What is a Letter of Offer When Buying Land or a House?

What is a Letter of Offer When Buying Land or a House?

Real Estate for Sale in Nairobi Kenya

A letter of offer is a certificate that describes the terms and conditions of the businesses. It is signed by both the purchaser and the seller and it is drafted before the payments are made.

A sale agreement specifies the consent of the buyer and the seller and they sign the agreement before their lawyer who act as their witnesses. It is used to show the time of transaction, the means of payment and also it highlights the terms and circumstances under, which the sale is being conducted. On the other hand, a letter of offer is not a legally binding contract, but it is used to express the intents of the buyer to purchase the property.

The buyer tells the seller their intentions and the terms and conditions under, which they will purchase the property. A letter of offer contains five basic elements, which are: the name of the buyer, the address of both the buyer and their lawyer, the address and description of the property. A letter of offer also includes terms and conditions for purchasing the property, the buying price and also the down payment. There is also a section in the letter where it is indicated as a non-binding document and also specifies when the transaction will be completed.

Due diligence time – this is the period whereby the lawyer representing the buyer takes to execute a certified search on the property. An official search is a study of the title of the property to determine the registered owner of the property. The buyer is not supposed to pay any amount to the seller before they confirm the person selling the property is the legal owner of the property. The lawyer representing the buyer is accountable for conducting the search to avoid fraud.

The lawyer should conduct official search to confirm the registered owner of the property, the land reference number, burdens, and covenants and also registration details. The search will also indicate whether the property is leasehold or freehold and if there is any land rate rent that should be paid, or not. A letter of offer also creates room for negotiations.

A sale of agreement is drafted after the buyer is through with the inspection of the property with the help of professionals. The terms and conditions of the agreement may change especially if the seller did not disclose some aspects about the property. Example, a recognized valuer may come up with a report that may lead the price of the property to increase, or to decrease. A house engineer may tell the buyer that the house they want to buy is not in a good condition pushing the buyer to negotiate for a lower price. The buyer can decide not to continue with the transaction even before signing a sale agreement without being punished for breaching of agreement.

A letter of offer is an important document when buying a property but some buyers may instruct their lawyers to ignore it especially if they are in a hurry to purchase the property.

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