OTP Clauses Explained — A Plain-Language Guide to Your Offer to Purchase

An offer to purchase (OTP) is the most important document in any property transaction. Once both parties sign it, it becomes a legally binding agreement — and yet most buyers and sellers sign without fully understanding what each clause means.

This guide walks you through every standard clause in a South African OTP, in plain language, so you know exactly what you are agreeing to.

The Cover Page — Key Details at a Glance

The Parties (Seller and Purchaser)

This section identifies the seller(s) and buyer(s) by their full legal name, identity or registration number, marital status, email address, and physical address. Getting this right is critical — the Deeds Office will reject a transfer if the party details do not match their records exactly.

Where there is more than one buyer or seller, each person's details are recorded separately. Every person listed is a party to the agreement and must sign.

The Property

The property is described by its formal legal description — typically the erf number, township or sectional title scheme name, and extent (size in square metres). This description must match the title deed registered at the Deeds Office. The street address is also included for practical identification, but it is the legal description that governs.

Excluded Fixtures and Fittings

By default, everything permanently attached to the property is included in the sale — light fittings, built-in cupboards, curtain rails, irrigation systems, and so on. If the seller wants to take specific items, they must be listed here as excluded fixtures and fittings. If it is not listed as excluded, it stays with the property.

Occupation Date and Occupational Interest

The occupation date is the date the buyer takes physical possession of the property. This is often different from the transfer date (the date ownership officially changes hands at the Deeds Office).

Occupational interest is the daily amount payable by the party who occupies the property but does not yet own it. If the buyer moves in before transfer, the buyer pays occupational interest to the seller. If transfer happens before the seller vacates, the seller pays occupational interest to the buyer. It is calculated daily and payable monthly in advance.

Purchase Price

The purchase price is stated in South African rand. If the transaction includes VAT (typically when the seller is a VAT-registered developer), this is noted and the price includes VAT. For most private sales between individuals, VAT does not apply — transfer duty is payable instead.

Period to Secure Purchase Price

This is the number of days the buyer has to secure the full purchase price — whether through a bond (home loan), a deposit, bank guarantees, or cash. The clock starts from the signature date, or if suspensive conditions apply, from the date those conditions are fulfilled or waived.

Deposit

A deposit is not legally required in South Africa, but it is common practice and signals the buyer's good faith. Where a deposit is agreed, the OTP specifies the deposit amount and the date by which it must be paid into the conveyancer's trust account.

On the buyer's written instruction, the conveyancer may invest the deposit in an interest-bearing trust account, with the interest accruing to the buyer's benefit.

Suspensive Conditions — When the Deal Depends on Something Else

Bond Financing Condition

This is the most common suspensive condition. It states that the sale is subject to the buyer obtaining a home loan for a specified amount, within a specified number of days. The loan is considered approved when:

• A bank provides the buyer with a written loan quotation that the buyer accepts; and
• The bank completes a satisfactory valuation of the property.

Sale of Purchaser's Property

This condition applies when the buyer needs to sell their current property to fund the new purchase. It makes the sale conditional on the buyer's existing property being sold for at least a minimum purchase price, and that sale becoming unconditional, by a specified long stop date.

If the buyer waives this condition or accepts a lower price for their property, the buyer must pay the full purchase price (or the shortfall) into the conveyancer's trust account within 7 days.

Continued Marketing Clause

This clause protects the seller while suspensive conditions are pending. It allows the seller to continue marketing the property. If the seller receives a genuine unconditional offer from a third party (a "competing offer") that the seller wishes to accept:

Termination of Existing Agreement of Sale

This condition applies when the seller has already signed an OTP with a different buyer, and that earlier deal needs to be formally terminated before this new sale can proceed. The condition requires that the existing agreement be terminated within 30 days of the signature date.

The termination is considered complete when the conveyancer handling the earlier sale confirms in writing that the agreement has been cancelled.

Sale of the Property

Securing the Purchase Price

The purchase price must be secured in one or more of the following ways:

• Deposit: Paid into the conveyancer's trust account by the due date specified on the cover page.
• Bank guarantees: Delivered to the conveyancer within the period to secure the purchase price. The guarantee must be acceptable to the seller's conveyancer.
• Cash: Any balance not covered by the deposit or bank guarantees must be paid in cash into the conveyancer's trust account within the same period.

Occupation of the Property

Risk and Possession

Risk in the property (responsibility for damage, theft, or loss) passes to whoever is in occupation:

• If the buyer occupies before transfer, risk passes to the buyer from the occupation date. The buyer pays occupational interest to the seller until transfer.
• If transfer happens before the seller vacates, risk stays with the seller until they hand over vacant possession. The seller pays occupational interest to the buyer from the transfer date until they leave.

Consumption Charges

The party in occupation pays all consumption charges — water, electricity, refuse removal, sewerage, and any prepaid or top-up utility charges — for their period of occupation. This applies regardless of whose name the accounts are in.

Rates, Taxes, and Levies

The seller is responsible for municipal rates, property taxes, and body corporate levies (if applicable) up to the transfer date. The buyer takes over responsibility from the transfer date onwards. This is a standard apportionment — the conveyancer will calculate the exact split.

Compliance Certificates

• Electrical Certificate of Compliance (CoC): Required by law for all property sales. Confirms the electrical installation is safe.
• Gas Certificate of Compliance: Required if the property has a gas installation.
• Electric Fence Certificate: Required if the property has an electric fence.
• Entomologist Certificate: Confirms the property is free from wood-destroying organisms (beetle, borer). Not legally required, but sometimes included.
• Water Installation Certificate: Required in certain municipalities (notably the City of Cape Town).

Condition of the Property — Voetstoots and the Mandatory Disclosure Form

The Mandatory Disclosure Form

The seller must complete a mandatory disclosure form (also called a property condition report) that forms part of the OTP. In this form, the seller discloses known defects across these areas:

For each item, the seller answers "Yes", "No", or "Not Applicable". Where the answer is "Yes", the seller must provide a full written explanation. The form is not a guarantee — it records what the seller knows. But it creates a paper trail: if the seller marks "No" to structural defects and the buyer later discovers the seller knew about cracking foundations, the seller is exposed to a damages claim.

Voetstoots (Sold "As Is")

Unless the seller is a developer or regularly sells property in the ordinary course of business (in which case the Consumer Protection Act applies), the property is sold voetstoots — "as is", subject to what the seller has disclosed.

The buyer confirms they had a fair opportunity to inspect the property (or to appoint a professional inspector). After signing, the buyer cannot claim against the seller for defects that were visible on inspection or that the seller genuinely did not know about.

The Buyer's Inspection Right

The OTP records that the buyer had a fair opportunity to inspect the property before signing. This is your moment to bring in a building inspector, check the roof, test the electrics, and identify any problems.

Fees and Costs

The conveyancer will request the buyer's funds before lodging the transfer. Without the seller's rates clearance certificates, the transfer cannot proceed at the Deeds Office.

Registration of Transfer

Transfer is registered at the Deeds Office as soon as possible after:

1. All suspensive conditions are fulfilled or waived;
2. The purchase price is fully secured; and
3. All fees and costs are paid in full.

Breach of the Agreement

If the breach is not remedied within the notice period, the aggrieved party can choose between two options:

These are not the only remedies available — the aggrieved party retains all rights available under law. The important point is that a party cannot simply walk away from a signed OTP without consequences.

Enforcement Costs

Miscellaneous Clauses

Agent's Commission

If an estate agent was involved, the OTP records that the agent was the effective cause of the sale. If the seller cancels due to something the buyer did, the buyer pays the agent's commission. If the buyer cancels due to something the seller did, the seller pays. This prevents either party from torpedoing the deal to avoid commission.

Sectional Title — Real Right of Extension

If the property is a sectional title unit (apartment, townhouse in a scheme), the seller must disclose whether the developer or the body corporate has a real right to extend the scheme — meaning they can add more units to the building. This is required by Section 25 of the Sectional Titles Act.

Invasive Species (NEMBA)

The seller discloses any listed invasive species on the property. Under the National Environmental Management: Biodiversity Act (NEMBA), property owners have legal duties to manage invasive species. If the property has invasive plants, the new owner inherits this responsibility.

Protection of Personal Information (POPIA)

Both parties consent to the collection, processing, and sharing of their personal information for the purposes of the transaction — with the estate agent, conveyancer, Deeds Office, municipality, and SARS. This clause is required for compliance with the Protection of Personal Information Act (POPIA).

Cooling-Off Right

Withholding Tax — Non-Resident Seller

If the seller is not a South African tax resident and the purchase price exceeds R2,000,000, the buyer is required by section 35A of the Income Tax Act to withhold a percentage of the purchase price and pay it to SARS on the seller's behalf:

• 7.5% if the seller is a natural person;
• 10% if the seller is a company; or
• 15% if the seller is a trust.

The seller must notify the conveyancer within 10 business days of signing whether they are a South African tax resident. If not, they must provide the necessary documentation. The conveyancer handles the withholding and payment to SARS before transfer.

Joint and Several Liability

Domicilium and Notices

The parties choose the physical addresses on the cover page as their domicilium citandi et executandi — the address where legal notices and court documents can be served. Either party can change their address by giving 14 days' written notice, but the new address must be a physical address in South Africa (not a PO Box for legal process purposes).

Amendments and Waivers

No amendment to the agreement is valid unless it is in writing and signed by both parties. Failing to enforce a right does not mean you have given it up (waived it) — you can still enforce it later. This protects parties who are lenient about minor issues from losing their rights on major ones.

Entire Agreement and Superseding Documents

Severability

If any clause in the OTP turns out to be illegal or unenforceable, that clause is modified to the minimum extent needed to make it legal — or if that is not possible, it is simply removed. The rest of the agreement remains valid. This prevents the entire deal from collapsing because of one problematic clause.

The Offer Mechanism — How the Deal Becomes Binding

Who Is the Offeror?

The party who signs first and sends the document to the other party is the Offeror. The other party is the Offeree. In most transactions, the buyer signs first (making the offer), and the seller signs second (accepting the offer) — but it can work either way.

The Offer Period

The offer is open for acceptance until 17h00 (South African time) on the last day of the offer period stated on the cover page. If the Offeree does not accept by this deadline, the offer automatically lapses — no further action is needed.

When Does a Binding Agreement Exist?

A binding agreement of sale comes into existence only if, before the offer deadline:

1. The Offeree signs the agreement without any changes; and
2. The signed agreement is delivered by hand to the Offeror or sent to the Offeror's email address.

Counter-Offers

If the Offeree signs the agreement with any change at all — even a minor one — it is not an acceptance. It is a counter-offer, and the original offer falls away completely. The counter-offer is open for acceptance until 17h00 on the 5th business day after it is emailed to the other party (unless a different deadline is stated).

Withdrawal Before Acceptance

The Offeror can withdraw the offer at any time before acceptance is received, by giving written notice. Once acceptance is communicated, the deal is done — neither party can unilaterally withdraw.

Email Acceptance

An emailed acceptance is treated as received when it is capable of being retrieved by the recipient — even if they have not actually opened or read it. However, if the sender receives a bounce-back or "undeliverable" message, acceptance has not been received unless it is successfully re-sent before the deadline.

The Wet Ink Requirement

The Mandatory Disclosure Form

The mandatory disclosure form is attached to and forms part of the OTP. The seller must disclose known defects across these areas:

For each item, the seller answers "Yes", "No", or "Not Applicable". Where the answer is "Yes", the seller must provide a full written explanation. The form is not a guarantee — it records what the seller knows. But it creates a paper trail: if the seller marks "No" to structural defects and the buyer later discovers the seller knew about cracking foundations, the seller is exposed to a damages claim.

Order of Precedence

The OTP consists of two parts: the cover page (including any special terms) and the terms and conditions. If there is a conflict between these documents, the order of precedence is:

1. Special terms on the cover page — highest priority
2. Terms and conditions — standard clauses

Governing Law

The agreement is governed by the laws of the Republic of South Africa. Any disputes will be resolved under South African law, regardless of the nationality or residence of the parties.