The Purchase Price in an Offer to Purchase

The purchase price clause in an Offer to Purchase covers more than just the number you agreed on, and misunderstanding it is how straightforward deals turn into disputes. It's written at the top, both parties have nodded, but that clause also covers how the money moves, when it arrives, and what happens if it doesn't. Understanding those details before you sign protects you from the kind of headache that delays or derails a transfer.

What is the purchase price in an Offer to Purchase?

The purchase price in an Offer to Purchase is the total amount you agree to pay and the seller agrees to accept for the property. It must be stated in both figures and words to prevent misinterpretation. The clause must also specify how the price will be paid: by deposit plus bond, by cash lump sum, or by another agreed mechanism, along with the deadlines for each payment. A purchase price clause without complete payment terms is incomplete and unenforceable as written.

Misalignment between the written words and the figures in the price clause, or silence about how and when funds will move, are among the most common reasons property sales stall or collapse before the Deeds Office receives the lodgement.

Key Takeaways

• The purchase price must be stated in both figures and words. A discrepancy between the two versions is grounds for rejection at the Deeds Office and requires a formal addendum to correct.
• Deposits are paid into the conveyancer's trust account, never to the seller directly. Funds held in trust earn interest for you unless the OTP specifies otherwise.
• Payment deadlines are legally binding. If you miss the deposit deadline, you're in breach of contract and the seller may issue notice and cancel the sale if the default isn't remedied within the grace period.
• Occupational rent must be written into the OTP where you take occupation before registration. The amount, start date, and payment frequency must all be recorded.
• Agent's commission is drawn from the purchase price and must be stated in the OTP, including the percentage, whether VAT applies, and the triggering event (typically registration of transfer).

Defining the Purchase Price

The purchase price is the total amount you agree to pay and the seller agrees to accept. It must be written in full, both in figures and in words, so that no misunderstanding can take root.

“The purchase price is R1,500,000 (One Million Five Hundred Thousand Rand).”

The clause must also state how that sum will be paid, whether by deposit, by bond, or by cash in full. A price without terms is a story without an ending. The law demands that every cent be accounted for.

At Golden Homes, we remind our clients that this figure is more than arithmetic. It is the heart of the deal, the pulse that drives everything else.

Deposits and Lump-Sum Payments

A property may be paid for in stages or all at once. The two most common paths are deposit payments and lump-sum payments.

Deposits

A deposit is a sign of good faith. It is paid into the conveyancer's trust account, never to the seller directly, within the period stated in the Offer to Purchase. The funds are held safely until registration, and in most cases they earn interest for you.

Deposits usually range from five to ten percent of the purchase price. They reassure the seller that you're serious and strengthen your position when applying for a bond, since the loan required will be smaller.

Lump-Sum Payments

Some buyers choose to pay the entire purchase price in one sum once all suspensive conditions are met. These payments also pass through the conveyancer's trust account, where they wait under legal protection until the property transfers.

Whether by deposit or lump sum, the rule stands firm: never pay money into a private account. The trust account is the fireproof chest of property law.

The OTP must state the exact deposit amount, the date by which it is due, and the account details of the conveyancer's trust account. Failing to pay the deposit within the agreed window puts you in breach of contract, regardless of your intentions. The conveyancer will not issue receipts or open a transfer file until cleared funds are confirmed in trust.

Payment Terms and Deadlines

Every Offer to Purchase must set out when payments will be made and under what conditions.

“A deposit of R150 000 within seven (7) days of acceptance, payable into the conveyancer's trust account.The balance of R1 350 000 payable upon registration of transfer.”

If you fail to meet these deadlines, you're in breach of contract. The seller may issue notice, and if the default isn't corrected, they can cancel the sale or claim damages. Timelines protect both sides from confusion and disappointment.

The most important deadline is the bond approval date. Where a sale is subject to a bond condition, the OTP specifies how many days you have to obtain approval. Miss this date and the suspensive condition has not been met, and the sale lapses unless both parties agree in writing to an extension. The next critical deadline is the deposit, which typically falls within seven to ten days of the seller's acceptance. A missed deposit deadline is a breach, giving the seller the right to issue notice. The third deadline to note is registration itself, which may be triggered by satisfaction of all conditions and lodgement by the conveyancer. Delays anywhere in the chain push this date out, sometimes by weeks.

Occupational Rent and Early Occupation

Sometimes you take occupation before registration. In that case, you pay occupational rent to the seller. It's a fair exchange: you enjoy early possession, and the seller continues to receive value until the deal is final.

This amount must be written into the Offer to Purchase, along with the start date and monthly or daily rate. Getting it on paper keeps peace between parties who will soon trade places.

The rate is typically set as a percentage of the purchase price per month or as a flat agreed amount. It is not a rental agreement and does not give you tenant rights. If the sale falls through after you have taken occupation, you may be required to vacate promptly. The seller remains the legal owner until registration and bears the costs associated with that ownership during the occupation period. Occupational rent becomes especially important where there is a gap between acceptance and bond approval, or where the seller needs to find alternative accommodation before the property is fully handed over. Getting these dates confirmed and written into the OTP prevents misunderstanding once you are already living in the property.

Interest on Funds Held in Trust

When you pay early, the funds often earn interest in the conveyancer's trust account. Unless agreed otherwise, that interest belongs to you. A good Offer to Purchase states this clearly, ensuring that fairness is written into every stage of the process.

South African conveyancers are legally required to deposit all trust funds into an account that complies with the Legal Practice Act. Interest accrues at the rate offered by the financial institution holding the account, and by default that interest belongs to the depositor unless the OTP specifies otherwise. In practice, many offers include a standard clause allocating the interest to the seller, to the conveyancer's fidelity fund, or between the parties in agreed proportions. Before you sign, ask your agent to point out the interest allocation clause. If it is not there, ask that it be added. The difference between a few weeks and a few months in transfer timelines can mean a meaningful amount of interest on a large deposit. Confirming who receives it at the start prevents a dispute at the end.

Agent's Commission and the Purchase Price

The estate agent's reward is drawn from the purchase price. Commission is usually a fixed percentage, paid by theseller once transfer is complete. The Offer to Purchase must show this amount and whether VAT applies to it.

“Commission of 5 percent plus VAT is payable by the seller upon registration of transfer.”

Stating this openly prevents dispute and honours the work of the professional who brought both parties to the same table.

Estate agents in South Africa earn commission only when transfer is registered. This protects you: if the sale falls through before registration, commission is typically not payable, unless the failure was caused by your breach. The OTP must specify whether the seller pays commission from the proceeds or whether it is incorporated into a gross price the buyer funds. It should also confirm whether the stated percentage is VAT-inclusive or exclusive. An agent who is VAT-registered charges VAT on top of their commission rate, which the seller funds from the sale proceeds. Getting these numbers clear before signing means no surprises when the conveyancer presents the final settlement statement.

Getting the Numbers Right

The purchase price is more than the sum of its digits. It anchors every other term: the bond, the commission, the certificates, and the final transfer. If it's vague or inaccurate, the entire sale may unravel.

Precision keeps the compass true. When numbers and wording align, the conveyancer, the bank, and the Deeds Office move together in harmony. In a market built on trust, a well-drafted price clause is the truest foundation you can lay.

You shouldn't have to complete the purchase price section of an Offer to Purchase without understanding what each payment term commits you and the seller to, and what happens when those terms aren't met. With Golden Homes, you won't.

ContactGolden Homesbefore signing any offer. An agent will confirm that the purchase price clause, deposit terms, and payment deadlines are correctly recorded before the document is presented for signature.

The purchase price clause reaches further than you might expect. It determines the bond amount your bank will lend against, the transfer duty payable to SARS, the conveyancer's fee scale, and the agent's commission. Each of these flows directly from the price stated in the OTP. Write it right the first time, because correcting it after signing requires a formal addendum signed by both parties, which adds time and often resets certain deadlines.

The Number That Starts the Journey

In the wide South African sun, the purchase price burns like a signal fire. It's the moment when intention hardens into agreement, when words and numbers forge ownership. Whether paid as a deposit, in full, or with the help of a bond, it marks the beginning of something lasting.

At Golden Homes, we treat that number with the respect it deserves. We help buyers and sellers understand every figure, every clause, and every step. When the ink dries and the dust settles, the purchase price stands as proof that both sides kept their promise.

Yet even a promise needs power behind it. Once the number is agreed, the next question rises naturally: how will it be financed?

That story continues in our next chapter, Bond Finance in an Offer to Purchase, where banks, buyers, and courage meet.

Every purchase price tells two stories: the seller's, of years invested in a home, a building, or a piece of land, and the buyer's, of a future decided and a commitment made. When those two stories meet in a correctly drafted Offer to Purchase, the transfer proceeds cleanly. When the numbers are wrong, the stories diverge, and what should have been a handshake becomes a correspondence between lawyers. Golden Homes is here to make sure yours is the first kind of story.