Scared of Real Estate Contracts?
Friends, this was my latest article to run in the Auroran, I wrote about legal clauses in Real Estate contracts I hope you enjoy!
Hi Julien, I chatted with you briefly at the street sale in June and I thought I would ask you a question. There was a news piece on television recently that discussed conditional clauses and general clauses when buying a home. I am still renting and thinking about taking the jump, I am confused. Can you clear this up for me? Sincerely, Alice
Hi Alice, this is a common area of confusion which is why it is best to use a Realtor when purchasing a home. A conditional clause means that the seller of the home accepts that the offer to purchase the home is dependent on a future event. The condition can be in favour of the buyer or the seller. The party in whose favour the condition is stated has the option to back out of the deal if the condition is not met. Conditional clauses are typically used to cover things like financing and other key factors that can affect purchasing the home.
This Offer Is Conditional!?!
For example, a conditional clause would read like this: ”THIS OFFER IS CONDITIONAL upon the Buyer arranging, at the Buyers own expense, satisfactory financing and home insurance. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 6 p.m. on the 5th business day following acceptance of this agreement… that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction or delay…”
In this example, this condition allows the buyer five business days to find satisfactory home financing and insurance. Should they not be able to do so, both parties have the option to walk away.
Can you fix this, please?
There are many other examples of conditional clauses – on the sale of the purchaser’s home, on the inspection of the home etc.
Sometimes the purchaser requests that the purchase of the house is conditional on the seller doing something or fixing something. In those types of circumstances, if the seller does not follow through and do what was promised, it can allow the purchaser to walk away from the deal or to request a reduction in price.
The purpose of conditional clauses is to allow the parties to make a deal dependent on a future event that is not known to them at the time of purchase and sale. These types of clauses can protect both the buyer and seller. There are many nuances in the area of conditional clauses and the consequences of either party failing to meet the condition. When a purchaser wants to make an offer of purchase with conditional clauses, it is wise to use a Realtor like me, and in some situations, additional assistance from a real estate lawyer may also be required. If you want to chat more, do not hesitate to reach out.