What is a Conditional Clause in an OTP?
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Purchasing property can become a drawn-out affair. Often we may find additional documents, clauses and legalese cropping up, irrespective of how many times we may have gone through the transfer process.
This is because every home and seller has unique conditions and sometimes stipulations over and above the standard requirements. Occasionally, contracts may include additional agreements in the OTP (Offer to Purchase) that both parties need to meet. These are known as conditional clauses.
What is a conditional clause?
Essentially, a conditional clause is any additional agreement outside the standard contract when signing the offer to purchase. A conditional clause must always state which party is responsible for what, when it should be done, and who covers the costs.
An example of this could be existing renovations on the property. Should a homeowner state that they will pay for the upgrades completed after the transfer process, this will form part of an additional agreement.
Homeowners must be clear about what is expected from each party and the consequences of failing to meet them. Failing to meet any of these conditional clauses after the agreement can have legal consequences.
Suspensive conditions
While it may seem simple enough in theory, the reality is that certain agreements might not be met due to extenuating circumstances. For example, you may have discovered your dream home after much searching but made the mistake of submitting your bond approval a few days later than stated in the contract.
In this case, a suspensive condition may apply to the clause if a specific time frame is stipulated. A suspensive condition is one that, if not met by the specified date in the agreement, would cause the entire agreement to lapse, and both parties would no longer be liable to its terms.
A seller has the right to accept another offer should it please them. This also frees the buyer from any litigious action, but they may be left in a tight situation if they have already sold their property.
Special Conditions
Much like a suspensive clause, a special condition provides the seller with an additional line of protection to account for the circumstance mentioned above. As such, establishing a time frame is essential.
Special conditions govern actions, such as when the seller needs to provide approved building plans or renovations. These details need to be agreed on by both parties before any documentation is signed.
Remember, purchasing a property is perhaps one of the most significant investments you will ever make. You must understand where liability falls and that you review all documentation with a fine-toothed comb. If you're unsure about conditional clauses and additional requirements, then please feel free to contact us.
Our doors are always open! Visit our website https://www.homesofdistinction.co.za/agents/ or pop by our offices for a chat. Our friendly property practitioners are always available to assist in this regard.
Homes of Distinction CC holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Bryce Anderson
