Conditions precedent are requirements that must be satisfied before a contract obligation takes effect or a transaction can complete. In a property deal they are the boxes that must be ticked — such as obtaining finance or an NOC — before completion can proceed.
Where you’ll see it
You’ll see conditions precedent set out in sale agreements: securing a mortgage, clearing an existing loan, obtaining the developer NOC, or settling service charges. The deal advances only once each condition is met.
Why it matters
Conditions precedent protect the parties by making completion contingent on the right things being in place. A buyer made conditional on finance, for instance, is not bound to complete if the mortgage falls through — provided the contract is drafted to allow that.
What it is not
Conditions precedent are not optional preferences — they are contractual prerequisites. They are also not the same as a breach; failing a condition may release a party, whereas a breach is a failure to perform an obligation that has already taken effect.
Example
A sale is made conditional on the buyer’s mortgage approval and the developer NOC; only when both are obtained does the obligation to complete crystallise and the transfer proceed.
Connected documents and parties
Sale agreement, mortgage offer, NOC; buyer, seller, bank, developer.
Going deeper: related reading: breach of contract.
Related Terms
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