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Is there a cooling-off period when you buy property?
For most home purchases in South Africa, no. The law does give some buyers five days to withdraw from a property deal, but that right falls away when the price is more than R250 000, so it rarely applies to a house, flat or townhouse. Once you sign the offer to purchase on an ordinary home, you should assume you are bound.
The five-day right in the Alienation of Land Act
The Alienation of Land Act, section 29A, gives a buyer five days to withdraw from the deal. To use it, you give signed written notice to the seller or to the seller’s agent. The five days exclude the day you signed, Saturdays, Sundays and public holidays, so in practice it means five working days.
If you withdraw in time, the seller must refund any money you paid within 10 days.
The right covers residential land and also sectional title units. It does not apply to agricultural land. The offer must also set out the right in writing. But it falls away in a number of cases, including:
- If the price is over R250 000, or a higher amount if one is prescribed.
- If the buyer is a trust or another party that is not a natural person, such as a company.
- If the sale is at a publicly advertised auction.
- In a few other cases set out in the Act.
A 2008 notice proposed raising the limit to R500 000, but we found no sign that it was finalised. For that reason, treat R250 000 as the figure. That means the right is mostly relevant for very cheap properties, such as a small unit or a low-cost stand.
The Consumer Protection Act is separate
Section 16 of the Consumer Protection Act also gives a cooling-off right of five business days. It applies only where the deal resulted from direct marketing, for instance a salesperson approaching you unprompted. It does not apply where you approached the seller yourself or where you responded to an ordinary advert. A buyer who finds a home online and calls the agent is therefore not covered by that section.
What this means for you
Treat your signature as final. A few things follow from that:
- Do the checking first. View the home more than once, and read the offer in full. Our checklist for the offer to purchase sets out what to look at.
- Know your finances. Do not sign hoping to sort out the bond later. Get a pre-approval, and test the repayment on the affordability calculator.
- Look for a way out written into the contract. A suspensive condition, such as the sale depending on bond approval or a satisfactory inspection, is a more reliable exit than a cooling-off right. See suspensive conditions explained.
- Do not rely on a promise. If an agent tells you that you can always change your mind, get it in the offer or assume it is not true.
If you want to back out
Pulling out of a signed offer with no right to do so is a breach of contract. The seller may be able to claim damages or insist on the sale going ahead, and you may lose your deposit. The details depend on the clauses you signed. Before you decide anything, speak to an attorney, and do not simply go silent in the meantime.
- Read the offer again and note every deadline and condition.
- Check whether any suspensive condition is still open.
- Check whether the price was above or below R250 000, and whether you bought as a natural person.
- Get legal advice on your own contract before you send any notice.
- If the five-day right does apply, send the signed written notice to the seller or the agent within the time, and keep proof it was delivered.
What to do next
- Read the offer to purchase: what to check before you sign.
- Learn how conditions protect you in suspensive conditions explained.
- Check the cash you will need with the transfer costs calculator.
This article is general information for South African readers, not legal, financial or tax advice. Rules and rates change, so check your own situation with an attorney, your bank or a tax practitioner. Our property calculators can help you work out the numbers.