Humber/Ontario Real Estate Course 4 Exam Practice

If a waiver provision is added to a condition subsequent concerning a new first mortgage, what is the result?

1. The buyer can waive the condition irrespective of exact mortgage terms.

2. The mortgage clause is incorrectly drafted as waiver provisions are unsuitable for conditions subsequent.

3. The mortgage clause is incorrect as mortgage conditions can only be condition precedent.

4. The buyer can waive the condition using a specific waiver form.

5. The buyer must adhere to the exact terms specified without waiver.

6. The seller can waive the mortgage condition.

The correct answer is: The mortgage clause is incorrectly drafted as waiver provisions are unsuitable for conditions subsequent.

When a waiver provision is added to a condition subsequent regarding a new first mortgage, it is essential to recognize that conditions subsequent imply that a certain event or obligation must happen after the closing of the deal for the agreement to hold. Typically, in real estate transactions, conditions subsequent are not intended to allow for waivers like conditions precedent, which set requirements that must be fulfilled before a contract is executed. A condition subsequent is often linked to the idea that if a specified event does not occur, then the parties may be released from their obligations. As such, incorporating a waiver provision into a condition subsequent misaligns with its inherent purpose. Therefore, if the mortgage clause includes a waiver provision, it indicates that the clause is indeed drafted incorrectly. Conditions subsequent are not designed for waivers because they undermine the very nature of the condition that provides an exit from the contract based on nonfulfillment. Understanding the correct drafting and application of these conditions is crucial in real estate to ensure that obligations are clear and enforceable.