It is not unusual to find a property you like, put in an Offer to Purchase only to find better property elsewhere. Or, in the process of purchasing the home, an inspector discovers there is more damage to the home than the Seller disclosed. Can you cancel your Offer to Purchase? If yes, how?
The Consumer Protection Act
On 1 April 2011, South Africa passed the Consumer Protection Act, which allows Buyers to cancel the Offer to Purchase under certain conditions. If you came to know about a piece of property through direct marketing, you have a legal right to terminate your offer regardless of your reasons. Direct marketing is defined as advertising through which businesses contact the consumer directly, including by way of electronic communications, telephone calls and cold calling.
In these circumstances, you may rescind a sale agreement within 5 days of signing it (called the cooling off period) or in some cases within 5 days of taking transfer of the property, and the Seller has 15 days to return any payment after receiving the cooling off notice.
Suspensive Conditions
Another way to cancel an Offer to Purchase can be through suspensive conditions. A suspensive condition is a requirement in the contract between you and the Seller that needs to be met before the transaction can continue.
An example of a condition can be that the Buyer (you) needs to secure X amount of financing within a set period of time. If a suspensive condition is not met, the Offer to Purchase is considered legally to be null and void.
Cancelling a Breached Contract
The Offer to Purchase, like any other contract, is legally binding. If you have missed the cooling off period and have already met all the suspensive conditions, cancelling the contract is a breach on your part.
In this case, it is important to know that the Seller has legal right to force the sale. In other words, the Seller can take you to court and order you to continue with the transaction, whether you want to or not. If the adjudicator rules in their favour, you will have no choice but to purchase the property.
In some cases, the Seller may sue for damages. Depending on the stage of the transaction, you may be required to pay the costs of the process. This includes estate agent commissions, attorney fees and transfer costs.
In any case, you need to put your request to withdraw the Offer to Purchase in writing. An experienced estate agent not only helps you draft a withdrawal, but can guide you through the process from the very beginning to help you avoid costly mistakes.