The Offer to Purchase (AKA: the OTP/Deed of Sale/Sale Agreement) is the foundation of every property transaction. As Mortgage Originators, we see hundreds of Sale Agreements every year and even relatively minor errors/omissions can result in a deal unraveling. Although the majority of mistakes can be fairly easily rectified, it has been our experience that inaccurate OTPs can cause long delays or even the collapse of a transaction weeks after the sale was thought to be secured.
We feel it is important to remind Estate Agents, sellers and purchasers of the importance of accurate information on the OTP as this is a legal document requiring all details to be correct in every respect. In recent weeks several transactions have not been able to transfer on time because the property description as provided on the OTP was incomplete/incorrect, and in one instance the marital status of the seller was given as single when he was, in fact, married In Community of Property!
Of particular concern is the accuracy of information included in the sale of Sectional Title Units. The difficulty associated with Sectional Title properties comes from the fact that they often consist of the unit (apartment), plus a garage, and/or an ‘exclusive use’ parking bay and/or garden area. In many instances lately, the Agents have neglected to include all these details on the Offer to Purchase (OTP).
Using the OTP as the foundation the bank will construct its home loan offer around the information supplied. If the ‘exclusive use’ areas are not included the Bank’s assessment of the value of the property will be incorrect. The Home Loan approval will not include it and finally, and most importantly, it will not be included in the bank’s instructions to the Bond Registration attorney.
In these cases it is only when the attorney carries out a Deeds Search that the full extent of the property is revealed. This means that the attorney has to request “Amended Instructions” from the bank which inevitably leads to delays in the transfer and bond registration and in one case recently even led to the collapse of the deal when it came to light that certain “sections” reflected on the OTP had not been registered under the Sectional Scheme.
As brokers of the deal and professionals who charge for their services the onus is on Estate Agents to ensure that the Sale Agreement reflects full and correct details of all aspects of the sale including the property description, seller/purchaser details etc. The agent can obtain seller and property details by carrying out a ‘Deeds Search’ and we would recommend that agents use this tool to confirm the veracity of the information provided by the seller before they complete any OTP for signature by the relevant parties. For the seller and buyer it is advisable that they pay close attention to the OTP to ensure that their details have been correctly captured. All these measures can go a long way to safeguard against delays and heartache.