Humber/Ontario Real Estate Course 4 Exam Practice

A condition precedent clause to arrange a new first mortgage should include which of the following from the buyer's perspective?

1. Must include the amortization for that mortgage.

2. Cannot include a waiver as it is a true condition precedent.

3. Should include minimum acceptable terms from the buyer's perspective.

4. Must allow a minimum of 15 days for condition fulfillment.

5. Should include the interest rate.

6. Cannot involve any third-party approvals.

The correct answer is: Should include minimum acceptable terms from the buyer's perspective.

The inclusion of minimum acceptable terms from the buyer's perspective in a condition precedent clause regarding the arrangement of a new first mortgage is essential because it ensures that the buyer has a clear understanding of the terms under which they are willing to proceed with the purchase. This approach protects the buyer’s interests by providing them with a framework that the financing must meet, which can include aspects such as interest rates, amortization periods, and other terms that would influence the affordability and suitability of the mortgage. This clarity helps eliminate ambiguity, ensuring that both the buyer and the seller know what has to be satisfied for the transaction to move forward. Establishing these minimum acceptable terms allows the buyer to negotiate better financing options, ensuring that they are not left with unfavorable loan conditions that could affect their financial situation long after the purchase has occurred. Including such provisions can prevent potential disputes later on and streamline the loan approval process, giving the buyer a greater sense of control over their purchasing power in the real estate transaction.