Understanding special clauses in an offer to purchase
Category Property Advice
When buying or selling a property, it's important to understand the finer details of the Offer to Purchase (OTP), especially the inclusion of special clauses. These additional provisions can significantly affect the outcome of the transaction. But what exactly are special clauses, how do they work, and what should both buyers and sellers know before signing?
Let's break it down.
What is a special clause?
A special clause is a tailor-made provision added to an Offer to Purchase to address specific conditions or requirements unique to a particular property transaction. These are not standard components of the OTP but are instead included to reflect the individual needs or negotiations between the buyer and the seller.
Special clauses can be practical, like stipulating that a leaking roof must be repaired before transfer, or financial, such as adjusting the purchase price in lieu of certain obligations.
Is a conditional clause the same as a special clause?
A conditional clause is a type of special clause, but not all special clauses are conditional.
Conditional clauses make the entire agreement dependent on a specific condition being fulfilled. If that condition is not met, the deal may fall through. Common examples include:
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The sale is subject to the buyer obtaining bond approval.
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The sale is conditional upon the buyer selling their current home.
In contrast, other special clauses may not be contingent but still add important terms to the deal. For instance, a clause might require the seller to provide approved building plans or to carry out agreed-upon renovations, these are binding requirements but not conditions that would void the agreement if unmet (unless stated otherwise).
Should special clauses be discussed before the OTP is signed?
Technically, special clauses can be introduced for the first time in the OTP, but it's not advisable. Adding unexpected clauses into the formal agreement can lead to misunderstandings, delays, or even outright rejection of the offer.
To avoid this, buyers and sellers should discuss and agree on any special clauses beforehand. A transparent discussion ensures both parties fully understand the expectations and are more likely to reach a smooth agreement.
Common special clauses in South African property sales
Special clauses vary depending on the circumstances, but some of the most frequently used include:
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Bond clause: The sale is contingent on the buyer obtaining bond (mortgage) approval within a specified timeframe. Our advice is to get prequalified if possible and to use a knowledgeable bond originator that can simplify the process by applying to all the major banks on your behalf.
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Sale of another property: The buyer must sell an existing property before proceeding with the purchase.
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Repair clause: The seller is required to repair specific defects, such as a leaking roof, cracked windows, or faulty geysers before transfer.
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Occupancy clause: Allows the buyer to move into the property before the official transfer, usually in exchange for paying occupational rent.
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Renovation clause: The seller agrees to complete certain upgrades or renovations before transfer takes place.
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Building plans clause: The seller must provide the buyer with approved building plans that accurately reflect the current state of the property.
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72-hour clause: This clause gives the seller the right to accept a better offer if the current buyer cannot meet certain conditions (like providing proof of bond approval) within 72 hours.
What if the seller agrees to reduce the price instead of doing repairs?
In some cases, the seller may prefer to reduce the selling price rather than carry out repairs or renovations. If both parties agree to this, it must be clearly recorded in the OTP.
For example: "The purchase price is reduced by R50,000 in lieu of the seller's obligation to repair the roof."
This protects both parties by legally binding them to the new terms and avoiding disputes further down the line.
How long do sellers have to comply with special clauses?
The OTP should specify clear deadlines for fulfilling any special clauses. For example: "The seller must complete all repairs within 30 days of the signing of this agreement."
If the seller fails to comply within the agreed timeframe, the buyer may:
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Cancel the agreement.
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Claim damages (e.g., recover the deposit or repair costs).
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Seek legal enforcement (specific performance).
Including consequences for non-compliance is essential to ensure accountability and legal clarity.
Drafting tips: Clarity is key
One of the most common mistakes in special clauses is vague language. Ambiguity can lead to disputes, delays, or even make the clause unenforceable.
For example, instead of writing: "The seller must fix the plumbing," use "The seller must repair the leaking pipe under the basin in the main bathroom no later than 10 days before transfer."
Precision ensures everyone knows exactly what is expected, and when.
A final word on legal compliance
All special clauses should comply with South African property and contract law. Poorly worded or illegal clauses may be deemed unenforceable. It's always best to work with a knowledgeable estate agent or conveyancer who can assist in drafting and reviewing the OTP.
Also, keep in mind that some special clauses, especially those involving repairs or conditional events, may extend the timeline for transfer. Buyers and sellers should factor in this potential delay when planning their move.
We always suggest that both sellers and buyers call in the professionals to do a professional building inspection. This way all faults can either be addressed before listing a property or buyers are fully aware of the condition of a property that will allow them to make an informed decision.
To further ensure both parties are fully aware of the condition of a property and the legalities involved with condition reports and the voetstoots clause, our guide will explain what you need to be aware of.
Purchasing a property is a significant investment, and understanding every aspect of the contract is crucial. Suspensive and special conditions are critical elements that can affect the outcome of the transaction. By ensuring these clauses are clear, specific, and reasonable, you can avoid complications and safeguard your investment.
Before you sign any property agreement, carefully review all terms and conditions, and consider seeking advice from a legal expert or real estate professional. This diligence will help you navigate the complexities of property transactions and make informed decisions.
Author: MyProperty
