Mandatory Suspensive Condition When Buying Property: Protection or Obstacle?
Anyone making an offer on a property but failing to secure a loan will soon be better protected. The new government plans to make the financing suspensive condition mandatory in sales agreements. But what does this mean exactly? And what are the implications for buyers and sellers?
What Is a Suspensive Condition?
A suspensive condition is a clause in a sales contract that states the purchase will only proceed if a specific condition is met. In this case, it means the sale will only be finalized if the buyer secures a mortgage loan. If not, the purchase is canceled without financial consequences for the buyer.
Benefits for Buyers
Currently, such a clause is not mandatory and depends on negotiations between the buyer and seller. This measure offers buyers more security: they can make an offer without risking a hefty penalty if they fail to obtain a loan. Without this clause, a buyer unable to secure financing may have to pay a penalty of 5 to 10% of the purchase price. For a property worth €275,000, this could mean a potential cost of €13,750 to €27,500.
Drawbacks and Impact on the Real Estate Market
However, this measure is not entirely positive. Since sellers will have less certainty that a sale will actually go through, they may become more cautious when accepting offers. This could disadvantage buyers with lower down payments or less stable incomes. Sellers may prefer financially stronger buyers, even if their offer is not the highest.
Additionally, this mandatory clause brings practical drawbacks. If a buyer finds out four weeks after their offer is accepted that they cannot secure a loan, the seller must put the property back on the market. This can lead to delays and may negatively impact the property's attractiveness to other potential buyers.
Conclusion
The mandatory suspensive condition provides essential protection for buyers, but it may also make it harder for financially less stable individuals to enter the housing market. How this measure will play out in practice remains to be seen. One thing is certain: both buyers and sellers may need to rethink their bidding strategies.
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