You have found a property that appeals to you, sorted out the finances, and are ready to make an offer. So, what happens next? You will need to submit an Offer to Purchase (OTP) to the seller. The OTP is a legally binding document that outlines the terms and conditions of the property purchase agreement between the buyer and the seller. Before signing this important document, here are some crucial aspects to be aware of:
Who prepares the OTP? An attorney or estate agent should draft the OTP. It is not advisable to use a template downloaded from the internet or have someone without property expertise create it.
What to look for in the OTP Carefully read and review the OTP, seeking clarification if any aspect is unclear. Pay attention to the following key points:
- Ensure that the buyer’s and seller’s details are correct.
- Verify that the property description matches the details on the title deed.
- Confirm the accuracy of the purchase price.
- Check that the occupation date and occupational rent amount are in order.
- Identify any special conditions, such as securing a bond or selling another property.
- Ensure that the fixtures and fittings are clearly specified regarding what stays or goes.
- Verify if a list of defects has been included.
Points to consider before signing the OTP As the buyer, thoroughly inspect the property to avoid overlooking any issues. As the seller, provide a comprehensive list of defects, both apparent and hidden, which should be included in the OTP.
What if you change your mind after signing the OTP? Once both parties have signed the OTP, it becomes a legally binding agreement. Changing your mind afterward can have costly consequences. Non-fulfillment of your obligations could result in financial penalties, such as forfeiting your deposit or being liable for the estate agent’s commission if specified in the agreement. It is crucial to understand the terms and conditions of the OTP before signing, as claiming ignorance will not hold up in a legal context.
Despite these cautions, do not let the OTP overwhelm you. Approach it with a sense of excitement and do your due diligence. This is an exciting step towards owning a home. Best of luck!