When can I cancel an offer to purchase?

An Offer to Purchase is legally binding from the moment it is signed. But there are a few situations in which it can be cancelled without having to pay the hefty penalties that would otherwise apply.

When a suspensive condition is not met

The most common reason for an Offer to Purchase to be cancelled is because one or more of the suspensive conditions weren’t met.

Suspensive conditions suspend the obligations of the contract (for all parties) until they have been fulfilled. Common examples include the purchaser getting the necessary bond approval, a successful home inspection, or the sale of the purchaser’s current property within a specified amount of time.

Suspensive conditions are added to the Offer to Purchase on request but it’s wise to keep these to a minimum or you risk making your offer less attractive. They’re also not Get Out of Jail Free cards – you have to be able to prove you were unable to meet a suspensive condition.

Breach of contract

Failure to meet a suspensive condition by choice would be considered a breach of contract – as would refusing to go through with the sale without legal cause, or breaking any other terms in the contract.

If this happens, the party not at fault can justifiably cancel the Offer to Purchase and claim any legitimate damages or losses from the party in breach. These costs can be significant, from estate agents’ fees and legal costs to compensation for loss of profit or moves that won’t happen.

When the offer is on a home priced under R250k

The only time a buyer can cancel their Offer to Purchase, regardless of suspensive conditions or other clauses, is if the offer is on a home priced under R250 000 and notification in writing is provided to the seller within five days of signing. This is a legislated “cooling off” period.

How to protect yourself

Cancelling an Offer to Purchase when all the suspensive conditions have been met is a difficult and often expensive process.

So, how can buyers avoid ending up in this kind of situation? The first step is to be 100% certain of your finances. Crunch the numbers, get pre-qualified, and make completely sure you are comfortable with the commitment you’re making.

Next, remove any room for surprises in terms of the property itself. Do your homework on pricing, check out the neighbourhood, speak to an estate agent and book a home inspection.

Once all those boxes are checked buyers still need to double check the Offer to Purchase is fair and includes their required suspensive conditions.

Talk all the details through with your estate agent, and have your attorney look things over if there’s any uncertainty.