SELLER TIP#3: WHAT YOU NEED TO KNOW ABOUT SUSPENSIVE CONDITIONS
PUBLISHED 2 AUG 2016
Offers made to you will usually contain one or more suspensive conditions. The deed of sale will not be legal and binding if the suspensive conditions are not fulfilled timeously and to the letter. Any deviation from the terms of the suspensive condition has to be addressed in an addendum before the due date of such a condition.
We, together with the transferring attorney, monitor these dates and will contact you should we require an instruction to amend the due dates or alternatively to amend any conditions.
There are typically two kinds of suspensive conditions in a deed of sale, i.e. the bond grant and the ‘subject to’ clauses.
Suspensive condition: Bond grant
Purchasers rarely have the resources to purchase properties cash. The offer to purchase will therefore in most instances be made subject to the approval of a bond.
Depending on the financial situation of the purchaser, the approval of the bond should not take longer than a month. There may be circumstances that require a longer period for bond approval and you must consider each case on its merits.
As the seller you must therefore ensure that the period allowed for the approval of a bond is on the one hand sufficient to give the purchaser a fair opportunity to obtain the loan and on the other hand not too long that it results in an unnecessary delay and your property effectively being off the market.
A final grant is necessary before it can be said that the suspensive condition has indeed been fulfilled. This final grant must be obtained on or before the date set out in the deed of sale.
Suspensive condition: “Subject to” sale
It is often a prerequisite of the purchaser, or the purchaser’s bank, that his present property must first be sold and registered before his new bond (which funds your transaction) can be registered.
If an offer to purchase is made to you, subject to the sale of the purchaser’s property, there are legal ways to protect yourself as the seller, e.g. by signing a 72 hour clause. It may be that you do not wish to decline the offer to purchase, but also do not want to withdraw your property from the market for too long while awaiting the sale and registration of the purchaser’s property.
If the offer that is made to you is subject to both the approval of a bond and the sale of the purchaser’s property, you must ensure that the bond approval date is calculated from date of acceptance of the offer and not from date of sale of the purchaser’s property, in other words you want to know as soon as possible if your purchaser qualifies for the loan. The purchaser will be protected as the bank will grant the loan subject to the sale of the property.