Humber/Ontario Real Estate Course 3 Exam Practice

Why might a conditional clause regarding insurability be included in a property sale?

1. A:It's unnecessary because the agreement covers insurability.

2. B:It benefits and protects the seller primarily.

3. C:It depends on the property's age, condition, and location.

4. D:It doesn't require an extended timeframe for inspection.

5. E:It's mandatory for all property sales.

6. F:It's added to comply with local regulations.

The correct answer is: C:It depends on the property's age, condition, and location.

Including a conditional clause regarding insurability in a property sale is essential because it addresses critical aspects of the property that could impact whether insurance can be obtained or maintained. The condition of the property is influenced not only by its age and overall physical state but also by its location, as these factors can determine the availability and cost of insurance coverage. An older property, for instance, might have wiring or plumbing that does not meet modern safety standards, making it less insurable or requiring modifications to qualify for coverage. Similarly, properties located in areas prone to natural disasters could face stricter insurance requirements or higher premiums. This clause serves to protect both parties in the transaction. For the buyer, it ensures that they will not be stuck with a property that they cannot insure, while for the seller, it mitigates the risk of needing to face potential disputes over insurability issues after the sale is completed. Thus, the clause becomes a critical aspect in evaluating the viability of the transaction, depending significantly on the specific characteristics of the property.