This is according to Cape conveyancing attorney, Saneli Ngcobo of Gunstons Attorneys, who says typically, once the buyer and estate agent have agreed on the offer, the document on which it is made will contain a clause stipulating the day by which the bond must be granted and the initial deposit paid up.
Alternatively, if the buyer is paying cash, a date will be set on which the entire sum owed will have to be paid.
At this point, Ngcobo says if the seller has accepted the offer, in some cases (which fortunately do not occur too often) the buyer may for a variety of reasons get cold feet and become hesitant.
“He suddenly finds himself in two minds about the purchase, possibly because he may well have found some other home that he prefers or he simply regrets the decision he has made. He may also like the house for which he has signed, but discovers that he cannot afford it. Certain indecisive people in these situations will delay paying the deposit or cash payment and miss the payment deadline. Sometimes they do this almost subconsciously without taking an actual decision to default in this way.”
If this happens, the buyer is in breach of contract and there can be no argument on this at all, she says. This leaves the seller and his attorney with two choices: they can, by law, cancel the contract and go in search of another buyer or they can go after the money owed with the full force of the law behind them. Furthermore, the estate agency is also entitled to sue the buyer for the loss of commission. If, however, the refusal to honour the agreement is the result of the bank declining to grant a bond, the offer will usually fall away because a conditional clause in the contract will have covered this eventuality.
“The more drastic measure, which involves taking action, tends to be followed when the seller and estate agent have put considerable time and effort into meeting the buyer’s wishes and the transaction forward. The seller’s disappointment and insistence on his rights might also be aggravated by the buyer having not been open about his feelings or his lack of finance and simply allowing the process to go forward all the same.”
Ngcobo says experience has shown that indecisive buyers sometimes do not appreciate that an Offer to Purchase is a binding legal document and cannot be broken without a legitimate reason, nor do they appreciate that if it is broken there will be legal consequences.
In most cases, she says it will benefit the buyer to go through with the transaction and then sell the property, even if he has doubts about his transaction.
“If the seller is allowed to sue the buyer, the financial implications for the defaulting buyer could be serious. Legal action of this kind is expensive, far more so than the man-in-the-street often realises.”