When you find a home you want to buy, the next step is usually to make a written Offer to Purchase (OTP) which the agent will then present to the seller to accept, reject or make a counter-offer.
And it is very important to understand that when an offer is accepted and signed by the seller, it immediately becomes a legal contract that is binding on both parties.
This means that you cannot use an OTP as a means of ‘booking’ or ‘banking’ a property you like while you carry on looking at others in the hope of finding one you like more, and that you cannot simply ‘change your mind’ about buying the property without the very real possibility of incurring a hefty financial penalty or having to pay a significant amount of money to get out of the contract.
Of course personal, work, and financial circumstances can sometimes change very unexpectedly, and buyers who are quick to communicate such changes as the genuine reasons for them being unable to proceed with a purchase are quite likely to encounter understanding and even sympathy from the sellers, especially if there is time for the sellers to re-open negotiations with others who might have expressed interest in the property.
Writing in the Property Signposts newsletter, latent defects can sometimes be discovered before a property transfer can be registered – and lead to the buyer wanting to cancel the deal.
But in such cases, the best course of action is actually for the purchase price to be re-negotiated, or for the buyer and seller to reach an agreement about payment for the necessary repairs and still go ahead with the transaction unless they want to end up in a long and costly court action.
Meanwhile, he says, buyers who are just having a “change of mind” about going ahead with a purchase that has already been agreed to should note that many OTPs still contain a clause stating that if they really do want to be released from the contract, they will have to pay the sellers rouwkoop – or an amount usually equal to a substantial portion of the purchase price.