Buyers are spoilt for choice in the current market. This makes it tempting to sign multiple offers on several homes in the hope that one of the sellers will accept. Sadly, if more than one offer is accepted, buyers could find themselves in some hot water.
According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, many are under the misconception that the Consumer Protection Act (CPA) gives them a cooling-off period when entering into a Sales Agreement. However, this is only applicable in certain instances.
“Many fail to realise the implications of signing an OTP. Once an Offer to Purchase has been signed by both the buyer and seller, it immediately becomes a legal and binding Sale Agreement. The cooling-off period during which a buyer may cancel the agreement within five days from the date of signing the initial offer is so seldom applicable that buyers should never falsely assume that they can get out of an offer without any legal recourse. Instead, buyers should only sign one offer at a time and wait to hear the outcome before signing any other offers,” Goslett advises.
To help buyers understand their legal rights in this regard, Goslett refers to section 29A of the Alienation of Land Act that states that residential property transactions of R250,000 or less are subject to a cooling-off period of five working days from the signature of the Offer to Purchase. The cooling-off period does not apply to residential homes that are sold for more than the R250,000 threshold.
Even in terms of section 16(3) of the Consumer Protection Act, a purchaser has the right to cancel the purchase of a property within five business days – only if the sale is a result of direct marketing. Direct marketing means that the person has been approached directly either in person, by mail, or by electronic communication for the purpose of promoting or offering to supply goods or services. The cooling-off period will not apply to any sales that are a result of any other type of marketing, such as print advertising and show houses. It will also not apply if the purchase is made by a client with whom the estate agent is already working.
The Act also does offer protection to buyers who are purchasing from a private seller. Consumers are only protected if they enter into a transaction with a supplier in the ordinary course of the supplier’s business. This means that sellers who do not earn a living from selling or buying property are excluded from the CPA.
Unlike the Alienation of Land Act, the CPA states that if the cooling-off period does apply, the five days do not start from the date that the offer is signed, but rather the day the property is transferred into the buyer’s name. “Considering that the transfer can take between three and six months after the offer is signed, cancellation of the agreement at this point could prove to be extremely problematic for all parties involved,” Goslett warns.
Considering the above, Goslett reiterates the importance of submitting only one offer at a time. “Buyers need to be certain that they want to purchase the property before they sign the agreement. If a buyer has signed an agreement, but would no longer like to purchase the property, it is best for them to be upfront with the seller and let them know as soon as possible, rather than breaching the contract. The seller might be willing to let the buyer off the hook and look for another buyer, rather than drawing out the situation longer than necessary. However, it is also possible for the seller to pursue the matter legally, which could leave the buyer with a very expensive impulse purchase on their hands. To play it safe, buyers should always be 100% sure that they want the property before signing any contract,” he concludes.
