Why is it important for buyer to fulfill all the suspensive conditions before an offer is considered binding on both parties

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Let’s go step-by-step and elaborate on why it’s crucial for a seller to ensure all suspensive conditions are fulfilled before considering an Offer to Purchase (OTP) completed in South Africa.

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🔎 What Are Suspensive Conditions?

Suspensive conditions are clauses in an OTP that suspend the contract from becoming binding until a specific event happens.

Examples:

• The buyer must get a home loan within 30 days.
• The buyer must sell another property before proceeding.
• The buyer must get approval from the Body Corporate or HOA.
• The sale is subject to compliance certificates (electrical, gas, beetle, etc.).

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📌 Why It’s So Important for the Seller to Wait

1. 🔐 No Legal Contract Until Conditions Are Met

• A contract with suspensive conditions is not enforceable until the condition is fulfilled.
• Even though both parties signed the OTP, it’s still not a binding sale if the condition is unmet.
• Seller cannot legally demand performance (e.g., payment, occupation) unless the condition is satisfied.

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2. ⚖️ Legal Risk for the Seller

• If the seller acts as if the deal is complete too soon, they expose themselves to serious legal risks.
  • For example, allowing the buyer to take early occupation or refusing other offers.
• If the suspensive condition is not fulfilled, the OTP lapses, and the seller is left with no deal and potential loss.

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3. 💸 Financial Risk & Missed Opportunities

• The seller might:
  • Take their property off the market, losing out on potential better offers.
  • Incur costs (moving, cleaning, etc.) based on an assumption that the sale is final.
  • Agree to another purchase using the proceeds of a sale that hasn't yet become binding.

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4. 🧾 Transfer Cannot Proceed

• Conveyancers (attorneys handling the sale) will not proceed with the transfer process until they receive written confirmation that all suspensive conditions have been met.
• The Deeds Office also requires a legally valid sale agreement to process ownership change — and this cannot happen until the sale is binding.

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5. 🏦 Bank Financing Depends on Conditions

• If the sale is subject to bond approval:
  • Banks will not disburse loan funds unless the buyer fulfills all bond-related requirements.
  • If bond is declined or withdrawn, the sale cannot proceed — and the seller can’t claim damages unless breach is proven.

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✅ Practical Example:

Let’s say you, the seller, receive an OTP from a buyer:

• The buyer has 30 days to get bond approval.
• You accept and sign the OTP.

Now, what happens if:

• On day 31, the buyer still has no bond?
  • The OTP automatically lapses.
  • You cannot enforce the sale.
  • If you already cancelled other viewings, you’ve lost time and money.

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🧠 Summary: What the Seller Should Do

Best Practice	Why
Wait for written proof of condition fulfillment	Only then does the OTP become binding
Don’t cancel other offers too early	Protects you from lost opportunities
Avoid early occupation unless conditions are fulfilled	Reduces risk if sale falls through
Monitor timeframes carefully	OTP lapses automatically if the condition is not met in time
Work closely with the conveyancer	To get updates and official documentation

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In a property transfer what does the buyer pay and what does the seller have to pay

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Here's an expanded and detailed explanation of what the buyer and seller are responsible for paying in a South African property transfer:

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🔵 BUYER'S COSTS (in detail):

1. Purchase Price

• This is the amount agreed upon in the Offer to Purchase (OTP).
• It’s usually paid into the conveyancer’s trust account and only released to the seller upon successful registration of transfer.

2. Transfer Duty (Paid to SARS)

• A tax payable on property purchases over R1,100,000 (as of 2025).
• Calculated on a sliding scale.
• Example: For a R2,000,000 property, the buyer would pay around R37,500 in transfer duty.
• First-time buyers should always check if they qualify for exemptions or rebates.

3. Transfer (Conveyancing) Attorney Fees

• These are legal fees for the attorney appointed by the seller to handle the property transfer.
• The buyer is responsible for paying this fee, which is based on the purchase price.
• The higher the price, the more the fee.
• Also includes VAT, and an additional charge for disbursements like postage, FICA verifications, etc.

4. Bond Registration Costs (if financing with a loan)

• If the buyer takes a home loan, the bank appoints a bond attorney to register the mortgage.
• The buyer pays this attorney’s bond registration fee, also linked to the bond amount.
• There is also a once-off bank initiation fee (around R6,000 – R7,000).

5. Deeds Office Fees

• A government charge for registering the transfer and/or bond with the Deeds Registry Office.
• The amount depends on the value of the property and is paid by the buyer.

6. Occupational Rent (if applicable)

• If the buyer moves in before registration is complete, they usually pay occupational rent to the seller.
• The amount is typically specified in the OTP and is often calculated as 1% of the purchase price per month.

7. Pro-Rata Rates and Utilities

• The seller pays rates in advance, but the buyer reimburses them for any portion after the transfer date.
• Applies to municipal rates, water, electricity, etc.

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🔴 SELLER'S COSTS (in detail):

1. Estate Agent’s Commission

• Paid by the seller upon successful registration.
• Typically ranges from 5% to 7.5% of the selling price (plus VAT).
• Deducted by the conveyancer directly from the proceeds before paying the seller.

2. Bond Cancellation Costs

• If the seller has an existing home loan, it must be formally cancelled by the bank.
• A bond cancellation attorney (appointed by the bank) handles this, and the seller pays a cancellation fee (± R3,000–R5,000).
• The bank also requires 90 days’ notice, or they’ll charge penalty interest.

3. Rates Clearance Certificate

• Required by the municipality to confirm that all rates, refuse, sewerage, water and related charges are fully paid.
• The seller typically pays 2–3 months in advance.
• Any unused portion is refunded to the seller after registration.

4. Compliance Certificates

These are mandatory in most transfers. The seller must pay for and provide:

• Electrical Certificate of Compliance (COC) – valid for 2 years.
• Beetle Certificate – required in coastal areas.
• Gas Compliance Certificate – if gas appliances are installed.
• Electric Fence Certificate – if applicable.
• Plumbing Certificate – required in Cape Town.

If the property fails inspection, the seller must fix the issues before certificates are issued.

5. Capital Gains Tax (CGT)

• Applies if the property is not the seller’s primary residence, or the gain exceeds R2 million.
• Tax is payable on the profit (capital gain) and is declared in the seller’s tax return.
• SARS calculates CGT based on market value, purchase price, and qualifying expenses.

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✅ WHO PAYS WHAT – QUICK RECAP

Item	Buyer Pays	Seller Pays
Purchase Price	✅	❌
Transfer Duty (SARS)	✅	❌
Transfer Attorney’s Fees	✅	❌
Bond Registration (if loan is taken)	✅	❌
Bank Initiation Fees	✅	❌
Deeds Office Fees	✅	❌
Occupational Rent (if early occupation)	✅	❌
Municipal Rates Advance Refund	✅ (reimburse)	✅ (pay upfront)
Estate Agent Commission	❌	✅
Bond Cancellation Fees & Penalty Int.	❌	✅
Compliance Certificates & Repairs	❌	✅
Capital Gains Tax	❌	✅

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