Suspensive Conditions in a Deed of Sale

Buying a property can be a daunting task and very often the Deed of Sale contains clauses that may not be fully understood if you do not come across them regularly. Because many of them create obligations which may fall on you as the buyer or the seller, it is extremely important that you obtain clarity from your Attorney or Estate Agent as to the meaning of any such phrases or words to ensure that you comply with them.

A phrase commonly included in a Deed of Sale is a ‘suspensive condition’. If a Deed of Sale is made subject to a suspensive condition, the Deed of Sale will lapse if the condition is not fulfilled within the stipulated time period. For example, the Deed of Sale may stipulate that a deposit must be paid or bond approval obtained by a certain date. If the deposit is not paid or bond approval not obtained by that date, there is technically no longer a contract in place between the buyer and the seller.

It is possible for the buyer and seller to extend this time period but it would need to be agreed to in writing and signed by both the buyer and the seller for the extension to be valid. It is also important that this extension period is agreed upon and signed before the initial time period provided for the in the Deed of Sale lapses. In other words, if the Deed of Sale stipulates that bond approval must be obtained by the 1st of June 2016 but the buyer realises that an extension of time is needed, the buyer must ensure that the extension is agreed upon with the seller and signed before the 1st of June 2016.

If you become aware that the suspensive condition will not be fulfilled in time, it is highly advisable to take the necessary steps to extend same to avoid the situation of a lapsed Deed of Sale.
This highlights just how important it is for both the buyer and the seller to take note of the wording in the Deed of Sale and to ensure that the wording is fully understood.