A seller may receive numerous offers to purchase on a property being sold and may select which to accept or reject. However, an offer to purchase is a legal document and once signed by both the buyer and seller, it becomes a legally binding agreement.
As with any such contract, it is vital to scrutinise all the terms and conditions within the contract carefully to make sure everything is in order before signing. Once signed though, both the buyer and seller are bound by these terms and conditions, and are required by law to perform accordingly to meet their obligations based on this agreement.
However, there are certain situations under which an offer to purchase may be cancelled after signing, and a new offer to purchase signed.
One such situation is where the price of the property being sold is less than R250 000. In such property transactions, there is an automatic “cooling off” period that typically lasts five days. During this time, should either party to the agreement decide not to proceed with the sale for whatever reason, they may cancel the contract in writing with no further consequences. As such, should the seller decide that there is a more beneficial offer for the property, he may accept this alternative offer after cancelling the original.
Another situation where a seller may cancel an offer to purchase in favor of another, is where this is allowed within the timeframe of and prior to a suspensive condition contained within the contract being fulfilled. This is also known as the continuing marketing clause. For example, should the sale of the property be dependent on the buyer obtaining the necessary finance from a financial institution within a specified period of time, this suspensive condition may also include a clause allowing the seller to accept an alternative offer and cancelling the current offer after giving due notice. This is to protect the seller from losing out on a sale while waiting for a potential buyer’s bond approval.
This is only possible, however, where such a clause is included in writing in the signed offer to purchase.
It is also worth noting that before accepting a new offer to purchase, a seller should confirm cancellation of the first signed offer to purchase in order to avoid any legal recourse due to breach of contract.
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