Property Buyer Wants to Back Out after the OTP. What Do I Do Now?


Can a buyer back out of option to purchase otp? what to do?
Find out what options are available to you and your client.

While it's rare that a buyer or seller will back out of the Option to Purchase (OTP), such cases can happen. This can be especially frustrating to real estate agents, as it means the undoing of a case you had considered closed - and if your client doesn't understand the implications, things can get emotional.


Here are a few things you can do when it happens:


First, a quick summary of the OTP and what it means


The OTP "reserves" the property for the buyer. Securing the OTP means usually putting down a non-refundable deposit of one per cent of the property price.


Once the OTP is secured, the seller is legally obliged not to sell the property to anyone else, for the duration of the OTP - most of the time, this is 14 days.


The buyer must exercise the OTP and buy the property (completing the Sale and Purchase Agreement) before the OTP expires - failure to do so means losing their deposit.


As such, you should always be sure to communicate this to your client from the very beginning. If your client is the seller, they must be clear that they want to sell - there are legal implications if they back out after getting the deposit.


If your client is the buyer, they must be certain they want to buy; otherwise they're throwing their money out the window with the deposit! All of this should be explained to your client in writing, not just verbally.


Nonetheless, if your client does decide to back out, here's what you should do: