Financing condition protects the Buyer(s) during its conditional period ... simply put: the mortgage specialist working for the Buyer(s) arranges for the mortgage approval within 5 business days of offer acceptance:
- In case the mortgage approval is NOT satisfactory to the Buyer(s), the Buyer(s) walk away from the deal and their deposit is returned to them without any interest or deductions. The Buyer(s) are then released from the purchase agreement with NO obligations to the Seller(s) and/or real estate salesperson(s).
- When satisfactory mortgage approval is received, the Buyer(s) will proceed with signing a "Waiver of financing condition" and are one step closer to closing date.
... is typically used in a purchase of freehold (detached & semidateched houses, freehold row townhouses) and some condominium properties (mainly condo townhouses and sometimes when purchasing an older condo):
"This Offer is conditional upon the Buyer, at his/her own expense arranging an inspection of the subject property by a Home Inspector and the obtaining of a report satisfactory to the Buyer at his/her sole discretion. Unless the Buyer gives notice in writing delivered to the Seller or His/Her Agent by 11:59 p.m. on the fifth (5th) business day after the date of acceptance that this condition is fulfilled, this Offer shall become null and void and the deposit shall be returned to the Buyer in full without interest or deductions. The Seller agrees to cooperate in providing access to the structure for the purpose of this inspection. This condition is included for the sole benefit of the Buyer and may be waived at his/her option by notice in writing to the Seller or His/Her Agent within the time period stated herein."
After the home insepction is completed by a Home Inspector (as per Buyer's choice), the Buyer(s) receive the full report (either in hard copy or electronically) and make a decision to:
- proceed with the purchase of the property as originally agreed to; OR
- re-negotiate the original contract with Sellers; OR
- in case Buyer(s) are not hppy with the results of the home inspections, They can walk away from the deal and their deposit is returned to them without any interest or deductions. The Buyer(s) are then released (after signing a "mutual release") from the purchase agreement with NO obligations to the Seller(s) and/or real estate salesperson(s).
... is used in a purchase of condominium properties only (resale condo & condo townhouses):
A Status Certificate is a short report on the current status of a condominium corporation. If you are buying a resale condominium, it is important that your agreement of purchase and sale is conditional, upon review of the Status Certificate by your lawyer.
The Status Certificate provides valuable information directly from the condominium corporation, examples of such information include, but are not limited to: Arrears or increases in common expenses; Whether any major work needs to be done to the building; The amount of the reserve fund and whether the reserve fund is sufficient for any major work. The Status Certificate also provides information about any claims against the corporation and whether the corporation is involved in any proceedings. This is important because if there are high value claims against the corporation and the corporation’s insurance does not provide coverage; the corporation can either increase the common expenses or levy a special assessment against the unit owners. If you are buying a condominium, you need to know of any potential significant increase in your monthly common expenses.
The Status Certificate package includes the corporation’s financial statements, declaration and by-laws:
- The financial statements are a good indication of a corporation’s financial stability.
- The statements will show the trends in expenditures and receipts for previous years and provide comparisons of a corporation’s actual and expected costs.
- The budget for the current year will also be included, identifying both the income to the corporation, and the amount of the reserve fund.
- The declaration of the corporation outlines the structure, rules and regulations of the corporation for example whether you can keep pets.
- The corporation’s by-laws govern the corporation’s functioning, i.e., electing the Board of Directors, meetings, notices etc.
... is used in a purchase of freehold & condominium properties when Buyer(s) would like their Lawyer (Solicitor) to review the offer AFTER it is accepted to provide Buyer(s) confidence, that their interests are legally protected.
"This Offer is conditional upon the approval of the terms hereof by the Buyer's solicitor. Unless the Buyer gives notice in writing delivered to the Seller or His/Her Agent by 11:59 p.m. within 2 business days after the date of acceptance of this Offer, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without interest or deductions. This condition is included for the sole benefit of the Buyer and may be waived at his option by notice in writing to the Seller or his Agent within the time period stated herein."