A buyer submits an offer with a financing condition that expires on Friday at 6:00 PM. On Thursday, the buyer's mortgage application is denied. What is the buyer's best course of action?

Q: What is the correct answer to: A buyer submits an offer with a financing condition that expires on Friday at 6:00 PM. On Thursday, the buyer's mortgage application is denied. What is the buyer's best course of action?

The correct answer is Provide written notice that the financing condition cannot be fulfilled. Option C is correct because Canadian real estate law requires immediate written notice when a condition cannot be fulfilled. This obligation stems from the duty of good faith and fair dealing inherent in all contracts. Provincial regulations under TRESA, RESA, and similar legislation emphasize timely communication. Written notice protects both parties legally, allows the buyer to withdraw without penalty, and enables the seller to pursue other opportunities immediately rather than waiting unnecessarily.

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

Financing conditions in Canadian real estate contracts must be fulfilled by specific deadlines or the buyer must provide written notice of inability to fulfill. Provincial legislation requires good faith dealing and timely communication. When conditions cannot be met, immediate written notice allows buyers to withdraw without penalty while protecting sellers' interests. This principle applies across all Canadian provinces under their respective real estate acts (TRESA in Ontario, RESA in Alberta, etc.). Proper notice procedures prevent disputes and ensure contractual clarity.

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

Remember NOTICE: Never delay, Obligation to communicate, Tell immediately, Inform in writing, Condition can't be met, Everyone benefits from clarity. Think of it like calling in sick to work - you don't wait until your shift starts if you know you're ill the night before. When you see condition fulfillment questions, apply NOTICE. If the buyer knows a condition can't be met, they must provide immediate written notice rather than waiting or trying alternatives.

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

Look for scenarios where buyers already know conditions cannot be fulfilled. The answer will almost always require immediate written notice rather than waiting, waiving inappropriately, or requesting extensions.

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

A buyer applies for a mortgage and receives a denial letter on Wednesday for a deal with a Friday financing condition deadline. The buyer's agent immediately drafts written notice to the seller's agent stating the financing condition cannot be fulfilled. This allows the seller to accept backup offers or re-list the property immediately, while the buyer retrieves their deposit without penalty and begins searching for alternative properties within their confirmed budget.

Question

Contracts & AgreementsConditions And WaiversMEDIUM

A buyer submits an offer with a financing condition that expires on Friday at 6:00 PM. On Thursday, the buyer's mortgage application is denied. What is the buyer's best course of action?

Answer Options

A

Immediately waive the financing condition to keep the deal alive

B

Wait until Friday at 6:00 PM and let the condition automatically expire

C

Provide written notice that the financing condition cannot be fulfilled

D

Request an extension of the financing condition deadline