Humber/Ontario Real Estate Course 3 Exam Practice

In a buyer's offer containing a condition subsequent related to mortgage approval, what must also be included?

1. Condition precedent wording

2. Mutual consent clause

3. Waiver clause

4. Mortgage insurance details

5. Seller’s agreement to finance

6. Third-party financing clause

The correct answer is: Waiver clause

A buyer's offer that includes a condition subsequent related to mortgage approval must incorporate a waiver clause. This is essential because a condition subsequent indicates that the agreement is effective unless a specific event occurs—in this case, the failure to secure mortgage approval. Including a waiver clause allows the buyer the option to waive this condition under certain circumstances, which can help facilitate negotiations or strengthen the offer if the buyer has confidence in their financing prospects. The other options do not align with the requirements of the conditional offer. For instance, condition precedent wording typically relates to situations where an agreement is valid only upon the satisfaction of certain conditions before it can proceed. Meanwhile, mutual consent clauses usually pertain to the agreement of both parties on certain terms, rather than conditions tied specifically to mortgage approval. Mortgage insurance details and the seller’s agreement to finance are not prerequisites for a condition subsequent. Lastly, the third-party financing clause generally refers to arrangements involving specific lenders and is not a necessity in this scenario.