There's many varying opinions on engines and when/if they can be run on condition. Casa says all piston engines must be overhauled or bulk stripped at least every 12 years. If your engine goes to TBO before 12 years, then as long as that engine has met the manufacturers requirements, it may be eligible to operate on condition until it becomes unservicable or 12 years passes since it's last tear down.
Lots of different takes on 'on condition' rules so ask around and talk to your LAME. Ultimatly it's his/her interpretation that will count, correct or not.
You can always email CASA and see what their thoughts are. They will respond, and by keeping a copy of their email you can be sure your sticking to at least one official version of the rule.
Cheers