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Let's go deeper into the differences between a Deed of Sale and an Offer to Purchase in the context of South African real estate, with a step-by-step breakdown of how each one fits into the transaction:
π· 1. Offer to Purchase (OTP) – The Starting Point
✅ What It Is:
An Offer to Purchase is a formal written offer made by the buyer to the seller to buy a specific property. It includes all the terms and conditions that the buyer is willing to agree to, such as:
- Purchase price
- Deposit amount
- Occupation date
- Inclusions and exclusions (e.g., fixtures)
- Conditions (e.g., subject to bond approval or sale of another property)
✅ Legal Status:
- Once both buyer and seller have signed the OTP, it becomes a legally binding agreement.
- This contract is enforceable in court.
- It is often drafted by an estate agent or conveyancer.
✅ Conditional Nature:
- Many OTPs include suspensive conditions, which means certain things must happen before the sale can go ahead (e.g., bond finance must be approved within a certain number of days).
- If these conditions aren't met, the agreement may lapse.
π· 2. Deed of Sale – The Contract Becomes Final
✅ What It Is:
The Deed of Sale is essentially the finalised version of the OTP once all conditions are fulfilled. In many cases, the OTP itself becomes the Deed of Sale. There is often no separate document—it is simply the status the OTP takes after all suspensive conditions are met.
✅ Role in Transfer:
- Once the Deed of Sale is in place, the conveyancer (property lawyer) uses this document to prepare for transfer of ownership at the Deeds Office.
- It forms the legal basis for registration and ownership change.
- It also helps with the issuing of clearance certificates, payment of transfer duties, etc.
π Key Differences in Role & Timing:
| Point of Comparison | Offer to Purchase (OTP) | Deed of Sale |
|---|---|---|
| Purpose | Sets out the buyer’s intent and sale conditions | Final document confirming legal sale |
| Stage in Transaction | Early stage (agreement phase) | Later stage (transfer and registration) |
| Legally Binding? | Yes – once signed by both parties | Yes – once all conditions are fulfilled |
| Conditions? | Often subject to bond, sale of another property | No – conditions already fulfilled |
| Used For? | Offer, negotiation, and commitment | Transfer process and title registration |
π Example Scenario:
- Buyer signs OTP for a house for R1.5 million, subject to obtaining a home loan.
- Seller signs – now it's a legally binding agreement, but not yet final.
- Buyer secures bond approval and all other conditions are fulfilled.
- The OTP is now considered the Deed of Sale.
- Conveyancer uses the signed and fulfilled OTP (now deed of sale) to prepare documents for the Deeds Office.
- Property is registered in buyer’s name — ownership officially transfers.
✅ Final Clarification:
- In South African law, these terms can sometimes be used interchangeably, especially because a signed OTP becomes the Deed of Sale when all conditions are met.
- However, their function and timing in the transaction are very different
