When does the "cooling-off" period apply in the sale of immovable property
Generally, most property transactions do not include the cooling-off period and a signed offer remains enforceable and valid, however certain circumstances are excluded.
In this article I will be discussing circumstances that may include a cooling-off period.
When the purchaser and seller enter into a signed Offer to Purchase, it automatically becomes a legally binding Sale Agreement.
The parties are therefore cautioned to first take cognizance that they are entering into a legally enforceable agreement and shouldn’t sign anything before being certain that they want to purchase the said property.
Occasionally, there may be purchasers who are no longer interested in buying the property, but it is best to make this known expeditiously. In such a case, the Seller might be lenient and willing to look for an alternative buyer, rather than elongating the process and entering into legal proceedings. However, failure by the purchaser to comply with the Sale Agreement, which results in a breach in terms of the agreement, may result in the seller seeking legal advice resulting in the purchaser being in a financial dilemma. The purchaser may as a result be liable for damages suffered by the seller, wasted costs and the agent’s commission. In most situations, a Sale Agreement is only given to the seller after the buyer has signed. A purchaser should consequently think through the Sale Agreement before concluding it. There are sometimes situations where the purchasers are eager to buy property and signs several offers. Subsequently, the purchaser could potentially be in a situation where they have entered into more than one legally binding Sale Agreement.
Although it is not always certain that an offer is going to be accepted, it is advised to rather take caution and enter into one offer at a time.
Many people have a misunderstanding regarding the Consumer Protection Act (herein referred to as CPA) in a Sale Agreement and it conveying a cooling-off period.
This is however only applicable in certain situations but most of the time it is not. It would be best to consult your attorney for advice in this regard should the need arise.
Residential property transactions for R250 000,00 or less are subject to the cooling-off period, as stated in the Alienation of Land Act. The latter Act further states that the cooling-off period is not applicable to residential transactions above the R250 000,00 threshold.
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