Humber/Ontario Real Estate Course 3 Exam Practice

If a buyer considers purchasing a property without confirmed financing, what term guarantees contract completion?

1. Conditional on securing financing.

2. Subject to agent approval.

3. Firm agreement with a financing clause.

4. Contingent on property inspection.

5. Unconditional confirmed commitment.

6. With a mortgage pre-approval letter attached.

The correct answer is: Conditional on securing financing.

The term that guarantees contract completion when a buyer is considering a property purchase without confirmed financing is "conditional on securing financing." This phrase indicates that the buyer's obligation to complete the purchase is dependent on successfully obtaining financing. By including this condition in the contract, both the buyer and the seller understand that the transaction can only proceed if the buyer secures the necessary financial backing. Choosing this term is especially important in real estate transactions, as it protects the buyer from being bound to the contract without having the means to fulfill it. If the buyer is unable to secure financing, typically, they can withdraw from the agreement without penalty. This approach provides a safety net for buyers in uncertain financial situations, ensuring that they do not enter into a binding commitment that they can't honor. Other terms, while potentially relevant in different contexts, do not directly address the financing issue in the same manner. For instance, a firm agreement with a financing clause does not guarantee contract completion if the financing is not secured. Similarly, terms like "unconditional confirmed commitment" imply a strong guarantee without conditions, which would not suit a buyer without financing secured. Thus, the chosen term accurately reflects a protective measure within the context of real estate transactions.