Property Sale Agreements with Lapsed Suspensive Conditions – Is Reincarnation Even Possible? | Legal Articles

 

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Property Sale Agreements with Lapsed Suspensive Conditions – Is Reincarnation Even Possible?

In the conclusion of property sale agreements, parties commonly include a condition or more that must be fulfilled in order for the agreement to come into effect.

These are known as suspensive conditions at law, being future events upon which the coming into force of the agreement will be dependent upon.

proeprty attorneys in Cape Town

Suspensive Conditions in Offer to Purchase

A common suspensive condition in most property sale agreements is one whereby, upon acceptance of the offer by the seller, the purchaser is required to either settle the amount within a specific period of time alternatively to secure guarantee of payment from a financial institution (bond).

However, it may happen that due to unforeseen circumstances or by a dose of misfortune, the agreed timeframe may pass without the purchaser securing the guarantee of payment and therefore falling short of the agreed terms.

Can parties then bring back to life the agreement by waiving the lapsed suspensive condition, or by extending the period after its lapse?

Purchase and Sale Agreement for Property in South Africa

The Courts disagree and have upheld that parties cannot revive an agreement after it lapses due to non-fulfilment of a suspensive condition. The Courts held that in this scenario the parties must conclude a new agreement of sale for it to be valid and legal at law, even under the same terms (obviously having extended the suspensive condition period in the new agreement).

In the case of McPherson v Khanyise Capital (Pty) Ltd and Others (2009) ZAGPHC 57 (27 February 2009), where a suspensive condition (payment of R2 500 000) was not fulfilled within 60 days as had been agreed between the parties.

The Court held that the agreement effectively lapsed and could not be revived by the seller extending the period in which the Purchaser could pay the amount.  Earlier in the case of Mekwa Nominees v Roberts (1) 1985 (2) SA 498 (W) the Court held that it will be “too late” for parties to waive the suspensive condition after it has lapsed.

The position in the law today as was confirmed by the Court in Fairoaks Investment Holding (Pty) Ltd and Another v Oliver and Others 2008 (4) SA 302 (SCA), is that;

  • Upon its expiration, a suspensive condition cannot be waived or extended;
  • An agreement which has lapsed due to the expiration of a suspensive condition, cannot be revived;
  • Parties are free to enter into a new agreement under the same terms, where the suspensive conditions are extended.

Agreement of Sale of Immovable Property South Africa

In the event that parties foresee the possibility that a suspensive condition might not be fulfilled in the time agreed upon under the agreement, the parties are advised to either waive the suspensive condition or extend the period of the suspensive condition before its lapse, by signing a specially prepared addendum.

Sale agreements of immovable property are compulsorily required by law, as per Section 2 (1) of the Alienation of Land Act 68 of 1981 to be in writing. Where a sale of an immovable is not reduced to writing, such a contract is void and invalid.

Van Deventer & Van Deventer Incorporated – Property Attorneys Cape Town

Property sale agreements and transactions are fraught with legal and technical implications which most often render them complicated and sometimes invalid. However, our able team of property attorneys will guide and assist you to make the process as hassle free and secure as possible. Contact us to find out more.

 

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