Humber/Ontario Real Estate Course 3 Exam Practice

When can an accepted offer be considered invalid due to pending severance approvals?

1. Immediately, as the lot lacks a legal description.

2. Not until marketing is completed post-approval.

3. Valid offer, awaiting severance approval.

4. Conditional on seller’s guarantee of severance.

5. Invalid only if buyer withdraws.

6. Retroactively once severance is not approved.

The correct answer is: Valid offer, awaiting severance approval.

An accepted offer can be deemed invalid due to pending severance approvals if the offer hinges on the successful completion of those severance approvals. This means that until the severance is approved, the lot does not have a legal standing that allows for the sale to be completed. The correct understanding is that the offer is valid but contingent upon obtaining the necessary severance approvals. If the severance does not go through, the validity of the offer can be challenged since the basis of the agreement (the sale of a legally recognizable property) cannot be fulfilled. In the context of why the other choices do not hold: it isn't immediately invalid just because there isn’t a legal description (as described in the first option); the offer remains valid while waiting for severance approval rather than being contingent on completing marketing post-approval; a guarantee from the seller about severance isn’t typically valid without the actual approval; and it doesn’t become invalid only if the buyer withdraws, since the status of the severance is central to the transaction’s validity. Lastly, the offer isn't retroactively invalidated; its status is linked directly to the approval process.