Real Estate Contract Conditions
Buying a home is a significant milestone in many people’s lives. There are emotional and practical aspects to buying a property to live in. In addition, a significant financial investment comes into play when you buy a home. Caveat Emptor, or “buyer beware” still exists as the main legal position of a buyer. This means that completing relevant due diligence to protect yourself as a buyer plays an important role. Real estate contract conditions help protect buyers. Read more about how they work and how they protect. However, if you need further help, please connect with the real estate lawyers at Kahane Law office with both Calgary and Edmonton law offices. We help when you need us.
Please Note: All contract terms include different rights and obligations. The following include basics on real estate contract conditions. We always suggest legal help understanding the specific language and requirements under your own specific contract.
What Are Real Estate Contract Conditions?
Real estate purchase conditions are contractual terms that form part of a contract to buy real estate. The condition is a specifically used to protect a buyer or a seller. They function to effectively make the entire contract conditional on the waiving of the condition. for example, if buyers have concerns about their ability to secure mortgage financing to buy the home, a financing condition acts as protection for them. In essence, if they fail to secure a mortgage, the conditions allows for them to undo the contract from the beginning. It is as if the contract never existed, deposits go back to the buyer and the seller then must re-sale the home. Further, no binding obligations or rights exist under the contract. It puts both parties into the same position as if the contract never existed.
Examples Of Real Estate Contract Conditions
Many types of real estate contract conditions exist. Every buyer or sellers needs to evaluate the risks that they wish to mitigate to protect themselves. For example, they need to consider what circumstance or situation would cause them to not want to buyer or sell a home or make them unable to do so. Once the buyer or seller puts together that list, they then draft the condition into the contract. If the buyer and seller agree to that condition, the parties enter into the binding agreement “subject to” the condition being satisfied. In fact, in some jurisdictions, people refer to real estate contract conditions as “subject to”s. Typically, buyers use conditions more often than sellers. However, in many situations, sellers include real estate contract conditions to protect themselves in Alberta.
Types Of Buyers’ Conditions
The most common three conditions used by buyers include a condition for property inspections, financing and condominium document reviews. However, many other conditions protect buyers when concerns exist about a specific property. Drafting a condition for any concern a buyer has, protects them from the continued obligation to buy the property. For example, the following conditions help protect buyers from specific risks:
- Asbestos inspection;
- Sewer line video ;
- Radon gas testing;
- Confirming specific permitted uses of property;
- Electrical inspection;
- Lawyer review of the contract;
- Reviewing of real property reports; and lastly
- Environmental testing.
Types Of Sellers’ Conditions
Whiles used less frequently, Seller’s conditions protect a seller from breaching a contract if they remain unsure as to their ability to sell the property. For example, sellers may include a condition or conditions for:
- Subdivision of property;
- Removing or amending a Restrictive Covenant;
- Securing a grant of probate;
- The ability to pay off all debt on title; and lastly
- Determining the ability to discharge encumbrances on title.
Obligations Of Conditions
In the typical contract that real estate agents use, the conditions include obligations for the person relying on the condition. The Alberta Real Estate Association drafts these contract for agents to use. In Alberta, the person has a positive obligation to act in good faith and make a good faith effort to satisfy their condition. For example, with a home inspection condition, the buyer has the positive obligation to actually hire a home inspector, have the home inspected and either waive or not waive the condition based on the results of the inspection. If a buyer fails to conduct an inspection (with a licensed home inspector as per the contract) the buyer risks losing their deposit and facing a law suit for breach of contract.
Who Has The Benefit Of Real Estate Contract Conditions
While each contact is different, a typical real estate contract in Alberta limits the protection offered by the condition to the party who the condition protects. For example, a mortgage financing condition drafted to protect the buyer, only protects the buyer. Specifically, if a buyer lacks the ability to get a mortgage, the seller lacks the right to terminate the contract with the buyer. Only the buyer triggers the undoing of the contract. In the event that the buyer secures another way to pay for the home (a gift from family), even though they fail to get a mortgage, no requirement exists for them to not waive the condition.
How Do You Waive Real Estate Contract Conditions
Once again, all contract use different language for their terms and conditions. A real estate agent driven contract includes a requirement for the buyer or seller to waive the condition to the other party, if they want to continue on and buy the home. In addition, most contracts contain a specific time frame for the person to waive the condition. If they fail to waive the condition prior to the time deadline, then the contract is no longer binding on either party (other than to return the deposit). For most home builder contracts, the notice provision is reversed. For example, if a buyer does nothing within the condition time period, then the contract becomes binding. In those situations, the buyer needs to give notice if they no longer wants to buyer the property based on the condition.
Getting Help With Alberta Real Estate Contract Conditions
Whether you live in Calgary, Edmonton to anywhere in Alberta, we help clients draft, review and edit contracts. We explain the details for people so that they make informed decisions when buying or selling a home. The same is true with respect to specific real estate contract conditions. Call or email the real estate lawyers at Kahane Law Office today for help. It is always easier to fix a contractual term before the parties sign the contract than after. This also saves you money and stress. For a quick answer to your questions, please email us directly at this email address. Alternatively, feel free to call us in Edmonton or northern Alberta at (780) 571-8463 or in Calgary or central and southern Alberta at (403) 225-8810.