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Tuesday Feb 25, 2014

Unmet deadlines render an agreement of sale void

Property buyers should take care to ensure that they are aware of all dates and deadlines for bank guarantees and bond approvals, because missing such deadlines can result in the agreement of sale being rendered null and void.

'First-time buyers are particularly at risk, as they might not be aware of the seriousness of not meeting suspensive conditions as stipulated in an agreement of sale,' says Mike Greeff, the chief executive of Greeff Properties, an affiliate of Christie's International Real Estate.

Greeff was commenting on a recent case in which the court found that a lapsed suspensive condition rendered an agreement void. And even subsequent conduct by a seller, accepting a late and/or erroneous proof of available funds rather than a guarantee, cannot revive a sale agreement.

'It is a good idea for buyers to make a checklist of all the tasks and points requiring attention in the weeks following the signing of an agreement of sale,' he says.

These requirements usually include a deposit of a stipulated percentage of the purchase price, bond approval and/or a bank guarantee for the remainder of the purchase price.

'Buyers s hould always check with their conveyancing attorneys what the exact wording and content of the bank guarantee requires. A letter stating that there are sufficient funds available in the buyer's account is not acceptable where the agreement requires a guarantee to be provided.

'A bank guarantee must stipulate that the required sum (the balance of the purchase price) will be paid to the seller either on a date stipulated in the agreement of sale, or following certain conditions with which the seller must comply,' says Greeff.

Martin Sheard of STBB Attorneys says: 'If a deadline has passed and a suspensive condition has gone unmet, this renders an agreement of sale null and void. However, there is a solution, as the parties can agree to enter into a new agreement of sale essentially on the same terms and conditions of the lapsed agreement.

'The new agreement of sale can be a one-page document attached to the lapsed sale in which the parties state that there have been unmet suspensive conditions due to missed deadlines, and that both seller and buyer agree to new dates by which the suspensive conditions are to be met.

'It must also be stated that the seller sells to the buyer the property in question on the same terms and conditions as contained in the original agreement of sale and annexures thereto. Both parties then sign and a new agreement of sale is constituted on similar terms as the lapsed agreement.'

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