What to know before signing an Offer To Purchase (OTP)
You've found a property you like, you've worked out the finances, and you're ready to put in an offer. So, what happens next?
You will need to submit an Offer To Purchase to the seller. Commonly known as an OTP, this is a document that contains all the terms and conditions attached to the purchase, setting out the sale agreement between the seller and the buyer of a property. The fact that it's called an 'offer' might sound like a preamble to the real deal, but it is in fact a legally binding document, so here are a few of the crucial things to be aware of before putting pen to paper.
Who drafts an OTP?An attorney or estate agent should draft the OTP. It should not be drawn up by someone who is not a property expert, and it's not a good idea to download a 'template' from the internet.
What to look for in an OTPIt's essential that you read the OTP with attention. Don't hesitate to ask if you're unsure about something. If you don't clarify at this stage, you could regret it later. Important aspects to look out for, include:
- Are the buyer's and seller's details correct?
- Is the property description correct, and does it match that of the title deed?
- Is the purchase price accurate?
- Are the occupation date and occupational rent amount in order?
- Are there any special conditions, e.g. securing a bond, or selling another property?
- Are the fixtures and fittings set out clearly in terms of which ones are staying or going?
- Has a list of defects been included?
Before you sign an OTPAs the buyer, the best way to ensure that nothing is missed, is to go over the property with the proverbial fine-tooth comb. As the seller, a comprehensive list of defects (both latent and patent), should be provided, and included in the OTP.
What if I change my mind after signing an OTP?Should you decide, for whatever reason, not to go through with your OTP, this could unfortunately be an expensive change of mind. If the seller signs your OTP, the sale agreement is in effect legally binding. If you do not fulfil your share, there could be serious financial implications. For example, you could forfeit your deposit, if you paid one, or be held responsible for the estate agent's commission, if such a fee was part of the deal. That's why you must understand the terms and conditions of the OTP before signing. Saying you didn't know what you were committing to will not stand up to legal scrutiny.
Despite these words of caution, don't let an OTP fill you with fear or dread - just do your homework. This is an exciting part of buying property. You're taking the next big step on your journey to owning a home. Good luck!