What is subject to sale?

Getting into the property market is an exciting – if somewhat confusing – enterprise for many South Africans. Almost every would-be home buyer finds themselves wondering what this or that term describes, as the jargon used in the home buying industry can sometimes be anything but immediately understood. Terms like “subject to sale” are often misunderstood by the average new home buyer, but are not nearly as mysterious as they may first sound. In fact, subject to sale is an easily understandable concept once you grasp the basics.

What does it mean?

Subject to sale is a form of conditional suspension that a potential buyer places on an offer to purchase. Basically, this condition comes into play hen the buyer has a separate property that he or she needs to sell prior to being able to confirm the purchase of your property. Because this can be frustrating for the seller, there are usually additional conditions attached to the subject to sale provision to ensure that the buyer’s condition is not allowed to effectively seal the property in question from being considered for purchase by another party.

Conditions

One of these conditions is the usual two month deadline that begins to tick from the offering date. This deadline provides the seller with a concrete date certain by which the buyer will be committed to the purchase or will relinquish any potential claim associated with the offer. In addition, sellers today generally require that they are also provided written assurances that their sales efforts can continue during the subject to sale period. This enables the seller to avoid missing out on other offers that may be made during the two month deadline period. If another offer does come in, the seller is able to make the subject to sale buyer finalize their offer within three days or lose their offer.

Disadvantages and advantages

The subject to sale provision can be annoying to many sellers as well as buyers. Sellers can often feel as though they are wasting precious time awaiting the sale of their buyer’s property, and that the subject to sale clause in some way inhibits their ordinary marketing efforts. For buyers, the entire process could just be a waste of time and effort, especially if the seller receives another offer that they are unable to match before the final sale of their own property. There are few things that can be done to resolve any of these perceived disadvantages, however.

There are obvious benefits for buyers and sellers who are not as constrained by time. In such cases, sellers can afford the time involved in allowing a seriously interested buyer the necessary time to sell their other property. Under those circumstances, buyers can afford to deal with patient sellers, while the sellers are comfortable finding the buyer with the best offer. The only time this provision can become a hindrance is in cases where either the buyer or seller is under a time-induced imperative to quickly close their end of the purchasing process.