Under offer | The 72-hour clause explained
Seeing an Under Offer notification on your dream property can be crushing. This could mean the potential property buyer isn't quite meeting all of the required buying conditions yet. Here's what you need to know about the 72-hour clause, and whether it's worth still putting in an offer.
Ultimately, the 72-hour clause is designed to speed up the sale of a house and can be quite useful to the seller.
When a purchaser makes an offer to purchase immovable property and the offer is accepted and signed by the seller, it is a legal contract binding both parties. There are however instances where an offer to purchase may be cancelled after signature, thus making room for further offers from alternate purchasers.
More often than not, an agreement of sale is subject to what is known as suspensive conditions. A suspensive condition suspends the contractual obligations flowing from a contract until the occurrence of an uncertain future event.
There are two common examples of suspensive conditions in agreements of sale, namely:
Where the sale is conditional on the purchaser successfully selling his/her own immovable property; and
Where the sale is conditional upon the purchaser obtaining finance from a financial institution within a specified period of time.
In both cases, there is a period where the seller is waiting for the fulfilment of the above conditions. This period can often come with delays where the seller is possibly missing out on other offers which could be free of any suspensive conditions.
It is for this reason that most offers to purchase contain a 72-hour Ratification clause or a Continuing Marketing clause.
This clause allows the seller to continue marketing the property until the relevant suspensive conditions are met. If the seller receives an offer from a second purchaser which is free of any suspensive conditions (a cash deal perhaps), the seller can then give the first purchaser written notice that he/she has 72 hours' to waive (abandon) or prove the fulfilment of the suspensive condition(s).
If the first purchaser is unable to do so within 72 hours, the seller is entitled to cancel the agreement and can then accept the offer from the second purchaser.
It is for this reason that interested purchasers should not shy away from deals simply because they are already under offer. Each sale agreement has its own surrounding circumstances which could very well create room for some other competitive offers.
Author Property 24