Valid or void Offer to Purchase
Category Advice
Article Provided by Leanne Jooste, B Law Inc. Attorneys
When is an Offer to Purchase valid?
An Offer to Purchase must be in writing and must be signed by all parties to constitute an Offer to Purchase. It is important to note that an Offer to Purchase only becomes a valid and binding contract as soon as the Seller has accepted and signed the Offer to Purchase.
What is a suspensive condition?
It is a clause included in an Offer to Purchase that states that a specific event is to happen before the Offer to Purchase is of full force and effect and binding on all parties. The Offer to Purchase will set out what the suspensive conditions are and the time periods by which such conditions must be met. Examples of suspensive conditions are:
- A "subject to sale" where the Purchaser makes the Offer to Purchase to purchase the Seller's immovable property subject to the sale of the Purchaser's own immovable property; or
- The Offer to Purchase is subject to the Purchaser obtaining financing from any of the Banks of South Africa.
When is an Offer to Purchase void?
The Offer to Purchase must stipulate what the time period is for the suspensive conditions to be fulfilled. Should a suspensive condition not be fulfilled timeously, the sale agreement lapses and is regarded as void ab initio or "void from the beginning". This means that the Offer to Purchase cannot be revived and the parties should enter into a new Offer to Purchase that complies with the Alienation of Land Act should they still wish to proceed with such a transaction. An alternative is, is that the Seller and Purchaser will be able to discuss the terms of an Addendum to the Offer to Purchase should they wish to extend the time period for the suspensive condition of the Offer to Purchase to be fulfilled. An addendum will need to be signed by both the Seller and Purchaser prior to the suspensive condition's initial due date as per the Offer to Purchase. An Addendum that is signed only after the time period lapsed in the Offer to Purchase has no effect and is unenforceable.
De Lucia Group has been servicing the property industry for over 45 years. Contact us to ensure you get the best advise on whether you are purchasing or selling a property. Michael De Lucia - michaeldl@delucia.co.za
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Author: De Lucia Group
