Making An Offer To Purchase

As with a contract of sale document, making an offer to purchase immovable property can be a simple thing, if you follow a few important rules. For property sellers, these rules are as important, because they will help you know if an "offer" you receive is really a valid offer to purchase.

Simple Offer To Purchase

If a potential property buyer writes the simple sentence, "I, Piet Poggempoel, herby offer to purchase the erf at 10 Church Street, Springbok, from Sarie Marais for R50 000", on a little scrap of paper, signs it, and informs the offeree (Sarie Marais) about the terms of the offer, a valid offer to purchase was made.

Yes, the erf number does not appear on the offer to purchase, but it can be determined, because the street address does appear. And yes, this is a very, very simple offer to purchase, because no other terms, except the purchase price, is mentioned. But it is a valid offer to purchase the property.

Most offers to purchase will be more bulky than this one, but it is a good example for our discussion on making a valid offer to purchase.

Offer Becomes Contract

Should the offeree find the terms of the offer to purchase acceptable, and accept the offer in writing, the offer to purchase document becomes the binding contract of sale for the stated property. Yes, let me repeat: The offer to purchase document becomes the binding contract of sale for the stated property, once the offeree (usually the legal owner) accepts the offer to purchase in writing.

Some South Africans are under the impression that transferring attorneys will draw up the "actual" contract of sale at some later stage, but that is not true. The offer becomes a binding contract for transferring ownership of the property from the seller to the buyer. That is why it is so important to get the offer to purchase right, right from the start!

Valid Offer To Purchase

For an offer to purchase to be valid, some rules apply:

The offeror (buyer) and offeree (seller) must be clearly identified. The initials and surname is adequate, but it is better to have the full names and identity numbers as well.
The property must be clearly identified. The above offer to purchase relied on the street address to identify the property, and this may be enough, but it is better to state the correct erf number for a full title property, and the section number and sectional title scheme number for a sectional title property.
The offered purchase price for the property must be clearly stated.
All the material terms of the sale must be stated in the offer to purchase. "To be negotiated", is not acceptable. If any terms that are material to the sale of the property needs to be negotiated by the parties, the proposal does not become a valid offer to purchase until the parties have come to an agreement and reduced it to writing. Acceptance of a "To be negotiated" offer to purchase does not constitute a binding contract of sale, unless it is clear that the matter is in fact immaterial to the sale of the property. But what is "immaterial"? Rather write everything down.
The offeror must have the intention to offer to purchase the property. A letter stating that someone is "interested in buying" a property at a particular price is not a valid offer to purchase the property.
The offer to purchase document must be signed by the offeror.
Lastly, the offer to purchase must be brought under the attention of the offeree.

Drawing Up Offer To Purchase Documents

Most offers to purchase property are made using pre-printed documents with the clear title, "Offer To Purchase", right there on the front page. Real estate agents usually use pre-printed offer to purchase documents with blank spaces that need to be filled in.

Care must be taken to fill in ALL the blank spaces, and to delete any clauses that are not applicable. Clasues can be deleted by crossing them out, preferrably with two neat parralel lines drawn diagonally through the whole of the clause, and clearly writing the words, "Not Applicable", between these lines. Any deleted clauses must be initialled to avoid any disputes later.

Use simple, easy to understand language to fill in blank spaces, or when adding clauses to a pre-printed offer to purchase document. Remember that a clause should state what has to be done, by whom, and by when. A reasonable person should be able to clearly understand what the parties to the contract had in mind, simply by reading the clauses in the contract.

It is always a good idea to first draft the new clause on your writing pad, before writing it in the "Special Conditions" section of the pre-printed offer to purchase form. You can avoid a lot of deletions and work much neater if you hammer out the precise wording of the clause somewhere else first.

Annexures

Real estate agents usually have an arsenal of clauses on separate "annexure" pages that can be added to the basic offer to purchase form. Clauses such as a "72 hour clause", an "Eskom clause", a "subject to sale" clause, an "employer pays commission" clause and a "second agency clause" are some of the common annexures. These additional annexure pages must be referred to in the "Special Conditions" section of the offer to purchase document. "See Annexure A, Annexure B and Annexure C attached hereto.", is a sufficient reference.

Every inscription in the "Special Conditions" section of the offer to purchase should be numbered for clarity, and initialled to avoid any disputes. Also make sure that all deletions and other alterations to the offer document is initialled by the buyer.

Signing An Offer To Purchase

To be valid, the offer to purchase document must be signed by the offeror (buyer), or his authorised representative. If an authorised representative signs on behalf of the purchaser, annex the written authorisation to the offer to purchase document. This written authorisation can be contained in any document, including in the form of a letter, telegram, phonogram (do they still use those?), or fax. The authority must be clear in its intention and clearly readable. The representative should be indicated as signing "for and on behalf of" the actual offeror.

If more than one person is offering to buy the property jointly, the signatures of both parties are required. One signature is enough to make an offer to purchase valid, but to avoid any disputes, every page of the offer document usually gets initialled.

A signature and an initial is simply a mark by which a person identifies himself as signatory of the document. It doesn't matter if a signature is "ugly" or illegible. As long as it is the identifying mark of the person making the offer, it is valid. Where the signature is, is much more important than what it looks like!

The offeror has to sign in the space, or on the line, which has been provided. Disputes about the validity of contracts have arisen in the past, and signatures that do not appear in the correct places have lead to agreements being declared null and void in the South African courts.

Witnessing An Offer To Purchase

It is not necessary for an offer to purchase to be witnessed to be valid, but in practice it usually does. The witness does not have to acquaint themselves with the terms of the agreement. Witnesses only need to make sure that the identifying mark (signature) on the offer to purchase document belongs to the person whose signature he witnesses.

If an offer to purchase immovable property is made by a person who is married in community of property, under the Matrimonial Property Act 88 of 1984, the written consent of the other spouse, attested by two witnesses, is needed for the offer to be valid.