Most Offers to Purchase contain suspensive conditions protecting the purchaser.
That the offer is subject to the Purchaser selling his/her current property;
That the Purchaser obtains a loan from one of the major financial institutions.
A suspensive condition is an uncertain future event. The Offer to Purchase is thus subject to the happening of this uncertain future event. Should the Purchaser fail to comply with the suspensive conditions pertaining to his/her specific offer within the allotted time frame, the Offer to Purchase becomes null and void and is of no effect.
As this places the Seller in the unfortunate position of having to remove his/her property from the market for an extensive period, the “continued marketing” clause has been introduced to alleviate this situation.
The “continued marketing” clause, better known as the “72 hour” clause provides the Seller the opportunity to accept other similar or better unconditional offers on his/her property.
This article is written to explain the practical operation of this clause as it is commonly found in Offers to Purchase and does the working thereof regularly occur.
In practice, when this occurs, the Seller is obligated to give the Purchaser written notice that he/she has received a similar or better unconditional offer. The Seller must indicate that he/she wishes to accept this competing offer. In the written notice the Seller must indicate to the Purchaser that he/she has a period of 72 hours from receipt of the notice to waive the suspensive conditions applicable to their Offer to Purchase or to comply with all the suspensive conditions within the 72 hour period.
Should the Purchaser not waive the suspensive conditions applicable to their Offer to Purchase or not comply with them within the 72 hour period, the contract between the parties will become null and void and be of no effect. The Seller will then be in the position to accept the other offer which will them become a binding legal document.
Should the Purchaser waive the suspensive conditions, the Offer to Purchase will immediately become a legal binding document and must the Purchaser perform within the allocated time frames as per the Offer to Purchase.
An example can be as follows:
The Seller and Purchaser enter into an Offer to Purchase.
The sale is subject to the Purchaser selling his current property within 45 days. The suspensive condition.
The Seller will have to wait for the Purchaser to sell his property within 45 days for the
contract to be binding or for the contract to lapse should the property not be sold.
The “continued marketing” clause allows the Seller to market his property while he is waiting for the Purchaser’s suspensive condition to be fulfilled or to lapse.
Should the Seller receive a similar unconditional offer or another more favourable unconditional offer (depending on the wording of the clause), and the seller wishes to accept this other offer, the Seller has to give 72 hours written notice to the Purchaser within which time the Purchaser will have to decide whether he will waive the suspensive conditions.
Should the Purchaser waive the suspensive conditions, the offer will be binding and will the Purchaser have to make payments and deliver guarantees as described in the Offer to Purchase as if it was an unconditional offer. Should the Purchaser not be able to fulfil the suspensive conditions within 72 hours the offer will lapse.
If the first offer lapses, then the second unconditional offer will become the binding offer.
Sellers should be aware of unscrupulous Purchasers who do not have the financial means to make unconditional offers, or due to the mere fact that they (Seller and Purchaser) are uneducated in the workings of property transactions to make and accept such offers. Sellers must be aware that there are various variables, for example the wording of the “72 hour” clause, that may occur and that all these variables cannot be mentioned in this article.
It is therefore always recommended that Sellers appoint professionals to assist them with their property transactions who will be able to give them the necessary assistance and guidance. The selling and buying of a property is a major step in most people’s lives and it is therefore important to make it a stress free and memorable occurrence.