O­ver­co­ming ho­me­buying ob­sta­cles

George Herald - Auto Dealer - - News -

Su­bmit­ting an of­fer and ha­ving it accep­ted by the sel­ler is ex­ci­ting, but it is cer­tain­ly not the end of the pro­per­ty sa­les pro­cess. The­re are a few mo­re ob­sta­cles that need to be o­ver­co­me be­fo­re the ho­me can chan­ge o­w­ners­hip and the keys are han­ded o­ver. Fai­ling to o­ver­co­me any of the­se hurd­les could re­sult in the de­al fal­ling through and you re­star­ting the jour­ney from the first step.

“I­den­ti­fying the pos­si­ble is­su­es that could a­ri­se, will put you in good ste­ad to ma­king the ne­ces­sa­ry pre­pa­ra­ti­ons to a­void them be­co­ming a pro­blem,” says A­dri­an Gos­lett, re­gi­o­nal di­rec­tor and CEO of RE/MAX of Sout­hern A­fri­ca, who pro­vi­des a few points for con­si­de­ra­ti­on:

Bond not ap­pro­ved

If pos­si­ble, it is ad­vi­sa­ble to get pre-ap­pro­val from the bank with a writ­ten lo­an com­mit­ment let­ter that you can show the sel­ler. Ho­we­ver, being pre-ap­pro­ved is not a gua­ran­tee that you will get the fi­nan­ce. Cer­tain fac­tors could chan­ge, cau­sing the bond ap­pli­ca­ti­on to fall through, such as a chan­ge of em­ploy­ment or job loss.

Ap­prai­sal is less than ex­pected

The bank pro­vi­ding the lo­an will send an ap­prai­ser to va­lue the pro­per­ty to en­s­u­re it co­vers their in­ves­ted in­te­rest in the ho­me. The va­lue of the ho­me must be at le­ast as much as you are wil­ling to pay for it, for the mortga­ge lo­an a­mount is at an accep­ta­ble ra­tio to the va­lue.

The bank wants to ma­ke su­re that if you de­fault at any sta­ge, t­hey will be a­ble to re­coup their los­ses. If the bank’s ap­prai­sal is lo­wer than the pur­cha­se pri­ce on the of­fer to pur­cha­se, a pri­ce re­ducti­on mig­ht be ne­go­ti­a­ted with the sel­ler, or you will need to pay the dif­fe­ren­ce in cash. If you do not ha­ve the ex­tra cash and the sel­ler is not wil­ling to lo­wer their pri­ce, it could be a de­al bre­a­ker.

You want to back out of the de­al

If the pur­cha­se pri­ce is be­low R250 000, the of­fer to pur­cha­se (OTP) should con­tain a cool­ing-off pe­ri­od w­he­re you can step a­way from the tran­sacti­on. Ho­we­ver, all ot­her pro­per­ty tran­sacti­ons a­bo­ve t­his mark are ex­empt from the cool­ing-off pe­ri­od, and the agreement be­co­mes le­gal­ly bin­ding as soon as it is sig­ned.

The Con­su­mer Pro­tecti­on Act (CPA) cre­a­tes a rig­ht in fa­vour of buy­ers who wish to res­cind their of­fer. Ho­we­ver, it on­ly ap­plies if the sa­le is a re­sult of di­rect mar­ke­ting. Furt­her­mo­re, the CPA is on­ly ap­pli­ca­ble to tran­sacti­ons w­he­re the sel­ler de­als with pro­per­ty in the nor­mal cour­se of his bu­si­ness. The fact that an e­sta­te a­gent is in­vol­ved in the tran­sacti­on al­so does not ma­ke the CPA au­to­ma­ti­cal­ly ap­pli­ca­ble to a tran­sacti­on.

It is pos­si­ble for you to ne­go­ti­a­te a can­cel­la­ti­on of the of­fer with the sel­ler and the e­sta­te a­gent. Ho­we­ver, if ne­go­ti­a­ti­ons pro­ve to be unsuccess­ful and you do not com­ply with the sti­pu­la­ti­ons within the con­tract, you will be at risk of con­tract bre­ach, and you could be li­a­ble to pay da­ma­ges and the e­sta­te a­gent’s com­mis­si­on if le­gal acti­on is in­sti­tu­ted.

If the de­fect is se­ri­ous e­nough, the bank will not grant fi­nan­ce, and the de­al will fall through.

A ma­jor de­fect is found du­ring the ho­me in­specti­on

Ac­cor­ding to South A­fri­can le­gis­la­ti­on, all pro­per­ty tran­sacti­ons are still sub­ject to the “voet­stoots” clau­se if it is con­tai­ned in the OTP. No­te that the word “voet­stoots” need not ap­pear and the clau­se could be ter­med “Pro­per­ty sold as it now lies”, or so­mething si­mi­lar. The clau­se pro­tects sel­lers a­gainst any claims a­ri­sing from pa­tent (o­pen­ly vi­si­ble) de­fects, as well as la­tent (hid­den) de­fects in the pro­per­ty. Ho­we­ver, should the sel­ler ha­ve kno­wn a­bout the la­tent de­fect and wil­ful­ly or frau­du­lent­ly wit­hheld t­his in­for­ma­ti­on, voet­stoots does not pro­tect him.

That said, in most ca­ses pro­ving pri­or kno­w­led­ge of la­tent de­fects is very dif­fi­cult.

The ef­fect of voet­stoots is of­ten qua­li­fied by a dis­clo­su­re an­nexu­re which forms part of the OTP. Within the an­nexu­re, the sel­ler de­cla­res in de­tail the con­di­ti­on of va­ri­ous as­pects of the pro­per­ty. If your of­fer has just been accep­ted, you can bring the de­fect to the at­ten­ti­on of the mortga­ge bank. If the de­fect is se­ri­ous e­nough, the bank will not grant fi­nan­ce, and the de­al will fall through.

If the is­sue is not that se­ri­ous, you should enga­ge the ser­vi­ces of an in­de­pen­dent at­tor­ney who could ne­go­ti­a­te or li­ti­ga­te for a pri­ce re­ducti­on.

Gos­lett says that the pro­per­ty trans­fer pro­cess can be stress­ful for both par­ties, es­pe­ci­al­ly with the wi­de va­ri­e­ty of t­hings that need to be con­si­de­red and or­ga­ni­sed.

Ta­ke the ti­me to re­se­arch the pro­cess and its pos­si­ble pit­falls to en­s­u­re that you are re­a­dy for any si­tu­a­ti­on.

P­ho­to: www.mir­ror.co.uk

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