Humber/Ontario Real Estate Course 3 Exam Practice

Seller wants to divide a two-acre parcel into two one-acre lots. If Buyer makes an offer contingent on this severance, what is this condition in the agreement?

1. Condition subsequent

2. True condition precedent

3. Condition precedent

4. True condition subsequent

5. Conditional except

6. Exception clause

The correct answer is: True condition precedent

The correct choice is the fundamental concept of a condition precedent, which applies in this scenario where the buyer's offer is reliant upon the successful division of the two-acre parcel into two separate one-acre lots. A condition precedent is a specific condition that must be met before a contract becomes binding or before an obligation arises. In this case, the buyer's offer is contingent on the seller obtaining the necessary approvals for the severance; until that condition is fulfilled, no legal obligation exists for the buyer to proceed with the purchase. Therefore, the agreement would only take effect when this condition of severance is satisfied. This concept of a condition precedent is essential in real estate contracts, as it protects the buyer from being legally bound to a transaction that cannot go forward due to circumstances beyond their control. The involvement of a true condition precedent emphasizes that this is the primary concern at hand rather than any other conditional clauses that may exist in typical agreements. The context surrounding the other options involves understanding different types of conditions, but it's key to recognize that this particular situation clearly demonstrates the need for the specified condition of severance to be met for the transaction to proceed.