Understanding the Continued Marketing Clause (72-Hour Clause) in a SA Property Sale

What is the Continued Marketing Clause?

The Continued Marketing Clause, commonly referred to as the 72-Hour Clause, is a provision in South African property sale agreements that allows a seller to continue marketing a property even after accepting an offer that is subject to suspensive conditions. The clause should be clearly worded in the sale agreement to avoid disputes, leading to legal disputes between buyers, sellers, and property practitioners.

A suspensive condition is a condition that must be met before the sale is finalised, such as:

• The buyer obtaining a home loan.

• The buyer selling their existing property.

• The buyer securing third-party approval (e.g., from a trust or employer).

If the seller receives a competing offer from another buyer who does not have such conditions or can fulfil them faster, the 72-hour notice period can be triggered.

When can the 72-Hour Notice Be Invoked?

The seller can invoke the 72-hour notice when:

1. They Receive a Stronger Offer: A competing buyer submits an offer that is either unconditional or has fewer suspensive conditions.

2. The Offer is Confirmed: The competing offer must be legally binding and signed by both the seller and the new buyer before the 72-hour notice is issued.

3. The Purchaser of the competing offer has secured the full purchase price.

4. Proper Notice is Given: The appointed conveyancing attorney issues a written notice to the first buyer, informing them of the competing offer and giving them 72 hours to respond.

How the 72-Hour Notice Works

• The appointed conveyancing attorney formally notifies the first buyer in writing that a better offer has been received once the competing offer’s purchase price has been secured.

• The first buyer has 72 hours (three days, excluding weekends and public holidays, unless otherwise specified in the contract) to either:

o Waive the suspensive condition (e.g., confirm they can proceed without selling their property).

o Fulfil the suspensive condition (e.g., provide proof of secured financing).

• If the first buyer cannot meet these requirements within 72 hours, the seller is free to cancel the agreement and accept the new offer.

• If the first buyer manages to fulfil or waive the conditions, the original sale agreement remains in effect, and the competing buyer’s offer becomes void.

Example of the 72-Hour Clause in Action

1. Buyer A makes an offer on a house but includes a condition that they must first sell their existing home.

2. The seller accepts Buyer A's offer, subject to the sale of their property, and includes a 72-hour clause in the agreement.

3. A few weeks later, Buyer B submits an offer without any suspensive conditions.

4. The seller decides to accept Buyer B’s offer. Buyer B first needs to perform in terms of the accepted offer to purchase, in other words secure the purchase price in full.

5. The appointed conveyancing attorneys then issue a 72-hour notice to Buyer A.

6. Buyer A now has 72 hours to either:

o Show proof that their home is sold or that they can proceed with the purchase without selling it.

o Let the time lapse, in which case their agreement is cancelled, and Buyer B’s offer is accepted.

Risks of the 72-Hour Clause

• Time Delays: If the first buyer waives the suspensive condition but later fails to secure financing, the seller may need to start the selling process again, causing delays.

• If the 72-hour notice is given to Buyer A before Buyer B has secured the purchase price/performed in terms of the accepted offer to purchase the Seller is at risk of losing both buyers.

The 72-hour clause is a powerful tool that ensures sellers are not locked into a deal with uncertain buyers, while still giving the original buyer a fair chance to proceed. However, both buyers and sellers must carefully consider the risks and benefits before agreeing to this clause. Proper legal guidance and financial planning can help both parties navigate this process effectively and avoid unnecessary complications.

Written by: Maret Carroll
Moderated and approved by: Jean-Mari De Beer – Le Grange

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