Offer to Purchase
The Offer to Purchase (“OTP”), becomes a binding sale agreement to sell property as soon as the seller accepts and signs it (in accordance with the Alienation of Land Act of 1981). No contract is entered into if the seller verbally acknowledges the offer but fails to sign it within the time frame specified. Once a decision to buy a property has been reached, a signed OTP with the relevant terms under which the buyer is willing to purchase the property must be presented to the seller.
How does an Offer to Purchase Work?
An OTP is often created by the estate agency appointed by the seller to sell the property and is then given to the seller once an offer has been made by the buyer. After being signed by the seller, an offer cannot be retracted and is therefore considered final. The conditions in the offer will state the time frame for the seller’s acceptance, which is often a few days after the purchaser signs and accepts. As a result, the purchaser cannot withdraw their offer until after the time frame for acceptance has passed. The offer may be accepted by the seller at any point during the time frame.
Time Frame of an Offer to Purchase
The time frame during which the seller must accept or counter an offer will depend on how much time the purchaser is willing to give him to do so, this time frame should be specified in the OTP. The offer expires if neither an acceptance nor a rejection takes place during this time. However, if the Seller accepts the offer beyond the expiration date, a new offer must be completed and signed by all parties. The estate agency mandated to sell the property is required to present all formal written offers to the seller, regardless of the price being offered. They are not permitted to withhold any offers from the seller.
The Sellers Role
It is important to keep in mind that the seller is under no obligation to accept the purchaser’s specified selling price, even if it is the advertised selling price. Although the seller has the choice whether to accept or decline an offer, if the seller rejects an offer of the full asking price, he/she may still be required to pay the estate agent’s commission because the agent would have fulfilled their duty.
When is an Offer to Purchase Conclusive
A binding contract is created when all required parties sign an OTP. It is crucial to remember that once the purchaser submits an offer, he/she is not simply showing an interest in the property, rather they are announcing a formal offer to purchase the property.
Suspensive Conditions in an Offer to Purchase
A suspensive condition is a condition in the sale agreement that has to be complied in order for the sale agreement to become enforceable between the parties. This includes the requirement to get a mortgage bond or to sell the purchaser’s current property. These conditions usually have a specified timeframe for which the purchaser is required to comply with, failing which the sale agreement will lapse.
Neither of the parties may terminate the sale contract if the requirements of the OTP have been complied with. Either party will be in breach of the sale agreement if they fail to perform their responsibilities as set out.
Contact Brookes Attorneys for More Information
If you have any further questions or queries, please feel free to contact Brookes Attorneys and our conveyancing team will be happy to assist.
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