In South Africa, the transfer of immovable property is governed and regulated by legislation in order to protect all parties to the transaction. In terms of Section 2 of the Alienation of Land Act No. 68 of 1981, no alienation of land shall be of any force or effect unless it is contained in a written deed of alienation signed by the purchaser and the seller. This deed of alienation is also known as the Offer to Purchase (“OTP”).
An OTP sets out the details of the sale and ensures that there is no uncertainty regarding the property being sold, its conditions, and any other important elements. This agreement is signed by the buyer making an offer, and then signed by the seller if the offer is accepted. Once parties have signed the OTP, it becomes a legal binding contract and both parties are required to fulfil their responsibilities as set out therein.
As such, it is important to understand how signing an OTP affects you and what it means to be legally bound by the terms in the agreement. As with any other legally binding contract, cancelling an Offer to Purchase is only possible should there be a basis in law for doing so.
If there is no legal reason for the contract to be cancelled as set out above, both buyer and seller can be compelled to fulfil its obligations and complete the transaction. It is thus important that the parties in a property sale transaction should always be aware and realise that there is a possibility of numerous claims against him or her should he or she decide to terminate an OTP unilaterally as this amounts to breach of contract.