By Langenhoven Pistorius Modihapula Attorneys

The prospect of buying a new home can be exciting and daunting. You see a house that you love and you want to seal the deal before somebody else gets it. You sign the Offer to Purchase, but then later realise you can’t afford the house. It makes sense to then inform the Seller that you don’t want to proceed but that cancellation can have unintended, expensive consequences for you.
An Offer to Purchase a property is an agreement that sets out the provisions that the seller and buyer have to comply with, as well as the consequences in the event of non-compliance by either party. Once signed by both parties, an Offer to Purchase becomes a legally binding agreement that cannot simply be cancelled without attracting legal consequences.
If you don’t perform your obligations or unilaterally withdraw from an agreement, you will be in breach of such an agreement. It is quite standard for a property agreement to contain a clause that, if the agreement is cancelled, the estate agent can still claim their commission from the party who is responsible for that cancellation. This provision can be overlooked by buyers as it is assumed that the general rule is that it is the seller’s responsibility to pay the agent’s commission.
In a recent court case, an estate agent instituted action against a buyer after the agreement was cancelled because the buyers had notified the estate agent that they longer wished to proceed with the deal. The agreement contained a clause that the estate agent would be entitled to claim its commission from the buyers if they were responsible for the cancellation of the agreement.
The buyers argued that they were not aware of the clause and for that reason, they should not be held liable.
The Court disagreed and found that the buyers had sufficient time to read the agreement before signing, and by signing the agreement, they automatically agreed to all the provisions, even where they didn’t understand all the provisions. The Court based their decision on the principle that a party who signs an agreement consents to the contents of the document even if it later turns out to be unfavourable to them. The purchasers were ordered to pay the commission, even though they were no longer buying the Property.
This should be a warning for buyers not to rush into signing agreements before they are sure they can afford it and sure they understand the conditions of the sale.
When in doubt, rather press pause, and have an attorney or property specialist review any proposed Offer to Purchase with you so that when you sign, you are aware of the consequences and 100% ready for the transaction.