Understanding Subject to Conditions:

Subject to conditions are clauses in a real estate contract that outline specific prerequisites that need fulfillment for the contract to be binding. These conditions safeguard buyers and allow them to withdraw from the contract if conditions aren't met. Common subjects include:

• Financing: Ensuring mortgage approval.

• Title Search: Verifying the property's legal status and any legal charges and encumbrances on the property that may affect the property’s potential use and value.

• Fire Insurance: Securing coverage for the property. Believe it or not, some properties cannot get fire insurance coverage for various reasons.

• Strata Documents: Reviewing strata property details such as bylaws, regulations, meeting minutes, and financial statements (for condo apartments and townhouses).

• Appraisal: Determining the property's value, highest and best use and basic condition of the property.

• Home Inspection: Determining the property's condition after careful inspection by a qualified home inspector.

• Sale of Buyer’s Home: Buyer needs to sell their home.

Importance of Subject to Conditions:

Protection for Buyers: These conditions safeguard buyers against potential risks or issues with the property or financing.

Opportunity for Due Diligence: Buyers get the chance to conduct thorough inspections and assessments before committing to the purchase.

Flexibility in Contract: Allows for renegotiation or withdrawal if conditions aren't met within a specified timeframe.

Timely Removal of Conditions:

• Meeting Deadlines: Adhering to timelines for subject removals is crucial to keep the contract valid and avoid contract breaches.

• Collaboration: Timely communication and collaboration among all involved parties—buyers, sellers, realtors, and lenders—is essential.

Role of a Mortgage Broker:

• Assistance in Financing Condition: Mortgage brokers play a pivotal role in securing financing approval within the specified timeframe.

• Guidance and Support: Brokers guide clients through the financing process, ensuring compliance with lender requirements and timely submission of necessary documentation.

• Facilitating Final Subject Removal: Coordinating with lenders and other parties to fulfill financing conditions within stipulated timelines.

Example Scenario:

Consider a buyer, Sarah, who includes subject to financing and a title search in her offer. Her mortgage broker swiftly initiates the financing process upon acceptance of the offer. The broker works closely with Sarah, ensuring all necessary documents are submitted promptly. Simultaneously, a title search is conducted to verify the property's legal status. Now the broker receives the mortgage approval. The broker will then collaborate with Sarah and the lender, ensuring financing approval well within the stipulated timeframe and if all is well with the approval, the mortgage broker will advise Sarah she can remove the subject to financing condition. With that condition removed, Sarah proceeds confidently toward the finalization of the purchase.

Conclusion:

Subject to conditions are critical components of a real estate contract, safeguarding buyers and allowing them to perform due diligence. Timely removal of these conditions, especially the financing subject, is crucial. Mortgage brokers serve as invaluable allies, guiding borrowers through the financing process and expediting the removal of subjects, ensuring a smooth and successful real estate transaction.