Offer to purchase question

[zerocool2009]

Lot's of "this is what you should have done". I know. It's simply "I didn't know". You don't know these things until you know these things. Every one is a learning experience though, and this latest OTP has been a teacher of note. So far I've learned:

1. Don't sign an OTP without seller's info on there.
2. Don't sign an OTP without the list of what's included and excluded on there (like stove, etc.).
3. Don't sign an OTP without the property's full details (size, borehole, etc.) on there.
4. Ensure property will be empty on registration on the OTP, or it'll invalidate the OTP.
5. Work an interest rate for yourself on the OTP.
6. Don't sign an OTP with almost 3 weeks' time to let the seller decide. Cut that time short.



Doubt that place has anything. In fact, it has an almost R200k outstanding electricity bill (apparently), has moerse cracks, etc.

200K on elec bill (dont stress), it will be written off as "bad debt" from the council

 

[Marsie27]

Its now law, you need much more than only a COC. Drain certificates aswell. Plans must be current and valid. If you see cracks, you need an engineer. Ag, the list goes on and on

Does anyone know whether what is in bold is a country-wide stipulation, or just specific municipalities? I queried this with a conveyancing attorney in Cape Town this week who expressed ignorance? The OTP (not mine) was signed yesterday.

 

[zerocool2009]

Does anyone know whether what is in bold is a country-wide stipulation, or just specific municipalities? I queried this with a conveyancing attorney in Cape Town this week who expressed ignorance? The OTP (not mine) was signed yesterday.

Its common sense actually too (not being harsh here). If the bank sends someone out for the evaluation, and its not on spec, the bank will ask to fix the plans first.

But honestly, its not a cheap and quick thing. When you buy a property, ask the plans on (and confirm its on spec), and if you cant find plans, let the agent sign by that the house and plans are in sync.

You don't want to spend thousands fixing someone's wrong doing

 

[quovadis]

Lot's of "this is what you should have done". I know. It's simply "I didn't know". You don't know these things until you know these things. Every one is a learning experience though, and this latest OTP has been a teacher of note. So far I've learned:

1. Don't sign an OTP without seller's info on there.
2. Don't sign an OTP without the list of what's included and excluded on there (like stove, etc.).
3. Don't sign an OTP without the property's full details (size, borehole, etc.) on there.
4. Ensure property will be empty on registration on the OTP, or it'll invalidate the OTP.
5. Work an interest rate for yourself on the OTP.
6. Don't sign an OTP with almost 3 weeks' time to let the seller decide. Cut that time short.



Doubt that place has anything. In fact, it has an almost R200k outstanding electricity bill (apparently), has moerse cracks, etc.

1. Don't sign any contract without understanding the contract and the ramifications of everything it contains.

On the electricity side if it's Eskom and depending on the OTP's contents they may have a claim against the new owner. If the electricity is via a municipality the rates clearance certificate required will ensure that is paid prior to the clearance being issued.

 

[PhireSide]

Its common sense actually too (not being harsh here). If the bank sends someone out for the evaluation, and its not on spec, the bank will ask to fix the plans first.

But honestly, its not a cheap and quick thing. When you buy a property, ask the plans on (and confirm its on spec), and if you cant find plans, let the agent sign by that the house and plans are in sync.

You don't want to spend thousands fixing someone's wrong doing

The bolded bit is basically what happened to us.

That being said, in some cases the institution providing the bond will only do a 'desktop valuation' meaning there is no physical inspection of the property. For instance, if they did an in-person valuation of the place we are selling, they would likely have picked up on the discrepancy in the plans and would have saved me a few thousand to rectify it.

I could have sold it as voetstoots, but I would rather ensure what is on the plan corresponds with what is actually on the property, as I would not want to be the person on the receiving end of a cock-up like this.

 

[quovadis]

Does anyone know whether what is in bold is a country-wide stipulation, or just specific municipalities? I queried this with a conveyancing attorney in Cape Town this week who expressed ignorance? The OTP (not mine) was signed yesterday.

Non-disclosure of the lack of compliance in terms of building plans approval etc is generally considered to be a material non-disclosure on part of the seller but it depends on the nature in terms of remedy.

 

[zerocool2009]

1. Don't sign any contract without understanding the contract and the ramifications of everything it contains.

On the electricity side if it's Eskom and depending on the OTP's contents they may have a claim against the new owner. If the electricity is via a municipality the rates clearance certificate required will ensure that is paid prior to the clearance being issued.

I had a scenario in Tshwane back in 2009. I rented out my house and paid rates as usual. The tenants had to sign up for elec on their own name. Year later when they moved out, I saw that they never paid for any water or lights, but nothing was cut off either, because the council saw "incoming" payments on the property. The long and short, Tshwane wrote that off as bad debt, and it was ALOT. I am glad I wasnt billed ! Sjoe (in my case nothing was sold, it was purely a tenant who knew how to @#$@#$ with the system and getting away with it)

 

[Marsie27]

Its common sense actually too (not being harsh here). If the bank sends someone out for the evaluation, and its not on spec, the bank will ask to fix the plans first.

But honestly, its not a cheap and quick thing. When you buy a property, ask the plans on (and confirm its on spec), and if you cant find plans, let the agent sign by that the house and plans are in sync.

You don't want to spend thousands fixing someone's wrong doing

Sure, but no bond involved in this case, and it's a purchase from a deceased estate, so the executor could claim ignorance I suppose.

 

[zerocool2009]

Sure, but no bond involved in this case, and it's a purchase from a deceased estate, so the executor could claim ignorance I suppose.

Just be careful to buy something with wrong plans. You dont want to become the fixer 10 years down the path

 

[quovadis]

I had a scenario in Tshwane back in 2009. I rented out my house and paid rates as usual. The tenants had to sign up for elec on their own name. Year later when they moved out, I saw that they never paid for any water or lights, but nothing was cut off either, because the council saw "incoming" payments on the property. The long and short, Tshwane wrote that off as bad debt, and it was ALOT. I am glad I wasnt billed ! Sjoe (in my case nothing was sold, it was purely a tenant who knew how to @#$@#$ with the system and getting away with it)

Which is normal since the account wasn't in your name. My point depends on the detail and clauses within the OTP which varies depending on circumstances. ie. There could be a clause that states you're liable for all outstanding 'x' or 'y' or something generalised which you would generally look over ie. take responsible for any liabilities etc.

 

[zerocool2009]

Which is normal since the account wasn't in your name.

What saved me was putting it on the tenants name ! Sjoe !

 

[Marsie27]

Just be careful to buy something with wrong plans. You dont want to become the fixer 10 years down the path

Not me, as above. I just asked the question.

 

[quovadis]

Sure, but no bond involved in this case, and it's a purchase from a deceased estate, so the executor could claim ignorance I suppose.

You should always have someone qualified do an inspection on any and all property transactions. Simply advise as part of an OTP that you will be engaging an inspector for a specific cost of 'x' and should they find anything material which has not been disclosed they are liable for half or all of the cost of inspection. Offer subject to inspection obviously.

 

[Toxxyc]

On the electricity side if it's Eskom and depending on the OTP's contents they may have a claim against the new owner. If the electricity is via a municipality the rates clearance certificate required will ensure that is paid prior to the clearance being issued.

I believe a concourt case a few years back covered this. The new owner can't be held responsible for the debt of the previous owner. I'll stand by this, obviously.

 

[quovadis]

I believe a concourt case a few years back covered this. The new owner can't be held responsible for the debt of the previous owner. I'll stand by this, obviously.

Let me explain it clearer. If the OTP states that the buyer is responsible for the outstanding debt on the rates accounts that is a contractual arrangement as part of a contract and is common in various non-traditional offers such as Sheriff auctions or similar. There are, however, some very generic and dodgy terms which sometimes get inserted by unscrupulous sellers. The constitutional court case does not include a situation where an offer to purchase makes a commitment to settle specified or unspecified amounts.

 

[Toxxyc]

Yep. I believe my OTP does not state anything about me taking over that debt. Or any other debt on the property, for that matter.

 

[PsyWulf]

My electricity got cut early this year due to previous owner's meter being faulty or no proper readings(the excuses have varied) and me getting a backdated bill (Citypower Jhb)

Took a week to get it back on even (they cut the meter out and cut the link at the eskom box too)

Took 6 months for them to reverse the charges,with a monthly your services will be suspended unless paid immediately SMS

Point is,get every damn thing in writing,and photo evidence of everything including meter readings

 

[wtg]

Packing and moving with a 2 year old is a nightmare!!!

 

[zerocool2009]

Yep. I believe my OTP does not state anything about me taking over that debt. Or any other debt on the property, for that matter.

I think no clearance certificate would be issued with a huge amount owing...

 

[Alton Turner Blackwood]

Just state that if any costs are in arrears it will be covered by the seller by obtaining bridging finance.

Here's how it works.

The bank already guaranteed that they will pay the conveyancer for the house on your behalf.

Should there be any rates or any other outstanding amounts, the conveyancer will use bridging finance from the profit amount that the buyer would be getting to sort out the issues.

Upon registration, the bank will pay the sale price to the conveyancing attorneys.

They will then recover the bridged amount that they used to sort out the issues from the amount that they received from the bank.