The Non-Negotiables: 9 Legal clauses every property investor must lock in before signing an OTP

• The Offer to Purchase is legally binding; incorrect clauses or missing protections can expose investors to financial loss and long-term liability.
• Financing, defects, levies, and occupational terms must protect cash flow and investment returns before investors commit to property transactions.
• Professional legal review before signing prevents disputes, protects profitability, and ensures the property investment structure aligns with long-term portfolio strategy.

The OTP: Where property deals are won or lost

‍In property investing, excitement often peaks when a deal is secured. But seasoned investors know the real success or failure of a transaction is determined long before transfer takes place, at the moment the Offer to Purchase (OTP) is signed.

The OTP is not simply an offer. It is a legally binding agreement that sets the obligations and protections for both buyer and seller.

At a recent investor session, conveyancing attorney Nadia de Kock of Miltons Matsemela in Durbanville, Cape Town, unpacked the legal clauses investors too often overlook.

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As she warned: “The OTP forms the foundation of the entire transaction. Once signed, the rights and obligations of all parties are fixed.”

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Too many investors rush through this stage, only to discover costly consequences later.

Here are 9 non-negotiable legal protections every investor should secure

1. Buy in the correct legal entity
Professional investors should avoid purchasing investment properties in their personal capacity when building a portfolio.

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De Kock cautions: “Submitting an OTP in your personal name exposes the asset to personal liability and future tax inefficiencies.”

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Purchasing through the correct holding structure protects assets and improves future financing flexibility.

2. Make the financing clause work for you
Standard OTPs often state that the deal becomes binding once a bank issues a loan quotation, even if the terms are unfavourable.

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De Kock advises investors to qualify the clause: “The bond condition should only be fulfilled once the purchaser has accepted the loan quotation in writing and on acceptable terms.”

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She also highlights that loans should be approved under normal bank conditions, otherwise unexpected compliance requirements may fall on the buyer.

3. The reality of buying voetstoots
Most second-hand properties are sold voetstoots, meaning buyers accept the property as is.

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De Kock explains: “A seller is generally not liable for defects unless these are made conditions of the sale agreement.”

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Investors should commission professional inspections and make the OTP subject to acceptance of inspection results to avoid inheriting costly repair obligations.

4. Confirm the property description and exclusive use areas
Incorrect property descriptions can create transfer complications or leave buyers without parking bays or storerooms they believed were included.

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De Kock recommends verifying title details upfront: “Especially with sectional title properties, ensure exclusive use areas are correctly included in the OTP.”

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5. Understand rates, levies and special levies
Investment cash flow calculations can quickly unravel if levy or municipal charges are higher than expected.

Investors must confirm:

• Current levies
• Rates and municipal charges
• Any special levies payable

Unexpected increases can damage projected returns.

6. Never leave occupational rent blank
Occupational rent applies when occupation happens before registration of transfer.

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De Kock warns: “Never leave this clause blank, even if occupation is on transfer.”

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A reasonable benchmark ranges between 0.75% and 1% of purchase price, ensuring holding costs are covered.

7. Fixtures and fittings must be explicit
Disputes frequently arise around what stays and what goes.

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De Kock notes: “Do not assume anything. Be specific about fixtures and fittings in the OTP.”

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Investors should also ensure items are handed over in good working order.

8. The role of the conveyancing attorney
Although sellers usually appoint conveyancers, buyers may negotiate their own attorney.

Experienced conveyancers ensure smoother transfers, compliance, and risk reduction, particularly where attorneys serve on major bank panels allowing bond and transfer registration under one roof.

9. Have your documentation ready
Investors with bond pre-approval, proof of funds and completed compliance documents often win in competitive offer situations.

Prepared buyers are taken more seriously.

The Bottom Line: Protect the deal before signing
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As De Kock concluded in her presentation: “A properly structured OTP provides security, transparency, and a solid foundation for a successful transfer.”

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Property investing is a long-term wealth game, but success depends on disciplined deal structuring at the start. The smartest investors do not simply chase opportunities, they protect themselves legally before committing.

Before signing your next OTP, ensure every clause supports your investment strategy rather than undermines it.

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