The first part of your OTP will detail the seller and the purchaser’s details.
The next section will stipulate your purchase price. With our deal, we were going to put 10% down as a deposit and pay the remaining 90% at transfer. That’s why we inputted our details at 1.3 and scratched out line 1.3.1, 1.3.2, 1.3.3. This was something agreed with the owner and estate agent beforehand.
The following section is your bond (finance) input. Here you would input the amount of lending you would require for the property (i.e. 80% LTV). You can also request the specific interest rate you want from the bank. This is important, because sometimes a bank will loan you 2% above prime and it might kill your deal. Make sure that your offer is subject to a competitive interest rate.
The following section is your subject sale agreement, which stipulates whether you need to sale another property to acquire this one. Usually most purchasers are given 90 days to sale their old property to acquire the new one.
This section explains the occupational rent and benefit and risk.
This section stipulates the estate agents commission. Remember that this figure is ALWAYS negotiable. You are the client and if the estate agent wants to work with you, they sometimes need to lower their commission.
This section explains what could breach this contract, what the jurisdiction of the contract is and transfer details.
This is the section where you can explain which fittings and fixtures need to be done to the property before transfer. Here you can mention that the kitchen must be redone to a certain standard before transfer. If it is not done, the deal will fall through.
The following section stipulates:
- Sold board – allowing the agent to place a sold board on the property
- Domicilium – is a Latin term which, if directly translated to English, means “house for summoning and upkeep”. The general meaning thereof can be construed as the address nominated by a party in a legal contract at which it elects to receive all legal notices and documents
- Electric compliance certificate – stipulate what documentation is required to ensure the electrics of the house are in order
- Cooling off period – allowing you to terminate your offer within 5 days. This must be done in writing
The below explains some general agreements with regards to the sale (remember each OTP is different, make sure you read each section/clause and confirm it with your attorney). Also, there is a section for SARS as they will charge you transfer duties on properties over R900 000.
The final section of most OTP’s is your Other Conditions clause, which is known as your “subject to” section. Here you can stipulate exactly what your offer is subject to. Some common ones are;
- Subject to getting a builder in and accepting his quote of refurbishments
- Subject to getting 30% funds from an investor
- Subject to the roof being fixed and being approved by my architect
- Subject to partner approval