Humber/Ontario Real Estate Course 3 Exam Practice

What can Buyer Khan do if an environmental report finds contamination but a waiver clause exists?

1. The buyer is obligated to terminate the agreement

2. The buyer has the right to waive the condition, even though contamination was discovered

3. The seller has the right to terminate the agreement because the environmental report was not satisfactory

4. The seller has the right to retain the deposit if the buyer terminates the agreement

5. The agreement becomes null and void if contamination is identified

6. The seller must reduce the price to compensate for the contamination

The correct answer is: The buyer has the right to waive the condition, even though contamination was discovered

The correct answer is that the buyer has the right to waive the condition, even though contamination was discovered. This option highlights the power that the buyer holds in the scenario where a waiver clause exists. A waiver clause typically allows a buyer to proceed with the purchase despite the discovery of adverse conditions, such as contamination, provided they are willing to accept the associated risks. By waiving the condition, Buyer Khan can move forward with the transaction, acknowledging the contamination without being compelled to terminate the agreement. The context of a waiver clause is crucial. It signifies that certain contingencies in the purchase agreement can be overlooked if the buyer chooses to proceed. This flexibility can be beneficial, particularly in negotiations where the buyer and seller may address the contamination in other ways, such as through price adjustments or remediation agreements. Other options do not accurately reflect the implications of having a waiver clause. For instance, the notion that the buyer is obligated to terminate the agreement contradicts the very purpose of a waiver. Similarly, suggesting that the seller can unilaterally terminate the agreement or retain the deposit overlooks the buyer's ability to make a considered decision regarding the waiver. In cases involving contamination, obligations related to the deposit and price adjustments are typically determined by negotiations rather than imposed terms