What is an Offer to Purchase?
An Offer to Purchase (OTP) — sometimes called a deed of sale, sale agreement or agreement of sale — is the written offer made by a prospective buyer to acquire a specific property at a specific price on specific terms. It is signed first by the buyer and then submitted to the seller. Once the seller signs in acceptance and that acceptance is communicated back to the buyer, the OTP becomes a binding contract of sale that obliges the seller to transfer ownership and the buyer to pay the purchase price.
The OTP is not a preliminary document or a “letter of intent”. It is the contract itself. By the time the buyer’s conveyancer is opening a transfer file, every term of the deal is fixed in the four corners of that signed document — and the conveyancing process that follows is, in practice, the mechanical implementation of what the OTP already says. Treat it accordingly: by the time you sign, you have agreed everything.
Why it must be in writing — ALA s 2(1)
Section 2(1) of the Alienation of Land Act 68 of 1981 provides that no alienation of land shall be of any force or effect unless it is contained in a deed of alienation signed by the parties or by their agents acting on their written authority. The provision is mandatory and the courts have applied it strictly for more than four decades. An oral agreement to sell a house is unenforceable. A handshake on the price is unenforceable. A sketch on a napkin is unenforceable. Even if every party freely admits the deal in court, the writing rule cannot be waived.
Two corollaries follow. First, every material term of the sale — the parties, the property, the price, and any non-trivial condition — must appear in the signed document. A term left to oral agreement “on the side” is not enforceable. Second, every amendment must itself be in writing and signed by both parties. A WhatsApp from the seller agreeing to extend the bond approval deadline is, on a strict view, not a valid extension; the parties should sign an addendum.
The writing rule is the foundation on which everything else in this guide rests. If a contract does not satisfy s 2(1), nothing else matters.
Essential terms: what a valid OTP must contain
A valid OTP must identify, with sufficient certainty, the parties to the sale, the property being sold, and the price being paid. Anything less and the contract fails for vagueness, regardless of how clearly the parties may believe they have agreed.
| Essential term | What it requires |
|---|---|
| Parties | Full names and South African ID numbers (or passport numbers for non-residents). For juristic persons: registered name, registration number, and details of the authorised signatory with the underlying resolution. |
| Property | Description matching the title deed: erf number, township, registration division, extent in square metres, and existing title deed number. For sectional title: scheme name, unit number, and undivided share in the common property. |
| Purchase price | A fixed sum in South African Rand. A formula linked to a future event (“market value at registration”) is risky and frequently challenged. State the price in numerals and in words. |
| Occupation date | The date the buyer takes physical possession. Often distinct from registration date — see “Common terms” below for the occupational rent point that follows. |
| Signatures and dates | Both parties must sign and date. Acceptance by the seller must be communicated back to the buyer for the contract to come into being. |
It is the conveyancer’s job to verify these against the title deed pulled from the Deeds Office under the Deeds Registries Act 47 of 1937. But that verification happens after the OTP is signed. By that point the bargain is fixed — so the time to be careful is before the pen meets the paper.
Common terms to scrutinise
Beyond the essential terms, almost every OTP will contain a cluster of operative clauses that materially affect the deal. The ones to read carefully:
- Occupation date vs registration date. The two are frequently not the same. Where the buyer takes occupation before the property is registered, the buyer pays occupational rent (typically a market-related monthly amount) to the seller until registration. Conversely, where the seller stays in occupation after registration, the seller pays the buyer. The OTP must state both dates and the occupational rent rate.
- Deposit. Many OTPs require a deposit (often 10%) to be paid into the conveyancer’s trust account or the estate agent’s trust account on signature. Read the wording: who holds it, in what kind of account, who earns interest on it, and what happens to it if the deal falls through.
- Estate agent commission. The OTP usually records that the seller is liable for the agent’s commission, the rate (typically 5–7.5% plus VAT), and that commission is earned on registration. Both parties should know who is paying.
- Voetstoots clause. A clause stating that the property is sold “as is” with all defects, patent and latent. The clause is standard but its effect is heavily limited by the Consumer Protection Act in many transactions — we explore this in detail in our spoke on voetstoots and defect disclosure.
- Fixtures and fittings. Anything that is not a standard fixture and is to remain (the gas hob, the wall-mounted TV bracket, the swimming-pool cleaner, the alarm) should be listed expressly. Disputes after registration about “what stayed and what went” are tediously common.
- Defect disclosure. Since 1 February 2022, the Property Practitioners Act 22 of 2019 requires every estate-agent-mediated sale to attach a mandatory disclosure form in which the seller lists known defects. Read it carefully — what is disclosed becomes part of what the buyer accepts.
Suspensive conditions
Most OTPs contain one or more suspensive conditions — conditions that postpone the coming-into-being of the parties’ rights and obligations until a specified event occurs. The most common in residential sales is a bond-approval suspensive: the contract only becomes enforceable once the buyer’s bank has approved the necessary mortgage finance within a stated period (usually 21 to 30 days). Other common suspensives include sale-of-existing-property (often paired with a 72-hour clause) and due-diligence inspections.
Until the suspensive is fulfilled, the contract exists but is not enforceable as a sale. If the condition is not met by the deadline, the contract falls away automatically and the parties are restored to their pre-contract position — the deposit is returned and neither party has liability. We unpack the mechanics, the leading authority of Lubbe & Van Rensburg v Voermeester, and the practical drafting points in the dedicated spoke on suspensive conditions in OTPs.
Cooling-off: section 29A ALA (R250,000 threshold)
Section 29A of the Alienation of Land Act gives a residential property purchaser a 5-calendar-day cooling-off right — but only where the purchase price is R250,000 or less. Within five calendar days of signing the OTP, the buyer can revoke the offer or terminate the contract by written notice to the seller, no reason given, no liability incurred. Any deposit paid is refunded.
In practice, the threshold is so low that the right almost never bites. Pretoria entry-level residential property is comfortably above R250,000, and the threshold has not been raised since the section was enacted. A long-mooted increase to R500,000 has been discussed but, at the time of writing, has not been gazetted — so the R250,000 figure remains the operative one. Buyers above the threshold have no statutory cooling-off right, and what looks like “buyer’s remorse protection” in international markets simply does not exist here.
Acceptance and when the contract comes into being
An offer is a unilateral declaration. It binds the offeror (the buyer) only once the offeree (the seller) has accepted it — and acceptance must be communicated back to the buyer. Until that communication, the buyer can withdraw the offer (within the offer’s acceptance period and before any term to the contrary kicks in).
In a typical sale: the buyer signs the OTP and submits it to the estate agent. The agent passes it to the seller, who signs in acceptance. The agent returns the fully-signed copy to the buyer (or the buyer’s agent or attorney). At that point — not when the seller’s pen left the page — the contract comes into being. From that moment, both parties are bound, and the conveyancing process can begin.
Practical implications: the OTP should state a clear acceptance window, the method of communication (signed copy returned by hand, by email, by courier), and the address or email at which acceptance is to be served. Loose drafting on this point produces avoidable disputes about whether and when the contract was concluded.
Frequently asked questions
A signed Offer to Purchase that has been accepted by the seller is a binding contract. You cannot unilaterally cancel because you have changed your mind, found a better property, or your circumstances have shifted. The seller can sue for specific performance (compelling you to take transfer and pay the price) or for damages and wasted costs.
The two real escape hatches are the cooling-off right under s 29A of the Alienation of Land Act (only for residential property at a price of R250,000 or less — see below) and the failure of a properly drafted suspensive condition, where the contract falls away by operation of law. Outside those, you are bound.
Most offers contain an acceptance period — for example, “this offer remains open for acceptance until 17h00 on [date]”. If the seller does not sign and communicate acceptance back to the buyer within that window, the offer lapses automatically. The buyer is then free to walk away, withdraw the offer, or submit a fresh one. If no acceptance period is stated, the offer remains open for a reasonable time — but reasonableness is contestable, so a clear deadline always sits better than silence.
A material misdescription of the property — wrong erf number, wrong title deed reference, wrong sectional unit number — can render the OTP void for vagueness. The Alienation of Land Act requires the property to be identified with sufficient certainty for a third party (the conveyancer, the Deeds Office) to know exactly which land is being sold.
Minor errors (a typo in the street address, a wrong stand size where the title deed reference is correct) are usually rectifiable by written agreement between the parties. Substantial misdescription, especially where the parties cannot agree on what was sold, is fatal — the contract simply does not bind. Always cross-check the property description against the title deed before signing.
Yes. The Electronic Communications and Transactions Act 25 of 2002 (ECTA) recognises advanced electronic signatures for most contracts, and South African courts have repeatedly accepted electronically-signed sale agreements (DocuSign, Adobe Sign, and similar platforms). Section 4(4) read with Schedule 2 of ECTA previously excluded the alienation of immovable property, but the position has shifted in practice — most conveyancing firms now accept e-signed OTPs, provided a clear audit trail exists. If in doubt, sign in wet ink: it costs nothing extra, and it removes the only argument a reluctant counterparty might raise.