A buyer submits an offer with a financing condition that must be satisfied within 5 business days. On day 4, the buyer's mortgage application is approved but they want better terms. What can the buyer legally do?

Q: What is the correct answer to: A buyer submits an offer with a financing condition that must be satisfied within 5 business days. On day 4, the buyer's mortgage application is approved but they want better terms. What can the buyer legally do?

The correct answer is Waive the condition and proceed, or allow it to expire and void the contract. Option B correctly identifies the buyer's two legal options when a financing condition is satisfied. Under Canadian real estate law, including TRESA and provincial regulations, once a condition is satisfied, the buyer can either waive the condition (accepting the approved financing and proceeding) or allow the condition period to expire without waiving it, which voids the contract. The buyer retains this choice even when financing is approved, as satisfaction doesn't automatically obligate completion. This protects the buyer's right to exit if the approved terms are unsatisfactory.

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

Financing conditions in Canadian real estate contracts protect buyers by providing time to secure mortgage approval. Under TRESA, RESA, and provincial regulations, conditions must be satisfied, waived, or allowed to expire within specified timeframes. 'Satisfaction' means the condition's requirements are met (mortgage approved), but doesn't obligate the buyer to proceed. Buyers retain the right to waive satisfied conditions or let them expire, voiding the contract. This principle balances buyer protection with seller certainty. Condition periods cannot be unilaterally extended, and contract modifications require mutual agreement. Understanding condition mechanics is essential for proper client advice and risk management.

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

Remember SWE: Satisfied conditions give buyers the choice to 'Satisfy, Waive, or Exit.' Like a restaurant where you've confirmed a table is available (condition satisfied) - you can either take the table (waive and proceed) or walk away (let it expire), but you can't demand they hold it longer or change the menu price. When you see condition satisfaction questions, immediately think SWE. Ask: Is the condition satisfied? If yes, the buyer can Waive (proceed) or Exit (expire the contract). They cannot unilaterally extend, modify terms, or transfer rights.

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

For condition questions, identify if the condition is satisfied first. If satisfied, buyers have only two choices: waive and proceed, or let it expire and exit. Eliminate options suggesting unilateral extensions, price changes, or transfers.

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

Sarah's offer on a $500,000 home includes a 5-day financing condition. On day 4, her bank approves a mortgage at 6.5%, but she hoped for 6%. The condition is satisfied, so Sarah must decide: waive the condition and buy with the 6.5% rate, or let the condition expire and lose the house but avoid the higher rate. Her agent explains she cannot extend the deadline or demand a price reduction. Sarah chooses to let it expire, protecting her from unfavorable financing while allowing the sellers to pursue other offers.

Question

Contracts & AgreementsConditionsMEDIUM

A buyer submits an offer with a financing condition that must be satisfied within 5 business days. On day 4, the buyer's mortgage application is approved but they want better terms. What can the buyer legally do?

Answer Options

A

Automatically extend the condition period for another 5 days

B

Waive the condition and proceed, or allow it to expire and void the contract

C

Reduce the purchase price to reflect the financing costs

D

Transfer the condition benefit to the seller for negotiation