'Better to use' resolutive than suspensive conditions in property purchase

A resolutive clause can be more effective than a suspensive condition says Lanice Steward, managing director of Knight Frank Anne Porter.

A resolutive condition is where the onus to complete an action is put on the person who is benefitting from the contract to perform a duty. The contract is immediately binding in this case unless the condition is released where in a suspensive condition the contract is binding only once all the conditions have been met.

Asked to give an example of a typical resolutive condition in an offer to purchase a property, Steward said, "In the wording in the agreement where the sale was a sectional title unit still awaiting registration of plans. The clause would read as follows: "In the event the plans are not registered on or before a certain date the agreement would be deemed to be cancelled and null and void"."

Resolutive conditions pass the risk over from one party to the next as soon as the formalities are completed.

Another example would be to put into a sales agreement that the purchaser wishes to do a building survey by a certain date. A resolutive condition would read as follows: "The purchaser by a certain date will have a building survey completed and the condition will be deemed to have been fulfilled unless the purchaser, in writing, notifies that he is not satisfied".

If one were to write a suspensive condition for the same type of scenario, it would read as follows, "This offer to purchase is subject to the building survey being done by a certain date". The agreement will be suspensive until the suspensive condition is withdrawn. The risk of the purchase has not passed over to the buyer until this has taken place, said Steward.

"A resolutive condition has its place and if used properly, can be better, because it removes the need to lift the suspensive condition. It is assumed that the purchaser is happy with the building survey - the onus is on him to act if anything is to the contrary," she said.

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