Humber/Ontario Real Estate Course 3 Exam Practice

Regarding a condition precedent and associated waiver in a purchase agreement, which statement is accurate?

1. A binding contract exists even if the condition is unmet or unwaived.

2. The agreement is unconditional once the offer is accepted by the seller.

3. A waiver is unnecessary for any condition precedent.

4. The agreement is binding upon the fulfillment or waiver of the condition.

5. The condition precedent extends the closing date automatically.

6. The condition must be included in a separate addendum.

The correct answer is: The agreement is binding upon the fulfillment or waiver of the condition.

The accurate statement regarding a condition precedent and associated waiver in a purchase agreement is that the agreement is binding upon the fulfillment or waiver of the condition. This means that the contract will only become fully enforceable once the specified condition has either been met or explicitly waived by the involved parties. In real estate transactions, conditions precedents are stipulations that must be satisfied before the agreement can be fully executed. If one of these conditions is unfulfilled and not waived, the agreement does not hold the same binding effect, allowing parties to withdraw without penalty. This concept underscores the nature of conditional contracts in real estate, where certain actions (like securing financing or completing inspections) must occur for both parties to adhere to the agreement. If a condition is waived, it no longer needs to be fulfilled for the contract to be binding. This reflects the importance of clearly defining conditions in agreements to ensure all parties understand when the commitments bind them.