Buying or selling a property is exciting, but the paperwork and terminology can sometimes feel like a language of its own.
From Offer to Purchase and mandates to voetstoots and occupational rent, understanding common real estate terms can make the process feel far less daunting and help you make more informed decisions along the way.
Whether you're a first-time buyer, an experienced homeowner or preparing to sell, here's your guide to some of the most commonly used South African real estate terms.
Offer to Purchase (OTP)
An Offer to Purchase, commonly referred to as an OTP, is a written agreement in which a buyer makes an offer to purchase a property on specified terms.
Once signed and accepted by the seller, it can become a legally binding agreement.
An OTP typically sets out important details such as the purchase price, deposit, conditions of the sale, occupation date and other terms agreed between the parties.
Why it matters: Before signing, make sure you understand every condition in the agreement. If you're unsure about anything, ask your estate agent or legal representative to explain it.
Mandate
A mandate is the agreement between a property seller and an estate agent or agency giving the agent authority to market and/or sell the property.
There are different types of mandates, including sole mandates, exclusive mandates and open mandates, depending on the terms agreed.
Why it matters: Always understand what type of mandate you're signing, what the agent is authorised to do and how long the agreement remains in place.
Voetstoots
You'll often hear the term “voetstoots” in South African property transactions. In simple terms, it traditionally means that a property is sold “as is”, subject to the applicable law and the terms of the sale agreement.
However, voetstoots does not simply mean that a seller can conceal known defects and walk away from responsibility. The legal position is more nuanced, particularly where a seller deliberately fails to disclose a known defect or acts fraudulently.
Why it matters: Buyers should conduct appropriate inspections and ask questions about the property's condition, while sellers should disclose known defects honestly and accurately.
Defects
A defect is a fault or imperfection in a property that can affect its value, functionality or use.
Defects are commonly discussed as either patent defects, those that are visible or reasonably discoverable or latent defects, which are hidden and may not be apparent during a normal inspection.
Why it matters: Buyers should inspect the property carefully and ask about anything that concerns them. Sellers should disclose known defects rather than assume they will go unnoticed.
Conveyancer
A conveyancer is a specialist attorney who handles the legal transfer of ownership of a property from the seller to the buyer.
The conveyancing process includes preparing and lodging the necessary documentation and ensuring that the transfer complies with legal requirements.
Why it matters: Property ownership doesn't simply change hands when the OTP is signed. The legal transfer must be completed and registered.
Transfer Duty
Transfer duty is a tax that may be payable by a buyer when acquiring property, depending on the circumstances and applicable thresholds and rules.
It is separate from the estate agent's commission and other costs associated with purchasing a property.
Why it matters: Always budget for the full cost of buying a property, not just the purchase price.
Occupational Rent
Occupational rent is an amount paid by one party when they occupy the property before ownership has formally transferred.
For example, a buyer may move into a property before transfer is registered, in which case the buyer may pay occupational rent to the seller.
Why it matters: The occupation date and occupational rent should be clearly agreed upon in the sale agreement.
Conditions of Sale
A property transaction may include certain conditions that need to be fulfilled before the sale can proceed.
These could include the buyer obtaining bond approval, selling another property, or fulfilling another agreed requirement.
Why it matters: Conditions can have a significant impact on whether and when a transaction becomes unconditional, so read them carefully.
Suspensive Condition
A suspensive condition is a condition that must be fulfilled before an agreement becomes fully enforceable in the way contemplated by the agreement.
A common example is a property purchase being subject to the buyer obtaining a bond of a specified amount within a specified period.
Why it matters: If a sale is subject to a suspensive condition, understand exactly what needs to happen, by when and what the consequences are if the condition isn't met.
Title Deed
A title deed is the legal document that records ownership of a property.
It contains important information relating to the property and may include conditions or restrictions affecting its use.
Why it matters: The title deed can contain information that is important to understand before purchasing a property.
Why Knowing the Lingo Matters
You don't need to become a property lawyer to buy or sell a home with confidence.
But understanding the language can help you ask better questions, spot important details and know when you need professional advice. The property journey involves more than finding the right home or accepting the right offer.
When in doubt, ask.
Your estate agent, conveyancer, bond originator and other property professionals are there to guide you through the process and explain the terms that matter to your specific transaction. Connect with anyone of our experienced estate agents: https://www.meridianrealty.co.za/team
Because when it comes to property, knowing the lingo isn't just useful. It puts you one step closer to making your next move with confidence.
