select
|

Residential property sellers increasingly using acceleration clause

The property market is making more and more use of a clause sometimes referred to as the 72 Hour Clause, but more correctly called the Acceleration Clause.

'This clause', says Wayne Albutt of the Rawson Property Group, 'is often inserted in the Agreement of Sale if the buyer's offer is conditional on them getting a bond or first having to sell their property and the seller and their agent are confident that the demand for the home is so strong that they will be receiving other offers.'

The clause enables the seller to accept the initial Offer to Purchase but to go on marketing the property. If they or their agent receives a further, unconditional offer, e.g. a cash offer, the initial purchaser will be given from a specified date three days (72 hours) to secure their bond or the sale of their property, failing which their offer is no longer valid, unless they waive the suspensive conditions.

This acceleration of the suspensive condition, says Albutt, can very often be achieved if the seller has a good bond originator or a close relationship with their bank (in the case of a bond). In general, however, bond approvals takes longer than 72 hours, so the chances of the offer expiring are fairly high.

In some cases, said Albutt, the second offer can be lower than the first and still be accepted by the seller because it has no suspensive conditions and will give a legally enforceable, immediate sale.

'All the legal arrangements surrounding this clause', says Albutt, 'are quite often not fully understood by agents, sellers or buyers ? which can lead to problems. Buyers can refuse to have such a clause in their offer but this may cause the seller to decline the offer, particularly if they know they are in a hot market.'


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK