Sold Subject to Conditions: What Does It Mean? 

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Do you see a property in The Hague listed as "sold subject to conditions" on Funda, or are you signing a purchase contract with a dissolving condition of your own? Then the sale is not yet final. In this article, Hekking NVM Estate Agents explain exactly what "sold subject to conditions" means, which dissolving conditions occur most often, and what this means in practice for both buyer and seller.

What does "sold subject to conditions" mean?

When a property is sold subject to conditions, the buyer and seller have already signed the purchase contract, but the sale is not yet final. The buyer then has the right to unilaterally dissolve the purchase, but only on the basis of one of the dissolving conditions agreed in advance. Outside of those conditions, the buyer cannot simply withdraw from the purchase without risking a penalty.

The purchase contract always states a final date by which the buyer must invoke the dissolving condition. If the buyer does not do so within that period, the sale is considered final.

The three most common dissolving conditions

In our practice in The Hague and Scheveningen, we at Hekking mainly see three types of dissolving conditions recurring: the financing condition, the structural survey condition, and the condition of selling the buyer's own home. Below we explain each condition in more detail.

1. Financing condition

The financing condition (financieringsvoorbehoud) is by far the most commonly used dissolving condition. It gives the buyer time to actually arrange the mortgage before the purchase becomes final. If this does not succeed, the buyer can dissolve the purchase, but not without substantiation: this usually requires a written rejection from a mortgage lender.

[to be filled in by Hekking: the standard period we apply for the financing condition in the purchase contract, and the number of rejections we require as evidence]

2. Structural survey condition

For older homes, for example in the Archipelbuurt (Archipel neighbourhood) or the Zeeheldenkwartier (Naval Heroes Quarter), buyers regularly request a structural or technical survey as a condition. If the survey report shows that repairing defects or overdue maintenance is significantly more expensive than estimated when the offer was made, the buyer can dissolve the purchase on this basis. This condition is also subject to a fixed period, linked to when the survey can take place.

3. Condition of selling the buyer's own home

Does the buyer first need to sell their current home before the new purchase can be completed? Then this can be included as a dissolving condition in the contract. As a seller, you do not automatically have to wait until the buyer's home has been sold: with a no-risk clause you can continue viewings and negotiations with other interested parties during this period. If another serious buyer comes forward, the original buyer is usually given a limited period to purchase unconditionally after all.

What does this mean for you as a seller?

As a seller, it is good to know that "sold subject to conditions" is not the same as a final sale. As long as the dissolving conditions are still running, there is a chance the purchase may still fall through. An experienced sales agent monitors the deadlines in the purchase contract, checks whether an invocation of a condition is valid, and advises on the use of a no-risk clause, so that you as a seller are not unnecessarily tied to one buyer for longer than needed.

What does this mean for you as a buyer?

Are you looking for a home yourself and come across a property listed as "sold subject to conditions"? It is worth contacting the agent anyway: if the dissolving condition is not met, the property may become available again. If you are buying a home yourself, make sure you get proper advice from a buying agent on which conditions make sense for your situation, for example if your own home has not yet been sold.

Frequently asked questions about sold subject to conditions

Can the seller still negotiate with other buyers while the property is sold subject to conditions?

Yes, this is possible, provided a no-risk clause has been included in the purchase contract. Without this clause, the seller may allow viewings to continue, but may not proceed to a final sale with another party while the first buyer's dissolving condition is still running.

How long does a financing condition typically last?

[to be filled in by Hekking: the period we typically see in practice or recommend for the financing condition]

Can a buyer dissolve the purchase without a valid reason?

No. A buyer can only dissolve the purchase free of charge on the basis of one of the dissolving conditions agreed in advance and within the applicable period. If the buyer dissolves the purchase outside of these conditions, the seller may be entitled to the contractual penalty set out in the purchase contract.

What is the difference between "sold subject to conditions" and "under option"?

With "sold subject to conditions", the purchase contract has already been signed by both parties, but the sale can still be dissolved on the basis of a condition. With "under option", no purchase contract has been signed yet; the seller temporarily gives one party priority to consider an offer, without any legal obligation yet existing.

Do I need to provide evidence as a buyer to invoke the financing condition?

Yes. The buyer usually needs to provide a written rejection from a mortgage lender. The purchase contract states exactly how many rejections are required and within what period they must be submitted.

Need help drawing up or reviewing a purchase contract?

Whether you are selling or buying a home in The Hague, the right dissolving conditions and deadlines in the purchase contract help prevent unpleasant surprises later on. Our agents are happy to guide you through every step of the selling or buying process.

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This article was written by Dennis hekking, NVM Estate Agent at Hekking NVM Estate Agents in The Hague.