In the context of real estate transactions, it is common for the parties to insert a suspensive condition into their contract, such as for example obtaining a mortgage loan, the delivery of a title deed free of easements, the completion of a soil study or the issuance of an urbanization permit. What is a suspensive condition? What are its effects ? Our lawyer takes stock of this issue.
Concept of suspensive condition
The law defines the suspensive condition as a future and uncertain event, still unknown to the parties to an agreement, and on which they make the birth of a conditional obligation dependent. In the case of a real estate sale, for example, the buyer will fulfill his commitments to the seller provided that he obtains financing.
A suspensive condition is therefore a condition which, if it is not fulfilled, renders the contract for which it was concluded, void. To be valid, this condition must not depend solely on the will of one of the parties. In such a case, the condition is called potestative and it is not valid. This will be the case, for example, if you buy a new property on the condition of selling your old property.
Effects
The law specifies that a contract with a suspensive condition is only validly formed once the condition has been fulfilled. This is why, in practice, and specifically in the context of real estate sales, many prospective buyers believe that they are not contractually bound until they have obtained their financing.
These buyers see the suspensive condition as a way out in case they are no longer willing to acquire the property. Think again !
Indeed, the buyer who has committed himself under a conditional obligation cannot evade his commitment by preventing, through his wrongful act, the condition from being fulfilled.
Case law considers that it is the principle of good faith execution of contracts which requires the buyer to act as best as possible and loyally to obtain financing. Consequently, the buyer must make all the efforts that can reasonably be expected of him in order to obtain his credit, for example by requesting financing from a bank other than the one with which he is accustomed to dealing. .
Sanctions
In the event of fault, negligence or carelessness on the part of the buyer, the suspensive condition will be deemed to have been fulfilled. The sale will be perfect and must be executed. It also follows that registration fees will be due and that the seller may seek legal performance in kind or cancellation of the sale as well as additional damages.
Recommendations
On the one hand, we suggest that you word the clause which provides for a suspensive condition in a precise and unambiguous manner, with particular emphasis on the time period you intend to benefit from to obtain your credit.
On the other hand, be proactive! Do not hesitate to consult several financial institutions and be sure to continually inform the seller of your efforts.
Finally, we recommend that you carefully keep refusals from financial organizations so that you can oppose them to the seller in the event of a dispute.
