The Lapsed Offer to Purchase

For prospective buyers who have found the right property, it is always an exciting but also a daunting time when an Offer to Purchase (OTP) has been signed and presented to the seller. The wait then begins before finding out whether or not it has been accepted.

Property Blog Articles | Advice | Contractual Matters | Market News

In general, there will be a finite period of time for this and we’ve set out a few key points and tips that can help prevent any ambiguity and conflict that can arise.

When the offer lapses due to time

In the majority of sale agreements, a blank section can be filled in by the buyer to indicate how long the seller has to accept the offer. The seller in turn then has a number of days in which he can choose to either accept or reject the offer. This is to ensure that the offer does not stay pending for a prolonged period of time which can be to the proposed buyer’s detriment. If no specific date or period has been noted, it is generally accepted that a ‘reasonable period’ will then need to run before the offer lapses.

If the offer is accepted after the stipulated date, the parties can then choose to revive the offer. It is best practice to then include an addendum signed by all parties setting out any bits and pieces that caused the offer to lapse and noting that both parties still accept and agree to the terms of the offer.

When an offer is rejected

If any changes are made to the agreement such as special conditions being inserted or changed, it will be considered that the seller has countered the offer and the original offer by the buyer has been rejected. If the changes are not acceptable by the buyer the offer is then deemed to have lapsed. The seller can then not revert to the original one by the buyer thereafter and instead an entirely new agreement will then have to be entered into.

When both parties wish to proceed

If the offer is seen to be out of time (i.e. the seller accepted it after the expiry period) it is held in accordance with South African case law that the expiry date in the offer to purchase was for the benefit of the purchaser and he or she is entitled to waive such benefit. This has the effect that the purchaser could then choose to waive the expiry date and continue with the sale.

This scenario does have the potential to cause disputes at a later stage and therefore it is always advisable to adhere to time periods to ensure that a correct and binding offer exists. Failing this, it is often in the best interests of both the buyer and seller not to continue with the ‘irregular offer’ but rather to sign a new one.

Follow Snymans on Facebook for more legal information, tips and news about property.

13147

Recommended for you

Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Purchase and ownership of vacant land

14425

Building on vacant land has unmatched possibilities when creating your dream home. There are, however, a few other aspects to consider when purchasing vacant land.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

The difference between movable and immovable property

14654

Miscommunication on what constitutes movable and immovable property can complicate the sale of a property and may even lead to litigation. It is important to draw a distinction between these when you sell or purchase a property in order to obtain clarity on what will be included in the property transfer.

Read More
Snymans Attorneys | Residential and Commercial Property Transfers
Contractual Matters

How to ensure a quick and smooth property transfer

19802

There will always be elements in a property transaction that will be out of your control as the purchaser or seller, however some elements can be managed in a way as to avoid unnecessary delays.

Read More
What Happens To The Ownership Of My Property When I Get Married
Contractual Matters

Marriage in or out of community of property?

20085

The marital regime selected at the time of entering into a marriage will have a significant impact on how ownership of property is dealt with within the marriage, which is why it is important to understand the different options available and select the one that best suits you.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

Minors and immovable property

19568

While the process for transferring ownership of immovable property remains largely the same in cases where one of the parties to the transfer is a minor, the minor’s contractual capacity must be carefully considered.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

The Lapsed Offer to Purchase

For prospective buyers who have found the right property, it is always an exciting but also a daunting time when an Offer to Purchase (OTP) has been signed and presented to the seller. The wait then begins before finding out whether or not it has been accepted.

Property Blog Articles | Advice | Contractual Matters | Market News

In general, there will be a finite period of time for this and we’ve set out a few key points and tips that can help prevent any ambiguity and conflict that can arise.

When the offer lapses due to time

In the majority of sale agreements, a blank section can be filled in by the buyer to indicate how long the seller has to accept the offer. The seller in turn then has a number of days in which he can choose to either accept or reject the offer. This is to ensure that the offer does not stay pending for a prolonged period of time which can be to the proposed buyer’s detriment. If no specific date or period has been noted, it is generally accepted that a ‘reasonable period’ will then need to run before the offer lapses.

If the offer is accepted after the stipulated date, the parties can then choose to revive the offer. It is best practice to then include an addendum signed by all parties setting out any bits and pieces that caused the offer to lapse and noting that both parties still accept and agree to the terms of the offer.

When an offer is rejected

If any changes are made to the agreement such as special conditions being inserted or changed, it will be considered that the seller has countered the offer and the original offer by the buyer has been rejected. If the changes are not acceptable by the buyer the offer is then deemed to have lapsed. The seller can then not revert to the original one by the buyer thereafter and instead an entirely new agreement will then have to be entered into.

When both parties wish to proceed

If the offer is seen to be out of time (i.e. the seller accepted it after the expiry period) it is held in accordance with South African case law that the expiry date in the offer to purchase was for the benefit of the purchaser and he or she is entitled to waive such benefit. This has the effect that the purchaser could then choose to waive the expiry date and continue with the sale.

This scenario does have the potential to cause disputes at a later stage and therefore it is always advisable to adhere to time periods to ensure that a correct and binding offer exists. Failing this, it is often in the best interests of both the buyer and seller not to continue with the ‘irregular offer’ but rather to sign a new one.

Follow Snymans on Facebook for more legal information, tips and news about property.

13147