We are all aware of the saying “signing your life away”, but do we always take note of what it is we may be signing? South Africa has one of the best Deeds Registries in the world and while this is great it does mean that the property transfer process has quite a few regulations. Signing an Offer to Purchase has a few legalities that the property buyer, whether local or foreign, should be informed about.
You’ve been browsing, trying to find the perfect property and then suddenly you see it. It’s perfect, everything you dreamed of and you’re ready to make it yours, but hold your horses before signing that Offer to Purchase. In South Africa, signing an Offer to Purchase is legally binding, meaning that once signed there’s no real way of reneging on the deal.
While most countries have a similar ruling, UK does differ in the fact that parties can pull out of the deal almost right up to the day of transfer. This is especially important if you are going to be buying a property in South Africa subject to the sale of a UK property, as this can affect the sale and cause major delays.
A lot of the time foreigners who decide to buy property here don’t actually plan it. They come on holiday and after seeing the beauty South Africa has to offer, they decide to purchase a home here. Because of this, most clients don’t necessarily have the deposit readily available and when signing an Offer this should be taken into account. Most Offers to Purchase require the deposit on signature, however if you need to transfer funds from overseas, it needs to be noted in the offer to allow time to transfer funds into the country.
When it comes to the balance of funds and providing some form of guarantee, the best is to have the funds paid into the attorney’s trust account as this forms a guarantee. Clients can pay funds to the estate agents trust account or into their own Non Resident bank account, however a bank issued guarantee will need to be provided to the attorneys if funds are in the client’s Non Resident bank account, and this is a monthly cost until the funds are paid across to the attorney on registration. Guarantees from overseas banks are generally not accepted as there is no real way an attorney here can enforce the payment from an overseas bank.
Another point to consider is the clause for suspensive/subject to conditions. Recently we came across a client who wanted to sign subject to the exchange rate being at a particular level. This is not possible as no one can predict the exchange rate and the seller could land up waiting. Buying subject to the sale of your UK property can also create problems should the UK deal fall through at the last minute.
These few points will help you in ensuring that you know what to look out for when signing an Offer and getting the most out of your new purchase.
Clients who would like assistance with finding a home and making an Offer or want further information can contact us by clicking here. We will be happy to assist you through the entire property process.