and things may become a bit overwhelming. It is important to stay ahead of the attorney process to ensure a smooth transfer.
Once you have found the perfect home you wish to call your own, it is time to submit an Offer to Purchase (OTP). From that point forward, things become more serious, as there are numerous clauses, various documents to handle, and a ticking clock. It is crucial to avoid any complications or hidden issues along the way. Here’s what you need to do:
- Avoid unnecessary delays You are responsible for driving the transfer process forward, so make sure to follow these steps:
- Prior to submitting the OTP, ensure that you have received pre-approval for a loan. This will place you in a better position to obtain a loan from the bank smoothly and without any complications.
- Always be honest and provide accurate information to prevent disputes later on.
- Gather your documents Start collecting all the necessary FICA and credit documents ahead of time, so that they are ready for signing. You will need:
- Proof of residence
- A copy of your identification document
- Your income tax number
- Details regarding your marital and solvency status
- Information on how you will finance the transaction (proof of funds or loan pre-approval)
- Once you hand over your documents, the attorneys can draft the necessary transfer documents for signing. Remember to ensure that all the information you provide is correct and up-to-date.
- Understand the terms and legal terminology There is a lot of technical jargon that may be unfamiliar to you, so it is important to ask the right questions and comprehend the terms involved:
- The “Subject to bond approval” clause: Bond approval may take some time, and it is included as a suspensive condition in the Deed of Sale agreement. This means that the sale cannot proceed until your bond is approved.
- Insufficient loan amount: There may be cases where the approved bond amount is lower than the amount you applied for. Again, suspensive conditions are put in place during the transfer process to allow time for you to secure additional funds.
- Unfavorable interest rate: If you are not satisfied with the interest rate offered, it is important to note that the suspensive conditions will still be considered met. To address this, you should include your desired interest rate in the OTP from the beginning.
- The “Lapsed Offer to Purchase”: If the specified time limit passes, the offer may lapse. It is common for sale agreements to have a blank section where you can indicate the duration within which the seller must accept your offer, so be sure to include this.
- Offer rejection: If the seller makes changes or adds special conditions to your OTP, they are countering your offer and rejecting the original terms. If you are unhappy with the changes, the OTP will lapse, and a new agreement will need to be negotiated if both parties wish to proceed.
- Both parties wish to proceed: If the seller accepts your OTP after the specified expiry date, it is your decision as the buyer whether to proceed or not (South African law protects the purchaser). You have the option to waive the expiry date and proceed with the transfer. However, this could potentially lead to disputes later on, so it is advisable to put the agreement in writing or create a new OTP.
The “Voetstoots” clause: “Voetstoots” is a term that cannot be directly translated, but it essentially means “as is.” It protects the seller from being held responsible for defects that they are unware of.