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Is there ever grounds to cancel an offer to purchase?

Hammond Pole Attorneys > Hammond Pole Blog  > Is there ever grounds to cancel an offer to purchase?

Is there ever grounds to cancel an offer to purchase?

Blog article by: Neil Mc Kinon

Signing an offer to purchase is an exciting time for any buyer. The freedom of owning one’s own property or the thrill of a new investment is a major drawcard for property buyers.

But signing an offer to purchase can also come with some buyer’s remorse and the question most often asked is “can I get out of the agreement once I’ve signed?”

The answer complex, but in short, no.
The terms and conditions in an offer to purchase are designed to protect both the buyer and the seller and prevent either party from unilaterally changing their mind to the detriment of the other.

However, under certain circumstances, it is possible to terminate an agreement where either; performance in terms of the agreement becomes impossible or if the other party has defaulted in performance and is in breach.

Most agreements, including an offer to purchase immovable property, contain a breach clause or a default clause which will spell out the steps that must be taken by an innocent party when the other party defaults on their obligations.

The breach clause will usually indicate that in the event of a breach, the innocent party may call upon the other party to remedy their breach within a certain period. If the guilty party fails to remedy their breach, the innocent party may terminate the agreement and effectively claim restitution, i.e., each party is placed in the position they were in prior to entering into the agreement.

However, breach and termination of an agreement can sometimes result in one of the parties suffering financial damages. The innocent party is then entitled to claim for the damages suffered.

One of the most common forms of a breach in a typical sale of immovable property happens when a purchaser commits to making a payment of the purchase price by a particular date and fails to do so. If the purchase price is not paid by the agreed-upon date, the seller would need to apply the breach provisions of the agreement by firstly placing the purchaser on terms to perform within a certain time. This would be done by way of delivery of a breach notice or a letter of demand. After the expiry of the time period allowed in the breach notice, the seller would then officially terminate the agreement.

The sales agent may also be entitled to claim commission from the purchaser if the agreement covers instances of cancellation as a result of the purchaser’s breach. In such cases, the sales agent may institute civil proceedings against the purchaser for their agent’s commission.

For more information, please contact Neil Mc Kinon – NeilM@hammondpole.co.za

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