Home sellers again and again find themselves dealing with eager buyers who for one reason or another (often a reason beyond their control) find themselves unable to lay their hands on the necessary cash – even though they have in good faith signed an Agreement of Sale.
In a case with which he has recently been involved, says Denver Vraagom, a conveyancing attorney with Gunston Attorneys, the Cape legal firm, the buyer had, he assured all concerned, been promised that a certain specified sum be paid out by a pension fund to which he had contributed over many years. On this basis the Deed of Sale was signed by both parties.
“After several weeks and ongoing enquiries,” said Vraagom, “it became clear that the buyer was having difficulty getting the cash. This made the seller extremely anxious because he had agreed to buy another home where the seller, a couple in the middle of a divorce, wanted the cash so as to complete the divorce and finalise their separation.”
In desperation Vraagom finally telephoned the buyer’s pension fund to find out for himself how matters stood and why there was a delay – only to be told that the fund could not divulge information to any party other than the pension fund member.
The seller was then warned by the divorcing couple from whom he hoped to buy that they would cancel the sale if not paid within one week. This put Vraagom’s client in a very difficult position – he had already paid another attorney almost R50,000 to secure the transaction.
With only three days to go before the cancellation came into effect, the original buyer was paid out by his pension fund – and both home transfers could go ahead.
What lessons can be learned from this incident? Vraagom said that yet again it shows how essential it is to set up an Offer to Purchase with a 100% guarantee that the money required will be available on a specified date – or if this is not possible to make a condition covering this eventuality.
“In this particular case,” he said, “we had absolutely no reason to doubt the buyer’s word as he had the documentary evidence to prove that the money would be forthcoming. We had, however, not reckoned on the dilatoriness of the pension fund and this very nearly derailed two good transactions which could have cost my client a great deal of money, all to no purpose.”