Are you working with a “Bona Fide” Buyer?
Many Buyers don’t have the financial resources and cannot qualify for a mortgage. It is therefore imperative that all Buyers be pre-approved before they start tying up the assets of a Seller with bogus offers.
Asking the Buyer a few pre-screening questions is a good idea:
What amount are you pre-approved for?
How much do you have put aside for closing and moving costs?
How much do you have put aside for a down payment?
Can you provide a letter from the lender confirming your bona fides?
How much deposit (non-fundable consideration) will accompany the contract?
Unless these are satisfied to the Sellers liking then don’t accept the offer.
The responsibility for determining the bona fides of the Buyer is with their representative, and this isn't limited to just the financial ability of the Buyer.
“The condition precedent clause begins with the words “this agreement is conditional upon…” and there is no deal, until the final condition is fulfilled, satisfied or waived”. - Brian Madigan, LL.B.
This is what the Contract of Purchase and Sale used in British Columbia, says:
Section 21. ACCEPTANCE IRREVOCABLE (Buyer and Seller): The Seller and the Buyer specifically confirm that this Contract of Purchase and Sale is executed under seal. It is agreed and understood that the Seller’s acceptance is irrevocable, including without limitation, during the period prior to the date specified for the Buyer to either:
A. fulfill or waive the terms and conditions herein contained; and/or
B. exercise any option(s) herein contained.
For instance, if a Buyer doesn’t remove conditions because of a failure to sell their own home, selling their home had better be a condition of the Contract of Purchase and Sale.
So are you working with a “Bona Fide” Buyer?
A contract where the Buyer has not acted in the general principle of bona fides (good faith and fair dealing) is only void at the pleasure of the innocent party (the Seller).
There is a binding contract between the parties when the final condition is dealt with and confirmed with the appropriate documentation and within the relevant time period.
