A buyer submits an offer with a financing condition that expires in 5 business days. On day 3, they receive mortgage approval. What should happen next?

Q: What is the correct answer to: A buyer submits an offer with a financing condition that expires in 5 business days. On day 3, they receive mortgage approval. What should happen next?

The correct answer is The buyer must provide written notice to the seller waiving the financing condition. Option B is correct because Canadian real estate law requires written notice to waive or remove conditions, even when they've been satisfied early. Under provincial real estate legislation like TRESA in Ontario and similar acts in other provinces, conditions remain in effect until formally waived in writing. This written notice requirement ensures clear communication between parties and provides documented proof that the condition has been removed, protecting both buyer and seller interests and maintaining transaction certainty.

Q: What background knowledge is needed for this Residential Trading question?

Conditions in real estate contracts are contingencies that must be satisfied or waived for the transaction to proceed. Under Canadian provincial real estate legislation (TRESA, RESA, etc.), conditions remain active until formally addressed through written notice or natural expiry. The written notice requirement serves multiple purposes: it provides clear documentation, prevents misunderstandings, protects both parties' interests, and maintains transaction certainty. This principle applies to all types of conditions - financing, inspection, sale of buyer's property, etc. The notice must be delivered according to the terms specified in the agreement, typically within the condition period.

Q: What is a good way to remember the answer to this Residential Trading question?

Remember WRITE: Written notice Required to Immediately Terminate Existing conditions. Think of conditions as sticky notes that won't come off automatically - you must physically remove them by writing a waiver notice, even if the underlying requirement is met. When you see any question about condition fulfillment, immediately think WRITE. Ask yourself: 'Has written notice been provided?' If not, the condition remains active regardless of whether it's been satisfied in practice.

Q: What exam tip applies to this Residential Trading question?

Look for keywords like 'automatically satisfied' or 'condition expires naturally' - these are usually wrong. The correct answer typically involves 'written notice' or 'waiver' when conditions are satisfied early.

Q: How does this Residential Trading concept apply in real world practice?

A buyer gets pre-approved for a mortgage on Monday and submits an offer with a 7-day financing condition on Tuesday. By Thursday, they receive final mortgage approval from their lender. The buyer's agent must immediately prepare and deliver written notice waiving the financing condition to the seller's agent. Without this written waiver, the condition technically remains in place until the following Tuesday, potentially delaying other transaction milestones like home inspection scheduling or lawyer instructions, and creating unnecessary uncertainty for all parties involved.

Question

Residential TradingOffer ProcessMEDIUM

A buyer submits an offer with a financing condition that expires in 5 business days. On day 3, they receive mortgage approval. What should happen next?

Answer Options

A

The condition automatically becomes satisfied and the transaction proceeds

B

The buyer must provide written notice to the seller waiving the financing condition

C

The buyer must wait until day 5 for the condition to expire naturally

D

The seller can cancel the agreement since the buyer was approved early