What home buyers need to know about the 72-Hour clause

If you're in the market for a new home in South Africa, especially in popular, fast-moving areas, you may come across something in your Offer to Purchase (OTP) called the 72-hour clause. At first glance, it might sound a bit intimidating, but it's a common part of many property transactions.

Understanding what the 72-hour clause is, how it works, and what it means for you as a buyer can make a big difference in your property journey. It could even be the reason you lose or secure your dream home. Here's everything you need to know.

Is the 72-hour clause legal?

Yes, absolutely. The 72-hour clause is legally recognised and enforceable in South Africa. It forms part of the Offer to Purchase, which is a binding contract between the buyer and seller. However, for it to be valid, the clause must be explicitly written into the OTP.

If it's not there in writing, the seller can't rely on it later. So, always read your contract carefully and don't hesitate to ask for clarification on any legal jargon.

What is the 72-hour clause?

The 72-hour clause, also known as the escape clause, is a provision that allows a seller to continue marketing a property even after accepting a buyer's offer as long as that offer is subject to certain conditions.

In essence, it gives the seller an escape route if a better, more secure offer comes in. It's most commonly used when a buyer's offer includes suspensive conditions (we'll get into those shortly).

So, while the seller has accepted your offer, the deal isn't completely locked in, and if you're not able to meet your conditions in time, someone else could swoop in and buy the property out from under you.

When is the 72-hour clause typically used?

The 72-hour clause comes into play when a buyer submits a conditional offer. That means the sale is dependent on one or more specific things happening before it can be finalised. Some of the most common suspensive conditions include:

• Selling your current home: If you need to sell an existing property before you can afford the new one.

• Getting bond approval: If your offer depends on the bank granting you a home loan.

• Securing a deposit or resolving financial matters: If you're waiting for funds to become available.

While these conditions are completely normal and even expected in many transactions, they do introduce an element of uncertainty for the seller. That's where the 72-hour clause becomes useful - it allows the seller to keep their options open in case a more straightforward, unconditional offer comes along.

How the 72-hour clause works in practice

Let's say you make a conditional offer on a property, and the seller accepts it. But, importantly, the Offer to Purchase includes a 72-hour clause. Here's what could happen next:

1. You begin the process of trying to meet your suspensive conditions (e.g., getting bond approval).

2. Meanwhile, the seller continues to market the property and show it to other potential buyers.

3. A second buyer submits a non-conditional or more favourable offer (perhaps higher or already approved for a bond).

4. The seller notifies you, the first buyer, in writing that another offer has been received.

5. From that point, you have 72 hours (usually business hours only) to either:

   • Waive your conditions (e.g., say you no longer need to sell your property first), or

   • Fulfill the conditions (e.g., obtain bond approval and provide proof).

If you can't do either within 72 hours, the seller is legally allowed to cancel your offer and proceed with the second buyer.

Why do sellers use the 72-hour clause?

From a seller's perspective, the 72-hour clause is a safety net. Here's why they might want to include it:

• It reduces risk: Sellers avoid being locked into a deal that might fall through due to financing issues or delays.

• It keeps the property marketable: They can still accept viewings and offers while waiting for the first buyer.

• It can speed up the process: It motivates the original buyer to act quickly and commit to the sale.

In competitive markets, like Cape Town, Johannesburg, or coastal towns during the holiday season, it's not unusual for properties to receive multiple offers in a short space of time. This clause helps sellers make the most of that demand.

What buyers should know before signing

If you're the buyer, here are some practical tips to protect yourself and stay ahead of the game:

• Know what you're signing - Before signing your OTP, ask your estate agent if a 72-hour clause is included. If it is, make sure you understand exactly how it works, including how the 72 hours are calculated (business days vs. calendar days).
• Get pre-qualified - Pre-qualification for a home loan shows that you're financially ready to buy. It makes your offer stronger and can help you meet your bond condition faster, potentially avoiding the need for a 72-hour clause in the first place. Using a professional bond originator will also help spot any issues that could impact your prequalification or home loan application.
• Have a backup plan - If your offer is conditional, know what you'll do if the clock starts ticking. Can you speed up your bond application? Do you have a bridging loan option if your current home hasn't sold yet?
• Act fast if notified - If you get a 72-hour notice, don't delay. This isn't a courtesy - it's a legal process that could cost you the property if you don't respond in time.
• Get professional advice - If you're unsure about any part of the process, speak to a conveyancer or property attorney. A small consultation fee could save you from a costly mistake.

It's not a trap - just be prepared

The 72-hour clause can seem a bit nerve-wracking at first, but it's not something to fear. In fact, it's designed to create flexibility and fairness for both parties, giving sellers peace of mind and buyers the chance to secure their dream home with a clear understanding of what's at stake.

The key is to go in prepared: know the terms, work with trusted professionals, and act quickly when the situation calls for it.