An Offer to Purchase Is a Binding Contract
The moment both parties sign an offer to purchase (OTP), a binding sale agreement exists. This is one of the most important things buyers (and sellers) fail to appreciate before signing. Unlike many other contracts in South Africa, there is no general right to cancel a property sale agreement simply because you change your mind.
Withdrawal from a signed OTP without a legally valid basis exposes you to a damages claim from the seller — typically the estate agent's commission (which the seller must pay whether or not the sale proceeds) and any proven loss suffered as a result of the aborted transaction.
When You Can Withdraw — Lawfully
1. The cooling-off right (Section 29A of the Alienation of Land Act)
A buyer who signs an OTP for a residential property for R250,000 or less has a five-business-day cooling-off right during which they can cancel the agreement in writing without penalty. This statutory right is limited to low-value residential purchases — it does not apply to the majority of property transactions in South Africa.
2. Suspensive conditions not fulfilled
Most OTPs are subject to suspensive conditions — most commonly, bond approval. If the condition specifies that the sale is subject to bond approval and bond is not approved within the agreed period, the condition fails and the contract lapses automatically. Both parties are released without penalty.
Read the suspensive condition carefully: it must specify a time period, the amount of bond applied for, and the bank(s). An OTP that says "subject to bond" without a specific amount, bank, and timeframe may not be a proper suspensive condition.
3. Seller's breach
If the seller fails to fulfil their obligations under the OTP — does not provide a valid electrical or plumbing compliance certificate, cannot transfer clear title, or breaches a material term — the buyer can cancel the agreement and recover any deposit paid, plus claim damages.
4. Mutual cancellation
Both parties can agree in writing to cancel the agreement. This requires the seller's voluntary consent — they have no obligation to agree, particularly if the sale has progressed and they have incurred costs.
When You Cannot Withdraw
You cannot simply withdraw because you found a better property, because the area does not suit you anymore, because the relationship broke down, or because you are having second thoughts. These are not legally valid grounds for cancellation.
What Happens If You Withdraw Without Grounds
If you withdraw without a valid legal basis, the seller can:
- Hold you to the contract (specific performance) — though this is rarely practical in a property context
- Accept the repudiation and claim damages — typically the estate agent's commission that the seller must pay, and any other proven losses
- Retain the deposit as security for the damages claim (most OTPs allow this)
The estate agent's commission on a R2 million property at 6% plus VAT is approximately R138,000. This is the minimum exposure for a buyer who withdraws without grounds.
If You Are Considering Withdrawal
Consult a conveyancing attorney immediately. Do not simply send a letter or WhatsApp to the seller or agent saying you are withdrawing — this constitutes repudiation of the contract and creates immediate liability. An attorney can assess whether any valid grounds exist and advise on the least costly path forward, including whether negotiating a mutual cancellation with agreed terms is achievable.