Humber/Ontario Real Estate Course 4 Exam Practice

When a buyer can't arrange financing and seeks termination, what is required?

1. Notice of termination and mutual release

2. Notice of waiver only

3. Waiver form and mutual release

4. Financing waiver

5. Condition satisfaction notice

6. Waiver of deposit notice

The correct answer is: Notice of termination and mutual release

In a situation where a buyer is unable to secure financing and decides to terminate the agreement, a notice of termination along with a mutual release is essential. The notice of termination serves to formally communicate the buyer's intention to withdraw from the contract due to the financing failure. It's a key document that outlines the reasons for termination and clears any obligations that may have been established in the original agreement. The mutual release is equally important, as it ensures that both parties agree to sever the contractual relationship without any further claims against each other. This document protects the buyer, providing them with confirmation that they have no financial liabilities toward the seller moving forward, precisely because their inability to secure financing has made it impossible to proceed with the purchase. The other options do not cover the full requirements necessary for an official termination of the contract. For instance, a waiver alone would not address the need for both parties to affirmatively agree to release each other from further obligations. Therefore, the combination of a notice of termination and a mutual release is crucial to properly conclude the transaction and avoid potential disputes.