Ontario Real Estate Licensing Exam Practice · Question
What is the primary purpose of a 'condition precedent' in an Agreement of Purchase and Sale?
A condition precedent, often referred to as a 'subject to' clause, specifies an event that must occur or a criterion that must be met before an agreement become
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Question: What is the primary purpose of a 'condition precedent' in an Agreement of Purchase and Sale?
Answer options:
- To make the agreement binding immediately upon signing.
- To allow either party to terminate the agreement without consequence. ✅ To ensure that certain events or criteria are met before the contract becomes firm and binding.
- To transfer ownership of the property at the time of signing.
Correct answer: To ensure that certain events or criteria are met before the contract becomes firm and binding.
Explanation: A condition precedent, often referred to as a 'subject to' clause, specifies an event that must occur or a criterion that must be met before an agreement becomes firm and legally binding. Examples include 'subject to financing' or 'subject to home inspection'.
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