A condition is a requirement that is fundamental to the very existence of the offer. A breach of condition allows the buyer to get out of the contract and obtain a refund of the full amount of the deposit. A buyer’s inability to meet the condition set by a vendor permits the vendor to get out of the contract.

A warranty is a minor promise that does not go to the heart of the contract. If there is a breach of warranty, the purchaser cannot cancel but must complete the contract and sue for damages. Therefore, if a particular requirement on your part is pivotal to your decision to purchase the property or not, it is important to frame your requirement as a condition rather than as a warranty. Both vendors and purchasers frequently insert conditions into the agreement, which are also referred to as subject clauses, and should:

•  Be precise and clearly detailed.
•  Have specific time allocated for conditions that have to be removed—within two days, 30 days, etc. It is preferable to put the precise date a condition has to be removed, rather than refer to the number of days involved.
•  Have a clause that specifically says the conditions are for the sole benefit of the vendor or purchaser, as the case may be, and the party requiring the condition can waive them at any time. This is important because you may wish to remove a condition even though it has not been fulfilled, in order for the contract to be completed.
Here is just a sampling of some of the common subject clauses. There are many others possible that you or your lawyer may feel it appropriate to insert.

Clauses for Benefit of Purchaser:
• Title being conveyed free and clear of any and all encumbrances or charges registered against the property on or before the closing date at the expense of the vendor, either from the proceeds of the sale or by solicitor’s undertaking
• Inspection being satisfactory to purchaser by relative, spouse, partner, etc. (specify name).
• Inspection being satisfactory to purchaser by house inspector/contractor selected by purchaser.
• Sale of purchaser’s other property
being made.
• Confirmation of mortgage financing.
• Deposit funds to be placed in an interest-bearing trust account with the interest to accrue to the benefit of the purchaser

Additional Clauses If Purchasing a Revenue Property
• Review and satisfactory approval of financial statements, balance sheet, income and expense statement, list of chattels, list of inventory, names of tenants, amount of deposits and monthly rents, dates of occupancy, list of receivables and payables, list and dates of equipment safety inspections, list of repairs and dates, service contracts, leases, warranties, property plans, and surveys.

For Benefit of Vendor
• Removal of all subject clauses by purchaser within 72 hours upon notice in writing by vendor of a backup bona fide (legitimate) offer.
• Confirmation of purchase of vendor-back mortgage through vendor’s mortgage broker.
• Satisfactory confirmation of purchaser’s creditworthiness by vendor or vendor’s mortgage broker.
• Issuance of building permit.
• Builder receiving confirmation of construction financing.
• Registration of a subdivision plan.
• Deposit funds non-refundable and to be released directly to the vendor once all conditions of the purchaser have been met.
• Review and satisfactory approval by vendor’s lawyer of the contents of the agreement of purchase and sale. CL

Excerpted with modification, from 101 Streetsmart Condo Buying Tips for Canadians, by Douglas Gray, published by John Wiley & Sons in May, 2006. Copyright  2006 by Douglas Gray. All rights reserved. Any reproduction of this material without the author’s advance written consent is prohibited. The author assumes no responsibility whatsoever for any information provided above, as the purpose of the column is for general information only, and not intended to provide professional advice.

• Approval of assumption of existing mortgage.
• Granting of vendor-take-back mortgage or builder’s mortgage.
• Removal of existing tenancies (vacant possession) by completion date.
• Existing tenancies conforming to prevailing municipal bylaws.
• Interim occupancy payments being credited to purchase price.
• Review and satisfactory approval by purchaser’s lawyer of the contents of the agreement of purchase and sale.
• Warranties, representations, promises, guarantees, and agreements shall survive the completion date.
• No urea formaldehyde foam insulation (UFFI) having ever been in the building.
• Vendor’s warranty that no work orders or deficiency notices are outstanding against the property or, if there are, that they will be complied with at the vendor’s expense before closing.

Additional Clauses If Purchasing a Condominium
• Receipt and satisfactory review by purchaser (and/or purchaser’s lawyer) of project documents, such as disclosure, declaration, articles, rules and regulations, financial statements, project budget, minutes of condominium corporation for past two years, management contract, estoppel certificate.
• Confirmation by condominium corporation that the condominium unit being purchased will be able to be rented.