It sometimes happens that a seller in a property transaction enters into a conditional agreement of sale with a purchaser and before the fulfilment of those conditions the seller wishes to accept a more favourable offer to purchase. The agreement of sale will normally be subject to the suspensive condition that the purchaser should obtain a loan for the purchase price or part thereof or sell his existing property within a specified time period.
In order for the seller to accept the more favourable offer, the agreement of sale first entered into must contain an escape clause.
Escape clauses do not all read the same, but they usually stipulate that should the seller receive a bona-fide offer to purchase prior to the fulfilment of the suspensive conditions in the agreement of sale that he wishes to accept, he can provide the purchaser with a notice informing him of the offer and requesting him to accelerate or waive the fulfilment of the suspensive conditions within the time period stipulated in the escape clause.
Parties are free to agree on the notice period to be incorporated in the escape clause. In practice it is usually 72 hours. Should the purchaser fail to fulfil or waive the suspensive conditions within the notice period stipulated in the escape clause, the seller can proceed to accept the offer to purchase and the agreement of sale shall lapse and be of no force and effect.
Contact our Property Law experts for assistance and more information regarding escape clauses.