When purchasing a property, signing the sales agreement, or preliminary contract, is a fundamental step. This document commits both parties to complete the transaction, unless a suspensive condition is not met.
The clarity and precision of these conditions are therefore essential to avoid future disputes.
What is the definition of a suspensive condition?
A suspensive condition is a clause included in the sales agreement that states the completion of the sale depends on the occurrence of a specific event, such as obtaining a property valuation, within a set period.
If this event does not occur, the sales agreement can be canceled without penalties for either party. For example, the most common suspensive condition is the buyer obtaining a mortgage loan.
What are the different types of suspensive conditions?
General suspensive conditions
General suspensive conditions are the most frequently found in sales agreements. They include:
- Obtaining a mortgage loan: The sale is often contingent on the buyer securing a loan. The agreement typically specifies the amount, interest rate, and loan term.
- Absence of easements: The property must not be subject to easements that could prevent the buyer from fully enjoying it.
- Waiver of preemption rights: Local authorities may exercise a preemption right on the property, which must be waived for the sale to proceed.
- Obtaining technical diagnostics: The mandatory diagnostics must be provided by the seller before the final deed is signed.
When browsing real estate listings in Paris, it is important to ensure that these suspensive conditions are clearly mentioned in the sales agreement.
Specific suspensive conditions
Specific conditions are more tailored to the circumstances of each transaction. For example:
- Building permit: For the purchase of a building plot, the sale may be contingent on obtaining a building permit.
- Completion of work: If the seller must complete certain work before the sale, its completion may be a suspensive condition.
- Sale of another property: The buyer may condition their purchase on the prior sale of another property.
Is the suspensive condition of obtaining a loan mandatory in the agreement?
Why is the loan suspensive condition protective?
For individuals, the suspensive condition of obtaining a mortgage loan is often mandatory. It protects the buyer by allowing them to withdraw from the sale if the loan is not granted.
In case of a loan refusal, the buyer must inform the seller within the stipulated timeframe, which results in the cancellation of the sale without penalties. This clause closely ties the loan approval to the property acquisition, in accordance with the provisions of the Scrivener Law.
Waiving the suspensive condition of obtaining a loan
Waiving the loan suspensive condition must be explicit and in writing. Buyers who do not need a loan to finance their purchase must state this in the agreement.
This waiver removes the protection offered by this clause, even if the buyer ultimately needs to take out a loan.
When should suspensive clauses be included?
Suspensive clauses should be incorporated into the purchase offer. The seller’s acceptance is thus made with full knowledge of the terms.
The nature of the clauses depends on the buyer’s specific circumstances, whether it involves securing a loan, selling another property beforehand, or obtaining a building permit.
How to draft a suspensive clause?
The drafting of a suspensive clause must be precise to avoid any ambiguity in the event of non-fulfillment. The notary or real estate agent formalizes the parties’ requests in the agreement.
For a loan-related condition, details such as the amount, term, and interest rate must be explicitly stated. If there is a discrepancy between the stipulated conditions and those of the loan refusal, the condition will not be considered fulfilled, and the buyer may lose their deposit.
Non-fulfillment of a suspensive condition: grounds for canceling a sales agreement?
If a suspensive condition is not met, the sales agreement may be canceled. For example, if the buyer does not obtain the mortgage loan within the allotted time, they can inform the seller and cancel the transaction without penalty.
This cancellation is based on the failure to meet the conditions outlined in the agreement, thereby protecting the interests of both parties.
Real estate purchases involve many considerations, and the precise drafting of suspensive conditions in the sales agreement is crucial for securing the transaction.
For investors, secondary home buyers, or international clients, understanding and using these clauses will help you successfully complete your real estate projects with peace of mind.
