Suspensive Condition for Loan: When Bank Approval is Sufficient to Purchase

Imagine yourself in Nice, in the Old Port. You have found your dream apartment, signed a sale agreement with a suspensive condition (a clause making the sale dependent on a future event) to obtain your Droit de préemption urbain : que faire si le vendeur refuse mon prix ?">loan, and you are delighted. But here's the issue: your bank does not grant you exactly the classic loan you expected, but proposes an alternative solution that still allows you to purchase. The seller, however, contests: according to them, the condition is not fulfilled, and they want to cancel the sale. What to do?

This situation, I encounter regularly in my practice, whether in Grasse, Nice, or Le Cannet. Buyers often find themselves helpless against sellers who seek to withdraw for various reasons, sometimes because the market has risen in the meantime. The question is simple but crucial: when can a suspensive condition for a loan be considered truly satisfied?

The Court of Cassation answered clearly in 1992 in a decision that remains authoritative today. It ruled in favour of buyers, specifying that what matters is having obtained the necessary funds, regardless of the legal form. A decision that protects purchasers and secures transactions. But what exactly does this change for you, as a property owner, tenant, or real estate professional?

The Facts: A Story as Common as Any

Let's go back to 1986. Mr. Dupont, owner of a property in Nice, decides to sell his property. He meets an SCI (Société Civile Immobilière, a structure often used to hold real estate) interested in the acquisition. The two parties sign a sale agreement, a contract by which the seller commits to sell and the buyer to purchase under certain conditions.

In this agreement, an essential clause is inserted: the sale is subject to a suspensive condition for obtaining a loan of 2,800,000 francs (equivalent to approximately €427,000 today, accounting for inflation) by the SCI. In other words, if the SCI does not obtain this loan by 17 March 1986, the sale does not proceed. The SCI has until 2 April 1986 to exercise the Droit de préemption urbain : la date de référence déterminante pour la fixation du prix">option, i.e., to definitively confirm its intention to purchase.

Things become complicated: the SCI does not receive exactly a classic loan from its bank. Instead, the bank proposes an alternative financial solution—perhaps a bridging loan, an advance on title, or another technique—that still allows it to gather the necessary 2,800,000 francs. The SCI therefore considers the condition fulfilled and exercises the option on 2 April. But Mr. Dupont disagrees: he believes that, since it is not a "classic" loan, the suspensive condition is not satisfied. He refuses to sell.

The dispute escalates to the courts. At first instance, the judges rule in favour of Mr. Dupont. The SCI appeals, and the court of appeal reverses the decision: it considers the condition fulfilled because the SCI obtained the necessary funds. Mr. Dupont, dissatisfied, appeals to the Court of Cassation, i.e., he asks the highest court to verify whether the court of appeal correctly applied the law. This is where the case takes a definitive turn.

The Court's Reasoning—Analysed

The Court of Cassation, in its judgment of 7 April 1992, dismisses Mr. Dupont's appeal and upholds the court of appeal's decision. Its reasoning is based on a broad and protective interpretation of Article 17 of the Law of 13 July 1979, a law governing sales of properties to be built and, by extension, influencing case law on suspensive conditions in general.

The judges explain clearly: the suspensive condition provided by law is satisfied "as soon as the purchaser-borrower has obtained, under whatever qualification or technique, the sum necessary for the realisation of the operation in question, as provided by the parties' agreement." In plain terms, it does not matter whether the bank granted a traditional mortgage, a bridging loan, an advance on account, or any other form of financing. What matters is that the buyer has the funds to pay, in accordance with what was stipulated in the contract.

The Court analyses the arguments of both parties. Mr. Dupont argued that the condition was not realised because the SCI had waived the suspensive condition—i.e., it had agreed to purchase even without the exact loan stipulated. But the second-degree judges, confirmed by the Court of Cassation, held that the bank had indeed provided the funds, and that this was sufficient. However, note: this does not mean a buyer can ignore the condition; they must still obtain the financial means, but the form is secondary.

This reasoning represents a confirmation of prior case law, which tends to protect the bona fide purchaser. It prevents sellers from withdrawing for purely formal reasons, especially in a fluctuating real estate market. undefined, I have handled cases where sellers in Nice or Grasse attempted to cancel a sale because the buyer opted for a loan different from the one initially envisaged, even though the funds were available. This decision puts an end to such abuses.

What This Changes for You—Concretely

If you are a purchaser, this decision protects you. Imagine you are buying an apartment in Le Cannet for €300,000. Your sale agreement includes a suspensive condition for obtaining a loan of €240,000. Your bank finally offers you a loan of €200,000 and a consumer credit of €40,000 to cover the remainder. Thanks to this case law, you can consider the condition fulfilled because you have the necessary €240,000, even in two different forms. The seller cannot legitimately refuse the sale on the grounds that it is not a single loan.

For landlords, this means that if you sell a property with a tenant in place, you must be vigilant. A buyer who obtains their financing in an alternative form can validate the sale, and you will be bound. This can be a good thing if you want to sell quickly, but ensure the funds are truly available. In condominiums on the French Riviera, where transactions are numerous, this legal security smoothes the market.

Tenants are indirectly concerned: if your landlord sells to a purchaser whose financing is secured by this case law, the sale is more likely to proceed, which can affect your situation (e.g., in case of a change of owner). Real estate professionals, notaries, and agents must adapt their advice: they can reassure buyers about the flexibility of loan conditions, while reminding sellers not to rely on technical loopholes to withdraw.

What few people know is that this decision also applies to sales of land or houses, not just apartments. If you are in this situation, you must keep all evidence of your fund acquisition (loan agreements, bank agreements) and act quickly in case of dispute, under penalty of losing months in proceedings.

Four Tips to Avoid This Type of Dispute

• Draft the suspensive condition clearly in the deed: Specify in the sale agreement or preliminary contract that the condition is satisfied upon obtaining the necessary funds, regardless of their legal form, to avoid any ambiguity.
• Communicate transparently with the seller: Inform them promptly if your financing takes a different form from initially planned, and provide bank documentation to prove fund availability.
• Consult a professional before signing: Have your contract reviewed by a lawyer specialised in real estate law, especially in high-stakes areas like Nice or Grasse, where amounts are high and disputes frequent.
• Anticipate deadlines: Strictly respect the time limits for fulfilling the condition and exercising the option, as a delay, even minor, can invalidate the sale independently of the financing issue.

In-Depth Analysis: Related Case Law and Developments

This 1992 decision fits into a jurisprudential trend favourable to purchasers. Before this, some courts were stricter, requiring the loan to correspond exactly to the contract's description. For example, in an earlier judgment from the 1980s, a court of appeal had annulled a sale because the buyer obtained a loan with a slightly different interest rate. The Court of Cassation, with judgment 89-14.659, ended this rigidity.

Since then, case law has evolved to strengthen this protection. In a more recent decision, the Court confirmed that even mixed financing (bank loan + personal contribution) could satisfy the condition, provided the total amount was reached. This means courts continue to favour the spirit over the letter of the contract, focusing on the economic reality of the transaction.

For the future, this trend should continue, especially with the digitalisation of banking services and the emergence of new credit forms. Buyers can expect a certain security, but they must remain vigilant: case law protects good faith, not negligence. If a buyer attempts fraud by simulating financing, judges will sanction them.

Checklist Before Acting

• If you are a buyer: 1) Check that your sale agreement clearly mentions the suspensive condition for the loan. 2) Obtain a financing certificate from your bank, even if it is atypical. 3) Inform the seller in writing as soon as funds are secured. 4) Keep all documents as evidence in case of dispute.
• If you are a seller: 1) Demand concrete proof of fund acquisition (not just a verbal promise). 2) Verify that the amount matches what is stipulated in the contract. 3) Do not oppose the sale for a mere change in financing form, under penalty of having to compensate the buyer. 4) Consult a lawyer if you have doubts about the condition's validity.

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