Lake Properties Lake Properties
First thing: read the Offer to Purchase (OTP) or sale agreement you signed. The OTP usually states:
- the deposit amount and who it must be paid to (conveyancer’s trust account, agent, seller, etc.),
- the exact due date for the deposit, and
- any clauses that say what happens if a deposit isn’t paid.
If the OTP requires a deposit by a set date and you don’t pay, that typically places you in breach of contract — which gives the seller rights to cancel the sale or claim damages.
2) Check for a suspensive condition (bond approval or sale-of-property clause)
Many South African OTPs are conditional — most commonly the condition that the buyer must obtain bond approval by a certain date. That’s called a suspensive condition: the sale only becomes binding if the condition is fulfilled. If that condition is not met in time, the agreement may lapse and the buyer can usually get their deposit back. But: you must comply with the process and time frames set in the agreement (e.g., apply for the bond promptly).
3) Communicate immediately — and do it in writing
This is the single best practical step. Call your estate agent and your conveyancer, then follow up with an email or WhatsApp message confirming what you discussed. Explain:
- why you can’t raise the deposit,
- how much you currently have available, and
- what you are doing to fix it (e.g., waiting on family funds, applying for a loan, arranging a bank guarantee).
Asking for a short extension or proposing an alternative (bank guarantee, staged payments, or lower deposit) can work — sellers often prefer a negotiated fix over the hassle and uncertainty of cancelling and re-marketing the property. Be aware there are clauses (for example a “72-hour” clause used by some sellers/agents) that may allow the seller to accept another offer while you try to meet conditions — so act fast.
4) Practical alternatives to raising a cash deposit
If you genuinely cannot produce the cash, here are realistic options to explore — quickly:
- Bank guarantee / guarantee from your bank — instead of cash, some banks will issue a guarantee to the seller confirming funds are available or payable on transfer. This is commonly used and accepted in property deals. It must be arranged with your bank and the guarantee document drafted correctly.
- Guarantee Deposit Account / escrow arrangements — some banks and services allow you to lodge funds into a special account or set up security that replaces handing over cash. Ask your conveyancer about Buyers’ Trust or a trust account arrangement.
- Bridge finance / short-term loan — a short-term personal or bridging loan to cover the deposit is possible but expensive; calculate the cost before committing.
- Family or private loan — a documented, time-bound loan from family can be the fastest route (but put it in writing).
- Negotiate a smaller deposit or staged payment — some sellers accept a reduced deposit or a phased deposit arrangement if they trust the buyer’s finance is solid.
Start these conversations immediately — some of these solutions (bank guarantees, bridging finance) take time to arrange.
5) Understand the seller’s legal remedies (and what you risk)
If you do nothing and the deposit deadline passes, the seller may:
- Cancel the contract and put the property back on the market; or
- Keep any amounts already paid and claim additional damages for losses; or
- Apply for specific performance (ask a court to force you to comply) — though the usual remedies are cancellation and damages. When quantifying damages, courts and attorneys will consider statutes such as the Conventional Penalties Act and contract wording. The seller may also claim wasted legal costs and the estate agent’s commission if the sale collapses because of buyer default.
6) A practical, step-by-step checklist you can follow right now
- Read the OTP — note deposit amount, due date and any suspensive/penalty clauses.
- Phone your agent and conveyancer immediately — then confirm in writing what you told them. (Time-stamped messages help.)
- Ask the seller (through agent) for a brief extension or to accept a bank guarantee while you finalise funds.
- Apply for any finance you’ll need (bond, bridging loan) and get proof of application — send it to the seller/conveyancer.
- If an extension is refused, get legal advice from a conveyancer or attorney immediately — they can advise whether the contract has any remedy clauses or whether a formal “letter of demand” should be sent.
7) A short real-life example (so it’s not just theory)
You sign an OTP asking for a 10% deposit within 7 days. Two days before the due date an expected transfer from the sale of your current property is delayed. You call the agent and explain, provide proof of the incoming funds and ask for a 7-day extension. The seller agrees to a short extension in writing. Meanwhile you arrange a temporary bank guarantee as backup. Because you communicated quickly and provided proof, the seller keeps the deal alive and you avoid breach. If you had stayed silent and missed the deadline, the seller could have cancelled and re-listed the property. (This is exactly how many disputes are avoided in practice.)
8) When to get legal help
If the seller threatens cancellation, claims damages, or if the OTP wording is unclear — get a conveyancer or property attorney involved right away. They can:
- interpret breach and remedy clauses,
- negotiate with the seller on your behalf, and -, where appropriate, draft notices or defend you against unjustified claims.
9) Final, honest takeaway
Missing a deposit deadline is fixable — if you act fast, communicate honestly and provide proof you’re working on a solution. Silence or delay is what turns a solvable money shortfall into a legal problem and a cancelled sale.
Lake Properties Pro-Tip
Never sign an Offer to Purchase unless you’re confident the deposit is already secured or you have a concrete, bank-backed guarantee in place. If you’re unsure, ask your conveyancer or mortgage originator to put a written plan in place before you sign — it protects you and makes you a stronger buyer.
If you know of anyone who is thinking of selling or buying, please call me
Russell
Lake Properties
www.lakeproperties.co.za info@lakeproperties.co.za
083 624 7129
No comments:
Post a Comment