Suspensive Condition Not Fulfilled: When Can the Buyer Recover Their Deposit?

Imagine: you are selling your house in Plaisir. The buyer pays a deposit of €30,000, but the sale is subject to a suspensive condition: the obtaining of a modified planning permission by the commune. The permission is granted, but not exactly as expected. The buyer withdraws and demands the return of the deposit. What should you do? The Cour de cassation, in a judgment of 4 May 2000, ruled: for the deposit to be refunded, it is not enough that the condition was not fulfilled exactly as the parties had imagined. It must be shown that the parties set a time limit for its fulfilment or that it is certain that it can no longer be fulfilled. A legal subtlety that could cost you dearly if you are not careful.

The Facts: A Story That Happens Every Day

The company SERPASO, a property developer, had signed a promise of sale with the company SERL for the acquisition of land in Lyon. The price was €1,500,000, with a deposit of €150,000 paid on the day of signing. The promise was subject to a suspensive condition: the obtaining of an agreement from the Urban Community of Lyon (Courly) to modify the initially planned construction programme. Without this agreement, the sale could not proceed.

Months pass. SERL modifies its project, Courly gives its agreement, and the city of Lyon grants a planning permission. But this permission does not explicitly mention Courly's agreement. SERPASO, considering that the suspensive condition had not been fulfilled, refuses to sign the deed of sale and demands the return of the deposit. SERL, on the other hand, considers that the planning permission amounts to an implied agreement and that the sale must be completed. The dispute arises.

SERPASO sues SERL before the tribunal de grande instance of Lyon, which rules in its favour: the planning permission does not constitute an express agreement from Courly, the condition is not fulfilled, the deposit must be refunded. The Lyon cour d'appel upholds this judgment. But SERL appeals to the Cour de cassation. And the Cour de cassation quashes the appeal judgment: the lower courts should have checked whether the parties had set a time limit for the fulfilment of the condition, or whether it had become impossible. Without this check, the refund of the deposit is not justified.

The Reasoning of the Court — Analysed

The Cour de cassation relies on Article 1176 of the Civil Code (old, now Article 1304-5). This text provides that when an obligation is contracted under a suspensive condition (i.e., a condition that suspends the birth of the obligation until it is fulfilled), the debtor (here, the buyer) is released only if the condition is fulfilled. But if the condition is not fulfilled, what happens? Article 1176 distinguishes two cases: either the parties set a time limit for the fulfilment of the condition, and after that time limit, the condition is deemed to have failed; or no time limit was set, and then the condition is deemed to have failed when it becomes certain that it will not be fulfilled.

In other words: if you buy an apartment subject to obtaining a loan, and you have 30 days to obtain it, after that time limit without a loan, the condition fails and you can recover your deposit. On the other hand, if no time limit is set, you must wait until it is certain that you will never obtain the loan (for example, if all banks have refused). As long as the event can still occur, the condition is pending, and the deposit remains with the seller.

In the SERL/SERPASO case, the cour d'appel had considered that Courly's agreement had to be official, formal, express and autonomous, and that it could not result from the planning permission. Therefore, in its view, the condition had not been fulfilled. But it did not check whether a time limit had been set, nor whether the agreement had become impossible to obtain. Yet the planning permission had been granted, which could suggest that the agreement was implied, or at least that the condition was not yet definitively compromised. The Cour de cassation criticises the lower courts for not having taken their analysis that far. In law, the reasoning is rigorous: one cannot simply say "the condition is not fulfilled" to order the refund of the deposit. It is also necessary to demonstrate that the time limit has expired or that the event is impossible.

This judgment is neither a confirmation nor a reversal: it strictly applies the letter of Article 1176. But it reminds a rule often unknown to non-lawyers: the deposit paid under a suspensive condition is not automatically lost, but neither is it recoverable simply by noting that the condition is not met. It is necessary to establish the definitive nature of the failure.

What This Changes for You — Concretely

Whether you are a buyer, seller, landlord or developer, this decision has direct implications. Let's take concrete examples.

For the buyer: you sign a promise to purchase a house in Houilles for €350,000, with a deposit of €35,000. The suspensive condition is obtaining a planning permission to extend the garage. The permission is refused, but you can reapply with modifications. According to the judgment, as long as you have not exhausted all chances of obtaining this permission (or the time limit set in the promise has not expired), the seller can retain the deposit. To recover your money, you must prove that the time limit has passed or that the condition has become impossible (for example, if the town hall has given you a definitive refusal).

For the seller: if you sell a building plot to a developer, and the suspensive condition is obtaining a planning permission for a specific programme, it is in your interest to set a precise time limit in the promise (for example, "the permission must be obtained within 6 months"). Without a time limit, you risk being in a situation of indefinite waiting, where the buyer can withdraw at any time as long as the condition is not definitively compromised. By setting a time limit, you secure the transaction: after that time limit, if the permission is not obtained, the condition fails and the deposit must be refunded.

For the developer: like SERPASO, you must be careful in drafting suspensive conditions. If the condition is vague (for example, "obtain the agreement of the local authority"), specify whether this agreement must be express or may be implied, and above all set a time limit. In the case decided, the developer lost in cassation because the cour d'appel had not checked these elements. Ultimately, the case was referred back to another cour d'appel, which had to rule again. Years of proceedings for an uncertain outcome.

Worked example: in Plaisir, a buyer pays a deposit of €40,000 on a sale of €400,000, subject to obtaining a loan. If the 45-day time limit set in the promise expires without a loan, the deposit is refunded. If no time limit is set, the buyer must wait until they have received several written refusals from banks to prove impossibility. In the meantime, the seller can block the deposit. Hence the importance of drafting the condition well.

Four Tips to Avoid This Type of Dispute

• Always set a precise time limit in the promise of sale for the fulfilment of the suspensive condition. For example: "The planning permission must be obtained within 6 months from the signing of the promise." Without a time limit, you expose yourself to uncertainties and litigation.
• Describe the suspensive condition clearly and in detail. Do not simply say "the agreement of the commune". Specify whether it must be express or implied, written or oral, and what the consequences are if the agreement is not obtained as provided.
• Keep all evidence of the steps taken to fulfil the condition. Refusals of loans, letters from the town hall, planning permission obtained or refused. In the event of a dispute, these documents help to demonstrate whether the condition has become impossible or not.
• If in doubt, consult a specialist lawyer before signing the promise. A legal review can avoid ambiguous clauses. In Plaisir as in Houilles, a property lawyer can advise you on drafting suspensive conditions adapted to your project.

Further Reading: Related Case Law and Developments

This 2000 judgment is part of a consistent line of the Cour de cassation on the strict interpretation of Article 1176. In a judgment of 13 February 1996 (No. 93-21.144), the Court had already held that the suspensive condition is deemed to have failed either on expiry of the agreed time limit or when it is certain that it will not be fulfilled. The 2000 decision merely reaffirms this principle, applying it to a case of implied administrative agreement.

A notable development occurred with the reform of contract law in 2016: the old Article 1176 became Article 1304-5 of the Civil Code, but the content remained identical. The courts therefore continue to apply the same rule. However, there is a tendency for judges to require increasingly solid evidence to establish the impossibility of fulfilling the condition. Thus, a simple oral refusal from a bank is no longer sufficient: a written refusal is required. Similarly, for a planning permission, a definitive refusal from the town hall is necessary.

For the future, it is likely that case law will become even stricter, to protect sellers against abusive withdrawals by buyers who invoke an unfulfilled condition too lightly. In practice, this means that suspensive conditions must be drafted with surgical precision, and that the parties must anticipate scenarios of failure.

What You Must Absolutely Remember

1. A deposit paid under a suspensive condition is neither definitively lost nor definitively acquired. It is "pending" until the condition is fulfilled or fails.
2. The condition fails in only two cases: either the time limit set for its fulfilment has expired, or it has become certain that it will no longer be fulfilled.
3. If no time limit is set, you must prove definitive impossibility. For example, a definitive written refusal from the bank or the administration.
4. To recover your deposit, do not simply claim that the condition is not fulfilled. You must demonstrate that it has become impossible or that the time limit has expired.
5. Have your promises drafted by a professional. A well-drafted clause will save you years of proceedings. In Plaisir, a buyer lost €15,000 in deposit for failing to provide a time limit: do not repeat this mistake.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →