Don’t keep your seller in suspense
Category Sale Agreements
Most, if not all, property sale agreements contain suspensive conditions. If you're buying, you need to understand these conditions: doing so could save you a great deal of money and keep matters out of the High Court in the event that the sale goes awry.
So what exactly are suspensive conditions and why is it so important to write them into a sale contract? Well firstly, many buyers rely on the sale of their own properties to finance their new homes. In these cases, it's standard for a clause to be inserted stating that the sale will only go through once the buyer's own property has been sold. A time limit is generally given and the sale will be cancelled if this condition is not honoured.
Likewise, most buyers need finance from a bank in order to purchase property. Again, this will be stipulated in the suspensive conditions and the sale will be regarded as null and void if this aspect of the agreement is not fulfilled.
Suspensive conditions (if abused) can come back to bite if the seller believes that the buyer wants to back out of the deal. For example, a buyer telling his bank that he longer wants to buy a property for which finance has already been requested, is definitely putting a spanner in the works. No one is going to try and force you to buy something that you no longer want – however, while the sale may not go through, this doesn't mean that sabotaging the sale will get you off scot-free. Given that the seller has taken his property off the market while he waits for the sale to go through, it stands to reason that he is entitled to recourse. Damages may be sought, and indeed granted by the courts, if it is found that the buyer himself has placed obstacles in the way of the sale.
Simply put, suspensive clauses are not a buyer’s “get out of jail free” card. Generally they are there to ensure that the buyer will be given enough time to arrange bond finance and the sale of his existing home.
The importance of having suspensive conditions written into an offer to purchase cannot be over-emphasised. Word-of-mouth agreements are, as they say, not worth the paper they’re written on.
It stands to reason that estate agents want their sales to go through with as little hassle as possible, and will thus ensure that all the I’s are dotted and T’s crossed. Private sellers on the other hand, particularly those who are new to the selling game, may not understand the importance of using these very important clauses and should consider consulting an attorney to ensure that all bases are covered before signing an offer to purchase.
Source: Lea Jacobs
Author: Lea Jacobs