Why sales fall through before transfer
Category Advice
Many sellers falsely believe that the sale is as good as done once the OTP has been signed. The unfortunate reality is that there are a number of reasons why a sale can fall through after the offer to purchase has been signed.
Sales often fall through before the transfer and registration can take place, most commonly owing to the fact that one of the suspensive conditions in the OTP has not been met. It is common practice to include suspensive conditions which need to be met before the transaction can proceed; the most common of which being that the buyer's offer only stands if he/she receives the necessary bond approval. Normally, each suspensive condition included within the OTP will include an agreed-upon time limit. The transaction can proceed only if all these conditions have been met within the stated time frame. If, however, the conditions are not met, then the contract becomes null and void and the whole transaction will fall through. This is often why cash offers are selected over offers where the buyer still needs to sell their current home or receive bond approval for the property in question.
Another leading cause for offers to fall through is a failed home inspection. Most OTP's will include a suspensive condition that states that the offer only stands if the home passes a home inspection. If issues are raised through this inspection, then the seller will either need to address the problems themselves or come to some sort of an agreement with the buyer.
In addition to this, offers tend to fall through over incomplete or incorrect planning approvals. A home cannot be transferred into the new owners' name unless all existing structures on the property have the necessary planning approval. If the seller is unable to get these approvals, they will need to tear down the structures before the sale may proceed. For this reason, it is always advisable to get planning approval before going ahead with any additions or renovations.
As a final piece of advice, sellers are encouraged to be as open and honest with their chosen real estate professional as possible. The more information sellers provide to their real estate agent, the better their chances will be to avoid complications down the line. The more a real estate professional knows, the better able he or she will be to provide solutions before they become problems.
Author: Private Property - Extracts
