A buyer submits an offer with a financing condition that expires at 5:00 PM on Friday. The buyer's lender approves the mortgage at 6:00 PM the same day, but the buyer doesn't waive the condition until Monday morning. What is the legal status of the Agreement of Purchase and Sale?

Q: What is the correct answer to: A buyer submits an offer with a financing condition that expires at 5:00 PM on Friday. The buyer's lender approves the mortgage at 6:00 PM the same day, but the buyer doesn't waive the condition until Monday morning. What is the legal status of the Agreement of Purchase and Sale?

The correct answer is The agreement is null and void because the condition was not waived before expiry. Option B is correct because under Canadian real estate law, when a condition expires without being formally waived in writing before the deadline, the agreement automatically becomes null and void. The fact that the buyer obtained mortgage approval at 6:00 PM does not satisfy the condition that expired at 5:00 PM. Provincial legislation requires conditions to be waived in writing within the specified timeframe. The buyer's failure to waive the condition before the Friday 5:00 PM deadline renders the entire agreement void, regardless of whether the underlying requirement (financing) was actually met.

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

Conditional clauses in real estate agreements are governed by strict timing requirements under provincial legislation like TRESA and RESA. These conditions protect buyers by allowing them to withdraw from agreements if certain requirements aren't met (financing, inspection, etc.). However, conditions must be satisfied or waived in writing before the specified deadline. If not waived by expiry, the entire agreement becomes null and void automatically. This principle ensures certainty in real estate transactions and prevents indefinite conditional periods that could prejudice either party. The formal waiver requirement prevents disputes about whether conditions were actually satisfied.

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

Think of conditions like a parking meter - once time EXPIRES, you get a ticket (null and void) regardless of whether you found coins in your pocket afterward. The clock doesn't care if you could have paid; what matters is whether you paid before expiry. When you see condition expiry questions, visualize the parking meter scenario. Ask yourself: 'Did they feed the meter (waive the condition) before time ran out?' If not, the agreement gets a 'ticket' (becomes null and void).

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

Look for the exact timing of condition expiry versus when action was taken. If any required action happens after the deadline, the agreement is automatically null and void, regardless of whether the underlying requirement was actually met.

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

A buyer places an offer on a $500,000 home with a financing condition expiring Friday at 5:00 PM. Their mortgage broker calls at 6:30 PM Friday saying the loan is approved, but the buyer is celebrating and doesn't submit the waiver until Monday. Despite having financing, the agreement is void. The seller has likely already accepted a backup offer over the weekend, and the buyer must start their house search over, potentially losing their dream home due to missing the deadline by 90 minutes.

Question

Contracts & AgreementsConditionsMEDIUM

A buyer submits an offer with a financing condition that expires at 5:00 PM on Friday. The buyer's lender approves the mortgage at 6:00 PM the same day, but the buyer doesn't waive the condition until Monday morning. What is the legal status of the Agreement of Purchase and Sale?

Answer Options

A

The agreement becomes firm automatically when the lender approves the mortgage

B

The agreement is null and void because the condition was not waived before expiry

C

The agreement remains conditional until the buyer formally waives the condition

D

The seller can choose whether to accept the late waiver