Offer to Purchase (OTP) for Commercial Property

An Offer to Purchase (OTP) for commercial property is the legally binding agreement that lays out every term of a sale—whether you’re acquiring an office block, retail unit, or industrial warehouse.

 

 Key Clauses in Your Commercial OTP

A. Parties, Definitions & Property

  • Schedule of Information: Full seller and purchaser details, including VAT vendor numbers.

  • Property Description: Defined as the commercial premises (e.g., “office block” or “warehouse”) and its Erf or unit number.

B. Sale of the Property

  • Going Concern: Confirms the enterprise is sold as a going concern and zero‑rated for VAT, with fallback language if SARS reclassifies the transaction.

  • Supply Includes Assets: All fixtures, fittings, and necessary assets for trade (parking bays, HVAC, signage) are transferred under Annexure A.

C. Purchase Price & Payment Terms

  • Purchase Price Allocation: Breaks down VAT portion (if applicable) and base price.

  • Deposit & Balance: Deposit payable into trust, balance on registration.

D. Transfer, Possession & Risk

  • Conveyancer Appointment: Transfer occurs “as soon as possible” once documents in Annexure A are delivered.

  • Possession Date: Occupation on registration or earlier by agreement, with risk passing on occupation.

  • Occupational Rent: Calculated pro rata from early occupation date.

E. Proprietary Charges & Expenses

  • Pro Rata Rates & Levies: Purchaser liable for municipal rates and levies from the earlier of occupation or registration.

  • Transfer & Drafting Costs: Conveyancer fees, bond costs, and drafting charges borne by the purchaser on request.

F. Voetstoots, Extent & Title Conditions

  • Voetstoots Clause: “As is” sale—no warranties on latent or patent defects.

  • Surveyor‑General Extent: Final extent per approved general plan; no claim for excess or deficiency.

  • Title Conditions: Subject to all conditions in the title deed and relevant authority restrictions.

G. Breach & Remedies

  • Notice to Remedy: Seven days’ written notice to rectify breach; failure entitles seller to cancel and claim damages or specific performance.

  • Forfeiture & Interest: Purchaser forfeits deposits on cancellation; interest at prime rate if transfer delayed by the purchaser.

H. Domicilia & Notices

  • Domicilium Citandi et Executandi: Each party’s physical address for legal notices.

  • Notice Rules: Registered post or hand delivery, deemed received after the prescribed period.

I. Warranties & Concessions

  • No Additional Warranties: Seller disclaims representations outside the OTP.

  • No Waivers: Time extensions or concessions must be in writing—no implied waivers.

J. Joint & Several Liability

  • Multiple Purchasers: All purchasers are jointly and severally liable (“in solidum”) for payment and performance.

K. Jurisdiction

  • Magistrate’s Court: Parties consent to the Magistrate’s Court, with option to proceed in a higher court for larger claims.

 

4. Selling Commercial Property Privately vs. Using an Agent

Although many sellers engage a commercial property agent for marketing, tenant introductions, and negotiations, you can sell privately and still:

  • Save on Commission (often 4–6% + VAT)

  • Maintain Control over viewings, pricing strategy, and deal terms

 

Download a Commercial OTP Template