A buyer submits an offer on a residential property for $550,000 with a condition that they obtain satisfactory financing by 5:00 PM on October 15th. The seller accepts this offer. On October 14th, the buyer's lender approves their mortgage, and the buyer's real estate agent immediately sends a written notice to the seller's agent stating that "the financing condition is now fulfilled." What is the legal status of the contract?

Question: A buyer submits an offer on a residential property for $550,000 with a condition that they obtain satisfactory financing by 5:00 PM on October 15th. The seller accepts this offer. On October 14th, the buyer's lender approves their mortgage, and the buyer's real estate agent immediately sends a written notice to the seller's agent stating that "the financing condition is now fulfilled." What is the legal status of the contract?

Answer options: ✅ The contract is now firm and binding.

• The contract is still conditional until 5:00 PM on October 15th.
• The buyer still has the option to back out until the condition date.
• The seller can now entertain other offers, as the condition was only 'fulfilled,' not 'waived'.

Correct answer: The contract is now firm and binding.

Explanation: Once a condition precedent is satisfied as per its terms (e.g., satisfactory financing obtained), and proper notice is given to the other party, the condition is deemed fulfilled, and the contract becomes firm and binding. This action signifies the buyer has met their obligation under the condition, making it no longer an 'out' for them.