A suspensive condition is a condition that suspends the rights and obligations of the parties (or the coming into operation of the entire Agreement of Sale) until the occurrence of a certain or uncertain future event.
The most common examples of a suspensive condition include:
- A condition requiring the purchaser to obtain loan approval from a financial institution within a specified period to finance the acquisition of the property; and
- A condition requiring the purchaser to first sell his/her existing property.
In the recent judgement of Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024], the Supreme Court of Appeal confirmed that an Agreement of Sale containing a suspensive condition that has not been fulfilled within the prescribed timeframe is rendered null and void.
Therefore, it is important to ensure that if it appears that a suspensive condition will not be fulfilled before the Agreement of Sale lapses, an addendum is signed by both the seller and purchaser to extend the timeframe for fulfilling the suspensive condition.
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