Buyers should always read before signing
- 25 Jun 2005
Home buyers should never be hurried or intimidated into signing an agreement of sale or too embarrassed to ask questions on its legal contents, especially with relevance to their own commitments in the transaction, no matter how idiotic the inquiries may seem or the degree of obviousness the answer.
Even though today’s average home hunter usually comes to the market usually well briefed on market related prices and the everyday basics of purchasing, far too few make sufficient effort to fully understand the legal conditions of such agreements says Tony Ketcher. He also airs concern that their reading of the contract is often little more than cursory or tokenism.
Ketcher, who heads the award winning Seeff Randburg office, believes it vital that both seller and buyer fully acquaint themselves with all legal documentation in the process and goes as far as to advise the public not to deal with an estate agent or developer who fails to explain in detail the legal obligations of documents.
Agents and developers with low knowledge level or poor understanding of such documentation he especially advises should be given a wide berth. “If their knowledge is anything less than 100 percent of the contract how can they possible be managing a client’s interests.”
Ketcher, who is also a home loan expert, emphasises that his warning is not to caution buyers against dodgy or deliberately dubious contracts as such documentation is highly unlikely to be used by accredited estate agents, but to urge full understanding of their own and the other parties commitments in the transaction. Even if this requires using the services of an attorney, he believes the costs are a good investment.
“Its unlikely that the need will arise to revert to the written agreement, but if it does in the event of a dispute or a misunderstanding then both parties should have a good idea of their responsibilities in the process.”
Ketcher says today’s sale agreements normally follow the letter of the law, but in the case of omissions from the contract, such as the cooling off period, these are upheld by legislation.
Apart from a good understanding of the contract Ketcher says buyers should ensure an agreement describes five key items.
It must clearly stipulate who is the seller and who is the buyer. This usually is self-explanatory, but needs to be considered when the buyer may involve two parties or a closed corporation.
The agreement must state in detail what is being purchased, such as a garage or carport, security system. It’s also important to include any levies and their frequency of payment. He advises particular attention when buying off-plan as the decision is often made after being shown a fully furnished showhouse whose fittings and fixtures are not intended for the rest of the development.
It’s also important to ask questions at this time to ensure that what is signed for is what you will be getting
Often overlooked by buyers, but highly important to Ketcher is to establish when you will be taking ownership of the property. “Dates and deadlines must be established and the buyer has every right to insist these be included in the agreement.”
“If one is purchasing an existing house then it is much easier because there can be an agreement between the buyer and seller on what is referred to as an ‘occupation date’. But, if the unit is still to be built the buyer should establish when will building start, when will it be completed, when can he, or she, take occupation and when will the property be registered in their name?
Very important is not just the inclusion of the purchase price in the agreement, but also the method of payment.
“Most agreements make provision for a deposit to be made and stipulate when this must be done. The buyer must also establish who will retain this deposit and ensure that the funds are deposited into a Trust Fund—funds are held on behalf of buyers and the party selling the product is not able to touch this money until final registration of the property into the name of the buyer.
“The balance of the purchase price must then be paid and the agreement must stipulate how and by when this payment will be made. Buyers must insist on this to ensure that they can manage the cash flow and more importantly know when to have the cash available.
Ketcher also strongly recommends breach clauses specifically to cover such eventualities as the buyer failing to raise the deposit, or cannot obtain the necessary finance. Such clauses he believes are even more important in buying off-plan and should give protection against lack of satisfaction with the finished unit or the unit not being ready on schedule.