How suspensive or resolutive conditions affect my sales contract

You found the type of home you were looking for, made an offer, and it was accepted. Now things get down to the nitty-gritty with the sale and conveyancing that needs to happen. It would be horrible if you finally get approval for your bond just to find out it wasn’t in time and the sales contract is null and void. On the flip side, you can be happy to finally have found the perfect buyer but then the proof for the building plans’ approval comes in too late and the contract is, also, null and void. Both of these events can happen if a suspensive or resolutive condition is part of the sales contract, and buyers and sellers should take note of them.


What are they?

A suspensive and resolutive condition places a condition upon a sales contract that has to be met for the contract to take full effect or continue to be valid. Buying and selling property, whether it is an existing building or one that is planned, is an expensive business and a sales contract needs to be in place before you can get final approval for a loan, for example. Suspensive and/or resolutive conditions help mitigate the risk for at least one of the contracting parties.


Suspensive condition

A suspensive condition essentially keeps the contract from taking full effect until a certain condition has been met. In other words, the contract has been drafted, accepted, and signed by all the parties concerned, but something has to happen before it is a truly binding contract due to the suspensive condition.


In a sales contract on immovable property, the suspensive condition can include the purchaser needing to get final approval for a home loan of a specific amount by a specific date, it could be that the purchaser needs to sell his current property by a certain date.


In these cases, the suspensive condition protects the seller and if they are not met in accordance with the details of the condition, the contract is not enforceable, and the seller can accept offers from other potential purchasers or keep advertising the property.


It is important that the condition be detailed in terms of a date by when it needs to be met and, for example, the exact amount of the bond approval. If one or both of these are not met, the condition as a whole is not met. The seller and purchaser can agree to alter the condition, for example, extend the date, or the seller could agree to waive it completely if, for example, the purchaser secured the funds for the purchase without requiring a financial institution’s bond approval.


Once the condition has been met, the contract is deemed valid from the date it was signed, not the date the condition was met.


Resolutive condition

This condition is similar to a suspensive condition in as far as it can cause a contract to be null and void, but it does not keep a contract from being valid until a condition is met. With a resolutive condition, the contract is valid and enforceable from the day it is agreed to and signed by all parties involved. The condition, however, can cause the contract to become terminated should a certain future event take place or not take place. If, for example, the continued sale of the property is dependent on the resolutive condition that the seller provides approved building plans by a certain date and that condition is not met, the purchaser is essentially protected. Once that date has passed and the seller has not provided the approved plans, the sales contract is not enforceable, and the potential purchaser can continue looking for property to purchase without being bound to the one in question.


As with the suspensive condition, it is important that the resolutive condition be detailed and has a date by which, for example, the approved building plans need to be provided. The parties can agree to alter the details or waive the condition.


Final thoughts

It is important for both the purchaser and seller to take notice of any suspensive and/or resolutive conditions that could hinder or completely terminate the sale of a property. Should it be necessary to change some of the details, for example, if the purchaser knows that the bank will need an additional week to approve the bond, this should be communicated immediately. It can save the seller and purchaser effort, money, and time and ensure that the sale happens without a hitch.


If you have the right property professionals and lawyers in your corner, they can help you in understanding any and all clauses and conditions that a contract is subject to. Get in touch with Karis today if you need any assistance.