General

Signed but I want a better offer

You put your property on the market and an acceptable but not-perfect offer comes in. On the “a bird in the hand is worth two in the bush” principle you want to accept the offer even though it’s not ideal.

Perhaps it’s not perfect because it’s subject to a suspensive condition - common ones give the buyer time to sell his/her current house or to obtain a bond. In both scenarios your sale will fall through if the buyer is unsuccessful within the stated time, and if that happens you are back to square one after a long and fruitless delay. Bear in mind that that delay could be a protracted one depending on what your sale agreement actually provides – normally no less than 30 days to get a bond, sometimes several months to sell an existing house. That’s a lot of very valuable marketing time lost – and you’ll never know for sure whether you just missed out on that “perfect offer”.

The “72-hour clause” and what it does
This is where the “72-hour”, “continued marketing” or “escape” clause comes in handy.

In a nutshell, it allows you to continue marketing your property until suspensive conditions are met. If your marketing pays off and an unconditional offer does come in, you can give your existing buyer 72 hours’ notice to match it. So the buyer would have an opportunity to make the sale unconditional - either by waiving (abandoning) the condition or by fulfilling it.

If the buyer fails to do whatever the clause requires within the 72 hours, you are clear to accept the new offer. If on the other hand the buyer does perform in time, the existing sale immediately becomes fully binding and the transfer process can get underway.

A note for buyers
The clause is usually there for the seller’s benefit so perhaps avoid it when you can. But if it’s a choice between your offer being accepted or not, bear in mind that having a signed sale agreement at least gives you a solid base for a full bond application and/or a concerted effort to finalise your own house sale.

Just be ready to react quickly if the seller does indeed give you the 72 hour notice – you don’t want to be rushing around in a last-minute panic.

Buyers and sellers - check the wording!
Although 72-hour clauses are common in standard sale agreements, the exact wording can vary substantially, and may need tailoring to meet your specific needs. You might for example want to be given proof of availability of funds together with a bond clause waiver, or proof that the sale of the buyer’s house is a viable one – every situation will be different.

Apart from everything else, make sure that -

  • The 72 hour period specifically excludes Saturdays, Sundays and Public Holidays (religious holidays too if important to you),
  • You can extend the 72 hours by mutual agreement if you want to,
  • There are clear requirements for the method and timing of giving notice and of waiving conditions, and
  • You aren’t binding yourself to anything else that could turn around and bite you down the line.

Delete the clause if it doesn’t apply.

As always, have your lawyer check it all for you before you sign anything!

For an example of the complications potentially arising from a buyer leaving a 72-hour clause decision to the last minute see  – Dubs v Dubs (20255/2012) [2012] ZAWCHC 158  available on SAFLII – at [12].

Jack Crook

© LawDotNews

Jack Crook, Director at DotNews, is well known to law firms as the author of LawDotNews since 2005. Jack’s legal qualifications (LLB Lond and LLB Rhod) are supplemented by many years of practical experience in law, in marketing his own firm, and in helping other small and medium sized professional firms to prosper by using simple, low-cost, effective marketing strategies.  

Contact us on 086 110 5904 (or email info@dotnews.co.za) for more on the Lexis Marketer platform, setting up a free LexisConvey client calculator and other LawDotNews services.

Reader Comments:

Milton Koumbatis 13/06/2019:

I would like to take issue with two statements made by Jack in his useful article namely:

  1. That the 72 hour clause should be drafted in such a way as to only permit the seller to trigger the notice provided for in the clause to his first purchaser if he gets an unconditional offer. I don't believe that we are being fair to the seller by restricting his options to only unconditional offers. For example the second offer might also be subject to the sale of another property but that property might be way more sellable than the property of the first purchaser. The seller should have the option to trigger the 72 hour notice in such circumstances if he wants to. Stipulating for unconditional offers only effectively eliminates most of the market!

  2. That once the 72 hour notification is received by the first purchaser he can solve the problem by causing the suspensive conditions in the rest of the sale agreement to be fulfilled. This will only solve the first purchasers problem if the specific wording of the 72 hour clause permits of this solution. The clause as I have always drafted it and seen in the marketplace is that the first purchaser is restricted to waving the benefit of all outstanding suspensive conditions and thereby binding himself to a final and unconditional purchase.

Jack Crook 21/06/2019:

Thanks Milton for your comments, your approach certainly seems better to me than the "standard" clauses I have seen which refer to either just "an unconditional offer" or to "a better, unconditional offer". I hope that what lay clients reading the article will take from it is the advice that "standard" clauses can vary widely and that they should always approach their attorneys to draft/check the 72-hour clause to ensure that it is appropriate to their specific circumstances.

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