A buyer submits an offer with a condition to arrange financing at 5.5% interest rate within 10 business days. On day 8, they secure financing at 6.0% interest rate. What should the buyer do?

Q: What is the correct answer to: A buyer submits an offer with a condition to arrange financing at 5.5% interest rate within 10 business days. On day 8, they secure financing at 6.0% interest rate. What should the buyer do?

The correct answer is Decide whether to waive the condition or let the agreement become void. Option C correctly identifies that the buyer has discretionary power when a condition isn't met as specified. Since financing was obtained at 6.0% rather than the required 5.5%, the condition technically remains unfulfilled. Under TRESA and provincial real estate legislation, buyers have the right to either waive unfulfilled conditions or let them expire, voiding the agreement. The buyer must actively decide whether to proceed with the higher rate or withdraw from the purchase.

Q: What background knowledge is needed for this Contracts & Agreements question?

Conditional clauses in purchase agreements are protective provisions that must be satisfied for contracts to become firm and binding. Under TRESA and provincial real estate legislation, conditions give buyers specific rights and timeframes to fulfill requirements like financing, inspections, or property sales. When conditions specify particular terms (interest rates, loan amounts, etc.), those exact terms must be met for automatic fulfillment. If different terms are obtained, the condition remains technically unfulfilled, giving the buyer discretionary power to waive or let it expire. This protects buyers from being forced into agreements when their specified requirements aren't met while maintaining flexibility to proceed if desired.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

Remember CHOICE: Condition not met = Buyer's CHOICE. When a condition specifies exact terms (like 5.5% interest) and you get different terms (6.0%), the buyer always has a CHOICE to waive or walk away. Think of it like ordering a specific car color - if they bring you blue instead of red, you can CHOOSE to take it or leave it. When you see condition questions where the exact terms aren't met, immediately think CHOICE. Look for the answer that gives the buyer decision-making power rather than automatic outcomes or obligations to continue searching.

Q: What exam tip applies to this Contracts & Agreements question?

When conditions specify exact terms that aren't met, the buyer always has discretionary power to waive or let the condition expire. Avoid answers suggesting automatic fulfillment or obligations to continue searching.

Q: How does this Contracts & Agreements concept apply in real world practice?

A buyer conditions their offer on obtaining financing at 4.5% within 15 days. On day 12, their mortgage broker secures approval at 4.8%. The buyer must decide whether to proceed with the slightly higher rate or withdraw from the purchase. They might consider market conditions, their budget flexibility, and whether better rates might be available elsewhere. The agent should explain both options clearly and document the buyer's decision properly to avoid disputes.

Question

Contracts & AgreementsConditions And WaiversONMEDIUM

A buyer submits an offer with a condition to arrange financing at 5.5% interest rate within 10 business days. On day 8, they secure financing at 6.0% interest rate. What should the buyer do?

Answer Options

A

Automatically waive the condition since financing was obtained

B

Wait until day 10 to see if better rates become available

C

Decide whether to waive the condition or let the agreement become void

D

Request an extension to find financing at the specified rate