Conditions Subsequent (Ontario)

By
Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

Conditions Subsequent

In this case, the deal has been struck. The contract is binding but it does contain an "escape clause". The buyer has for example the right to terminate the agreement upon certain conditions. These are all the same reasons that you might have included in a condition precedent, ie. mortgage financing, condition of the premises etc.

The advantage is that if you do nothing, the deal is a "go". So, when the relevant date arises, there is actually nothing to do. You simply allow the time period to expire, no running around getting documents signed, nothing like that. However, this doesn't seem to influence many realtors who insist on having either waivers, fulfillment statements or amendments deleting this clause signed. The purpose of this clause in the first place was to eliminate all this extra paperwork.

The leading case dealing with all three types of conditions was Turney vs. Zhilka in the Supreme Court of Canada in 1959. The Court preferred the use of conditions subsequent. Within about 10 years the Law Society adopted conditions subsequent as the preferred way of doing business (except when a true condition precedent was required). The real estate industry never adopted the change. As a result, the Law Society went back (about 20 years later) to using both types and that arrangement continues to the present time.

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