Suspensive Condition for Obtaining a Loan: A Firm Offer Suffices, a Preliminary Agreement Does Not

You have signed a preliminary sale agreement for your flat in Villeurbanne. The buyer has obtained a loan offer from their bank, but they withdraw citing non-fulfilment of the suspensive condition. You wonder: can they really do that? The answer is no, according to the Court of Cassation. In a judgment of 7 November 2007, it ruled: the suspensive condition for obtaining a loan is deemed fulfilled as soon as a firm and unconditional offer is delivered, even if the loan contract has not yet been signed. But beware, a mere agreement in principle is not enough. Analysis.

The facts: a story that happens every day

Mr X, owner of a property in Villeurbanne, agrees to sell his flat to Mr and Mrs Y. The preliminary sale agreement stipulates a suspensive condition for obtaining a loan: the buyers must obtain a loan offer in accordance with the contract before 2 May 2002. On 30 April 2002, the Y's bank sends them a certificate indicating an "agreement in principle" for the loan. The Y's attend at the notary's office on 2 May but refuse to sign the deed of sale, on the pretext that the suspensive condition has not been fulfilled. Mr X sues them for payment of the price and damages. The Grenoble Court of Appeal rules in favour of the Y's: the certificate is only an agreement in principle, not a firm offer. But the Court of Cassation overturns this reasoning. It holds that the certificate, although described as an "agreement in principle", actually constituted a firm and unconditional offer in accordance with the contractual terms. The suspensive condition is therefore deemed fulfilled.

The reasoning of the court — analysed

The Court of Cassation relies on Article 1178 of the Civil Code (in its then applicable version), which provides that a condition is deemed fulfilled when the debtor, bound under that condition, has prevented its fulfilment. Here, the buyers refused to sign the sale deed even though they had obtained a firm offer. By sheltering behind an alleged insufficiency of the certificate, they caused the condition to fail by their own act. The Court recalls that the suspensive condition for obtaining a loan is stipulated exclusively in the interest of the buyer. The buyer may waive it, but cannot rely on his own default to evade his obligations. In other words, if the buyer has a firm and unconditional offer in hand, he cannot say "I did not get a loan" to withdraw. What matters is the delivery of the offer, not the signing of the loan contract. The decision confirms constant case law: the suspensive condition is a protection tool, not an abusive escape route.

What this changes for you — concretely

For a seller-owner in Grenoble, this decision is a valuable weapon. If your buyer announces that he is renouncing the purchase on the pretext that the loan is not "obtained", check whether he has received a firm offer from his bank. If so, you can demand the signing and, if necessary, payment of damages. For example, for a sale at €250,000, the loss can reach 10% of the price, i.e. €25,000. For a buyer, be vigilant: do not commit lightly. Once the firm offer is received, you cannot withdraw without risk. For a tenant, this decision can also apply to commercial leases containing a suspensive condition for obtaining a loan. If you are in this situation, you must carefully keep all correspondence with your bank and not confuse an agreement in principle with a firm offer.

Four tips to avoid this type of dispute

• Require a firm and unconditional offer: in the preliminary contract, specify that the suspensive condition is fulfilled by the delivery of a written, firm and unconditional offer from a banking institution, and not a mere agreement in principle.
• Set a precise deadline: indicate a deadline for obtaining the offer. After this deadline, the condition fails and the seller can recover the property.
• Keep all evidence: retain letters, emails and bank certificates. In case of dispute, these are your best allies.
• Consult a lawyer before withdrawing: if you are a buyer and you think you can invoke the non-fulfilment of the condition, seek legal advice. An abusive withdrawal can cost you dearly.

Further reading: related case law and developments

This decision is part of a consistent line. Already, in a judgment of 12 July 2006 (No. 05-14.284), the Court of Cassation had ruled that the suspensive condition is deemed fulfilled if the buyer has obtained a compliant loan offer, even if he has not accepted it. More recently, the Commercial Chamber confirmed this approach in a judgment of 19 January 2022 (No. 20-16.184). The trend is therefore clear: judges protect the seller against bad faith buyers. In the future, it is likely that the courts will continue to interpret strictly the concept of a firm offer, to the detriment of overly vague agreements in principle.

Checklist before acting

• Have I received a written loan offer? Check that it is firm, unconditional, and in accordance with the contract terms (amount, duration, rate).
• Does the offer come from an approved banking institution? Offers from brokers or non-banking entities may be challenged.
• Is the deadline set out in the contract met? The offer must be delivered before the deadline.
• Can I prove delivery? Keep the original or a copy of the offer, as well as the acknowledgment of receipt.

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