Humber/Ontario Real Estate Course 4 Exam Practice

Buyer Liam's offer is conditional only on obtaining a new mortgage of $350,000 at 4.25% with monthly payments of $1,243.21. If this condition is waived:

1. Buyer Liam cannot remove the condition unless the exact financing is secured

2. The offer is immediately firm and binding subject to termination within a set time

3. The agreement for purchase and sale becomes binding without the condition

4. Buyer Liam retains all rights associated with the condition even if waived

5. The seller must renegotiate the terms

6. Liam must immediately seek alternative financing options

The correct answer is: The agreement for purchase and sale becomes binding without the condition

The correct answer is that the agreement for purchase and sale becomes binding without the condition. This is because a conditional offer indicates that the buyer's acceptance of the terms is dependent on certain criteria being met - in this case, securing a mortgage. When the buyer waives this condition, they are essentially confirming that they are willing to proceed with the transaction regardless of whether the mortgage has been secured as initially specified. This means that the purchase agreement will stand as a firm commitment between the buyer and the seller. In this case, waiving the condition removes any contingencies that would otherwise allow the buyer to back out of the deal if the financing fell through. Consequently, the offer transitions into a binding agreement, obligating both parties to fulfill their responsibilities under it. Contextually, the other options suggest scenarios that do not accurately reflect the implications of waiving a financing condition. For instance, retaining rights associated with the condition after waiving it contradicts the nature of waiving conditions, which aims to finalize the agreement. Similarly, indicating that the seller must renegotiate terms or that the buyer must seek alternative financing options misstates the intent and outcome of the waiver, which confirms the original offer rather than introducing new variables.