What happens if a suspensive condition is not met?

Imagine signing a deed of sale for your dream house and later discovering that the contract lapsed because you obtained bond approval one day too late or for an amount that is less than stipulated in the Deed of Sale. The situation could be worsened if the Seller receives a better offer for the house and accepts that better offer.

If a deed of sale is made subject to a suspensive condition, it will lapse if such condition is not fulfilled in time. This was confirmed in the case of Marais v Kovacs. There is then no contract for the sale of the property between the two parties and the Seller can sell the property to another purchaser.

Examples of suspensive conditions are obtaining bond approval before a certain date or the sale of the Purchaser’s current property before a certain date. It is very important for both the Seller and Purchaser to take note of the wording of these conditions and ensure that they understand them.

The following is an example of the wording of a suspensive condition relating to a bond, also sometimes referred to as a “bond condition”:

“This Deed of Sale is subject to the Purchaser obtaining bond approval from a financial institution for the amount of R1 000 000 before 2 April 2018, failing which this agreement will lapse.”

In the above example, if only R900 000 is approved before 2 April 2018, then the condition is not met and the contract will lapse. Similarly, if a bond is approved for R1 000 000 but only on 3 April 2018, then the condition is not met in time and the contract will lapse.

The parties can however agree to extend the time during which the suspensive condition must be fulfilled or the amount of the bond that needs to be approved. Such amendments must be in writing and signed by both the Seller and Purchaser as per the requirements of the Alienation of Land Act 68 of 1981. It must also be done before the time limit of the suspensive condition expires.

In the Marais case the court held that even if the suspensive condition had been inserted in the contract for the exclusive benefit of the Purchaser, the Purchaser would have had to communicate his intention to waive the requirement before it lapsed.

If a suspensive condition will not be fulfilled in time, rather take the necessary precautions beforehand to avoid a lapsed Deed of Sale.

We advise that you contact a professional for advice in this regard.

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