If you’ve made an offer to purchase a property you may have seen a suspensive condition in your contract. We unpack what that means and how suspensive conditions can protect you as a buyer.
What is a suspensive condition?
A suspensive condition is a condition that must be met before a contract becomes binding. The most common suspensive conditions are conditions that require the buyer to obtain bond approval by a certain date, and a condition that provides that the buyer sell their existing property. These conditions protect you by ensuring that you have the funds available to purchase the property.
Other suspensive conditions could include municipal approvals for rezoning, repair and inspection conditions, and due diligence periods that allow the buyer to thoroughly investigate the legal, financial, and physical aspects of the property.
When is my contract binding?
When the last suspensive condition is met, the contract is binding from the date on which both parties signed it.
What happens if a suspensive condition is not met?
If a suspensive condition is not fulfilled by the date outlined in the agreement, the agreement comes to an end without any of the parties facing any penalties. You will be placed in the same position as you were before signing the agreement. If you want to continue with the transaction you will have to conclude a new agreement with the seller.
Changing or waiving suspensive conditions
Any agreement can be amended, usually through a written addendum signed by both parties. So, you could agree with the seller to extend the deadline, or change it. An agreement can also make provision for the buyer to waive a suspensive condition. This flexibility can ensure that the transaction goes ahead smoothly, even if unexpected delays arise.
Have questions about your offer to purchase?
If you’re entering into an OTP and you would like to know more about how to navigate suspensive conditions book a consultation with Van Zyl Scheepers Attorneys and we’ll guide you through the complexities to ensure your deal proceeds smoothly and without any surprises.
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