Avoid confusion in carefully worded Offer to Purchase documents
Almost all Offer to Purchase documents contain wording to the effect that the sale includes all permanent improvements, fixtures and fittings.
However, says Bill Rawson, Chairman of the Rawson Property Group, this clause has been open to a variety of interpretations over the years and these can lead to acrimonious feuds once the new owner has taken possession of the property.
“The big difficulty,” says Rawson, “lies in the word ‘permanent’. Is a canvas or a vinyl patio covering a permanent or a relatively temporary fitting? Is a DSTV connection a fixture or part of the outgoing seller’s property? Is a swimming pool cover a permanent of a temporary ‘extra’?”
To overcome these problems, most Offers to Purchase, says Rawson, have a sub-clause which tries to list every conceivable additional fitting. The buyer and the seller, usually in the presence of the estate agent and/or the conveyancer, then go through the list and delete and initial any item on it that is either not being sold or will be deliberately excluded. It is nevertheless surprising how easy it is, he says, for an item to be overlooked.
“We once had a case,” says Rawson, “where a large ornate roofed bird enclosure had been in the garden for some time. The seller, a breeder of birds, planned to dismantle it and take it with him, not realizing that the buyer had been impressed by his collection and now planned to start an aviary using this facility himself.”
Another clause which can be open to more than one interpretation, says Rawson, is the phrase “in working order”. A stove, for example, may operate well but give off more fumes or smoke than is acceptable to the purchaser. A TV aerial may have worked last week but does not do so now – and swimming pool equipment is notorious for being inconsistent in its performance, working well one day and not the next.
Another tricky clause in most Offers to Purchase documents relates to “unreasonable” delays on transfer. Should either the buyer or the seller cause a delay in transfer, that person can be held responsible for this and by law is required to pay the interest on the purchase sum (very often at 2% above prime) until transfer does take place. The wronged party may also have the right to claim penalties or damages in cases such as these.
“This,” says Rawson, “is difficult to enforce because of the term “unreasonable”. If, for example, the transfer of a home is held up one month and the buyer possibly has to incur guest house charges for his family during that period, is that an unreasonable delay or is it to be expected in view of the pressure on the whole transfer system and the Deeds Office at the moment?”
A further clause that has caused difficulties, says Rawson, relates to natural people signing on behalf of a juristic person (i.e. a company, close corporation or trust). Such people may have been delegated the power to do this by their fellow directors, members or trustees but may not have the power to make significant changes in the agreement. Their position should be spelt out and put in writing at the outset and if this is not done they could be held responsible for delays and possibly extra costs incurred by the delayed party.
In general, says Rawson, a good conveyancer and agent will see to it that these ambiguities and misinterpretations do not arise. However, he says, the plain truth is that every now and then they do crop up and can cause problems.