Humber/Ontario Real Estate Course 3 Exam Practice

Which statement is correct regarding conditions in agreements whether stated as condition precedent or subsequent?

1. Conditions precedent can be redrafted as conditions subsequent

2. Conditions subsequent must include a waiver clause

3. Conditions subsequent for mortgage financing allow contract termination within a timeframe

4. Mortgage approval conditions must be written as conditions subsequent

5. Conditions subsequent allow conditional waivers

6. All conditions must have waiver clauses

The correct answer is: Conditions subsequent for mortgage financing allow contract termination within a timeframe

The selection of the statement regarding conditions in agreements is accurate. In the context of agreements related to mortgage financing, conditions subsequent are specifically designed to allow for the termination of the contract within a specified timeframe should certain criteria not be met. This is significant because it provides parties with a definitive period during which they can ascertain whether the conditions of the agreement, particularly those related to financing, are satisfied. Conditions subsequent typically relate to events or circumstances that could alter the obligations of the parties after the contract is in effect. In the case of mortgage financing, if the financing does not get approved within the agreed timeframe, the buyer or party seeking financing can terminate the agreement without penalty. This mechanism protects parties from being bound by a contract when critical financing conditions are unmet, allowing for flexibility within the contractual relationship. As for the other choices, they do not accurately represent how conditions function within the context of agreements or misinterpret the requirements for conditions in real estate contracts.