There are certain conditions that may be included in your offer to purchase that will need to be fulfilled before your contract is considered valid. These are referred to as your suspensive conditions. The fulfilment of the contract is then delayed until such a time that your conditions have been met.
The 2 most common suspensive conditions found in your offer to purchase:
A typical clause found in an offer to purchase is,
‘That the purchaser is successful in obtaining approval for the granting of a loan by a bank or other financial institution, for not less than R 1 000 000 (one million rand). Such approval should be obtained within 21 (twenty one) days after signature hereof by both parties.’
If the purchaser does not obtain a loan within the prescribed period or for the amount stipulated, the contract automatically lapses. Should the purchaser be successful in obtaining a loan, the contract will continue as per normal.
One of the most important wordings to look out for in the bond clause is the provision that makes it a requirement to inform the seller in writing of such bond approval. This will not allow for any ambiguity, as the seller will have to be expressly informed and made aware that the contract is now valid. He can no longer seek further potential purchasers.
Another example of a suspensive condition contained in a deed of sale is,
‘That the purchaser sells his or her property, situated at 2 Merriman Street , Bellville, within 30 days of signature of this agreement and that the suspensive conditions related to that sale, eg. that purchasers bond approval, be obtained within a further 30 days. Should such sale be successful, the two transfers are to register at the Deeds Office simultaneously’.
The purchaser will then need to do everything he or she is able to do to ensure that the property is sold within such time. This is a clause that essentially protects the purchaser, so as to ensure that they are able to afford the new property they wish to purchase.
Correctly worded suspensive conditions are of paramount importance to any offer to purchase and must be thoroughly examined.
Contact our conveyancing attorneys in Cape Town, before you sign your offer to purchase. We can help you understand what exactly is expected of you and to avoid any ambiguity from arising.
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