Navjot, a licensed real estate professional, is representing a buyer, Sarah, who makes an offer to purchase a detached home at 123 Maple Street, Surrey, BC, for $950,000. The offer includes a subject condition that Sarah obtains satisfactory financing within seven business days. The seller accepts the offer. Three days later, Sarah’s lender informs her that she can only qualify for a mortgage of $800,000, which is insufficient for her to complete the purchase. What is the most appropriate action for Navjot to recommend to Sarah regarding the contract?

Question: Navjot, a licensed real estate professional, is representing a buyer, Sarah, who makes an offer to purchase a detached home at 123 Maple Street, Surrey, BC, for $950,000. The offer includes a subject condition that Sarah obtains satisfactory financing within seven business days. The seller accepts the offer. Three days later, Sarah’s lender informs her that she can only qualify for a mortgage of $800,000, which is insufficient for her to complete the purchase. What is the most appropriate action for Navjot to recommend to Sarah regarding the contract?

Answer options:

• Waive the financing subject condition and proceed with finding alternative financing or making up the difference. ✅ Declare the contract null and void due to the failure of the subject condition and request the deposit be returned.
• Negotiate a lower purchase price with the seller, as the current price is unaffordable for Sarah.
• Extend the subject removal period to allow Sarah to apply to more lenders, even if it delays the seller.

Correct answer: Declare the contract null and void due to the failure of the subject condition and request the deposit be returned.

Explanation: If a condition precedent (subject condition) is not fulfilled or waived by the specified date, the contract may become null and void, allowing the parties to be released from their obligations. This is a typical outcome when a 'subject to financing' condition cannot be met.