Suspensive clauses in sale agreements

The Court held in this case that the Defendant had not established that the Plaintiffs had waived the suspensive condition, thus the sale agreement had lapsed and the Plaintiffs were entitled to the return of the deposit with interest

ELOFF & ANOTHER v DEKKER [2008] JOL 21331 (C)

THE FACTS
The Plaintiffs (mother and daughter) purchased immovable property in Gordon’s Bay. The sale agreement was suspensive upon the Plaintiffs obtaining a bond approval on a specific date.

The Plaintiffs bond was approved but for a lesser amount than was required. The Plaintiffs were thus of the view that the sale agreement had lapsed and requested repayment of their deposit paid.

The Seller admitted that the bond had not been approved in the correct amount but alleged that the Plaintiffs had accepted the lesser bond that was granted and that the Plaintiffs had thus waived the suspensive condition relating to the bond.

The Seller was thus of the view that the sale agreement was valid and binding.

The Seller thus rejected the Purchasers’ request for the repayment of the deposit and the matter proceeded to court.

WHAT THE COURT HELD
The Court confirmed the principle that a mortgage bond clause in a sale agreement is for the exclusive benefit of the purchaser.

The Court further confirmed the principle that a purchaser may unilaterally waive the benefit of the suspensive condition relating to the obtaining of the bond, provided the waiver takes place before the date for the fulfillment of the suspensive condition.

The Court held that there was a presumption against waiver and that a waiver must be clear and unequivocal.

The Court held in this case that the Defendant had not established that the Plaintiffs had waived the suspensive condition, thus the sale agreement had lapsed and the Plaintiffs were entitled to the return of the deposit with interest.

SUMMARY
Where an agreement for the sale of immovable property contains a suspensive condition to the effect that the Purchaser must obtain a mortgage bond:

• the agreement is suspended until the bond is approved;
• if the bond is not approved by the due date and in the correct amount, the sale agreement will lapse;
• if the purchaser obtains a lesser bond and wishes to accept that bond, the purchaser can unilaterally waive the bond condition, provided that such waiver takes place before the end of the time period for the obtaining of the bond;
• the purchasers waiver must be clear and unequivocal (the waiver should be done in writing);
• the waiver may be contained in an addendum and signed by both seller and purchaser, should the seller be agreeable. The addendum must be signed before the end of the time period for the obtaining of the bond;
• any extensions to the bond suspensive condition period must be contained in an addendum signed by seller and purchaser.

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