Understanding the 72 hour clause
In the context of the sale and purchase of immovable property, a 72-hour clause is an important component of a sale agreement. Also known as a ‘continued marketing clause’, a 72-hour clause permits a seller to continue marketing a property, even after accepting a valid offer, until all suspensive conditions of the existing agreement have been met.
Often, the clause is applied in instances where the sale is subject to the purchaser securing mortgage bond approval from a financial institution – or selling their own property – to finance the transaction. Generally, a purchaser is given a certain time period in which to fulfil a suspensive condition failing which the agreement will lapse and be of no further force or effect. Depending on the agreement, a suspensive condition may take weeks or months to fulfil. During this period, the seller risks missing out on a better offer.
To prevent delays and maximise opportunity, a 72-hour clause enables a seller to accept an offer from a second purchaser during the interim. Although the wording of this clause varies from agreement to agreement, it generally requires a seller to notify the first purchaser in writing that they have received a second unconditional offer that they wish to accept. From the date of receipt of notice, the first purchaser has 72 hours – excluding weekends and public holidays – in which to waive the suspensive condition(s). If the first purchaser fails to do so, the seller may cancel the agreement and proceed with the second sale.
It is thus critically important that prospective sellers incorporate a carefully worded 72-hour clause in their sale agreements.
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