What is a Conditional Sale?

A conditional sale occurs when an offer to purchase has been accepted, but the final sale is dependent on certain conditions being met. In Winnipeg, we call this a conditional sale. Often, these conditions are used to benefit or protect the buyer in the transaction, and must be fulfilled within a specified timeframe for the sale to proceed. If these conditions, also known as contingencies, are not met, the buyer can withdraw from the agreement without penalty, and their deposit will be refunded.

Common Conditions in a Real Estate Sale

1. FINANCING CONDITION

This condition is used to protect the buyer during the process of securing mortgage approval. If the buyer cannot obtain financing approval from their lender, they can cancel the purchase agreement without penalty.

2. HOME INSPECTION

This condition allows the buyer to have the property inspected by a professional to check for any issues or defects with the property. It ensures the buyer is aware of any potential problems and if the inspection was to reveal significant issues, the buyer can negotiate or choose to back out of the sale.

3. SALE OF THE BUYERS PROPERTY

This condition is based on the buyer successfully selling their current home. It allows the buyer to avoid the financial burden of owning two homes simultaneously. If the buyer is unable to sell their existing home by the date the condition specifies, they can withdraw from the purchase.

The Process of a Conditional Sale

1. OFFER AND ACCEPTANCE

The buyer makes an offer that includes certain conditions, the seller can accept as is, reject, or counter it with modifications.

2. MEETING THE CONDITIONS

Once accepted, the buyer now works to fulfill the conditions within the agreed timeframe (for financing & home inspection conditions this time frame is typically a week or less). Depending on what conditions the buyer has inserted this may mean securing financing, conducting an inspection, or selling their current property.

3. WAIVING THE CONDITIONS

Once the conditions are met, the buyer signs a form declaring the satisfaction of these conditions. If the conditions cannot be met, the buyer can declare this and withdraw from the transaction, having their deposit returned.

Your friend in real estate,

Sheyla Duncan