Humber/Ontario Real Estate Course 4 Exam Practice

What is a true condition precedent in a real estate transaction?

1. Is drafted similarly to a condition subsequent.

2. Is used when an offer depends on property division.

3. Is relevant for a condition involving obtaining a new first mortgage.

4. Must be exactly fulfilled as written.

5. Applies only when financing is clear.

6. Is typical in conditional sales agreements.

The correct answer is: Must be exactly fulfilled as written.

A true condition precedent in a real estate transaction refers to a specific condition that must be fulfilled before a contract becomes binding or a transaction can proceed. The rationale for this choice being correct lies in the nature of how conditions precedent function in legal agreements. When a contract includes a condition precedent, it sets a clear expectation that the specified condition must be exactly met for the agreement to move forward. This might include obtaining financing, specific inspections, or any stipulations that need to be satisfied to finalize the sale. Failure to fulfill this condition means that the parties are not obligated to proceed with the transaction. In contrast, other aspects mentioned in the other options do not capture the precise nature of what constitutes a true condition precedent. For instance, drafting similarities to conditions subsequent, relevance to property division, and the context of obtaining a mortgage are components that pertain to specific scenarios but do not define the core concept of what a true condition precedent is. Moreover, conditions that merely classify financing as “clear” or that relate to typicalities in conditional sales agreements do not encapsulate the strict requirement for a condition precedent, which emphasizes the necessity of exact fulfillment for the contractual obligations to take effect. Thus, choice D reflects the essential characteristic of true conditions precedent by