Understanding conditional offers when purchasing a home
Feb 14, 2017
There are many reasons in which prospective homeowners may submit a conditional offer. The most common reason to do so is to protect the buyers in the case that the home inspection report reveals extensive renovation needs or if their financing does not come through.
Typically a conditional offer is structured with a deadline for expiry of each condition and the purchaser can give notice of either waiver or fulfillment of those conditions. If the conditions are not met the offer to purchase becomes void and the purchaser’s deposit is returned.
About conditional offers
The seller may entertain a number of offers when their home is on the market even if they accept a conditional offer; this is because conditional offers are not binding to either party until the offer has either been waived or fulfilled.
Sellers may include an escape clause in the agreement of purchase to allow flexibility in entertaining other options. An escape clause, for example, may provide 48 hours for the conditions to be waived or fulfilled. The wording in the agreement of purchase and sale agreements should be reviewed by your real estate lawyer to ensure that you understand the conditions of the offer and you are protecting your own interests.
From a legal standpoint purchasers should be aware of the following:
What a conditional offers expiry date means
A conditional offers expiry date allows the vendor the opportunity to return the deposit and relist the property in question if the offer is not made firm. If the purchasers intends to waive the condition and confirm the offer, it must be done by the expiry date. Upon the expiry date the offer is considered null and void.
Waiving a conditional offer
The conditional offer is meant to protect the purchaser, it assists them in mitigating the risks involved in arguably the largest purchase of their lives. The best way to protect yourself is to only waive a condition when you are satisfied that it has been met. If you waive the condition without satisfactory evidence that it has been met, you risk taking on problems as the new owner. In a hot market, like Niagara’s, purchasers may be eager to confirm a deal before a home inspection. However, if problems are identified after the deal is firm, the purchaser can not leave the deal with their deposit.
Finding a Niagara Real Estate Lawyer
The Real Estate pratice group at Chown Cairns law firm provides superior quality representation to Niagara buyers and sellers in all matters involving real estate.