7 things every OTP should include
You have found a property and you would like to make an offer - exciting times! Make sure your Offer to Purchase (OTP) document is watertight by checking that it contains the essentials - clearly and correctly set out:
1. Personal detailsOn the OTP, the names and ID numbers of both buyer and seller must match those on the copies of the identity documents that form part of the paperwork. Also check personal details like phone numbers and email addresses for correspondence. This reduces the chances of admin errors and delays.
2. Property descriptionThe OTP must refer to the property exactly as it is written on the Title Deed. This is important because it is what the transferring attorneys and the Deeds Office will use to register the property and transfer it to your name.
3. Purchase priceProvided your bond is approved, an OTP is legally binding, so don't offer a purchase price that you cannot afford. Work out your bond affordability beforehand and decide what you can and cannot commit to in terms of monthly home loan repayments. Don't forget the other costs of ownership (rates and taxes, levies if you're buying sectional title property, water, electricity, connectivity like fibre internet, etc.). Once you and the seller have signed, you're bound - it constitutes a Deed of Sale - so there could be financial penalties if you decide to pull out.
4. Occupation dateThe occupation date can either be on transfer of the property into your name, or earlier, in which case occupational rent will be charged. The amount of occupational rent should be stipulated. Occupational rent has the potential to cause animosity between buyer and seller, so even if you doubt it will come into play, it's a good idea to put it in your OTP.
5. Fixtures and chattelsMake sure you know upfront what's going and what's staying in terms of fixtures (things that are permanently attached to the property, e.g. ceiling fans), and chattels (items that are not permanent fixtures, e.g. appliances).
6. DefectsYour OTP should include a full list of defects. Have a professional home inspection done before making an offer, especially if you're buying an older property. Inexperienced homebuyers who try to save money by not doing this have lived to regret it - experts agree it is money well spent. There are two types of defects to look out for - patent defects (clearly visible, e.g. cracked walls, flaking paint, broken windows or a motorised gate that is not working), and latent defects (harder to spot, e.g. faulty geyser or leaking roof).
7. Special conditionsThese are circumstances that could delay the sale. For example, you have to sell another property before you can buy this one, you require home loan approval on your bond application, or the seller needs to stay on in the property for a certain period of time before they can move out. Put all of this in the OTP rather than springing it on each other later on, causing stress and unhappiness. It's all part of dealing in good faith.
Pay attention to detail of your OTP to make sure it packs a punch and gets you the deal. Once you have a signed and accepted OTP, BetterBond will take care of your bond application and before you know it you'll be a homeowner!