ExamPassCondition precedent vs condition subsequent in Ontario
A condition precedent means the deal is not binding until the protected party gives written notice that the condition is fulfilled or waived. If nothing arrives by the deadline, the offer is null and void on its own terms and no termination notice is needed. A condition subsequent works the other way: the agreement binds on acceptance, and the protected party must deliver a termination notice in time to get out. Silence ends a condition precedent but confirms a condition subsequent.
This distinction sits under many exam questions in Course 2 and both simulations. The facts are usually simple: a lender answers, an inspection finds something, a deadline passes. What decides the answer is which kind of condition you are reading, because the same silence produces opposite results.
What is the difference between a condition precedent and a condition subsequent?
Both give a party time for due diligence. They differ in whether a contract exists during that time and who has to act.
| Condition precedent | Condition subsequent | |
|---|---|---|
| On acceptance | No binding agreement yet | A binding agreement, with a right to terminate |
| Notice is given to | Keep the deal (fulfilment or waiver) | End the deal (termination) |
| Silence at the deadline | Null and void; the deal ends by its own wording | Deemed waived; the deal is firm |
| Waiver | Needs a waiver provision in the clause | Built in by the deemed waiver |
| Typical word | "This offer is conditional upon..." | "The buyer may terminate this agreement..." |
A short way to hold it: precedent, speak up to keep it; subsequent, speak up to end it.
Most Ontario residential conditions are written as conditions precedent. The subsequent form turns up in some local markets and with some new home builders; brokerage policy or local custom usually decides.
When does a condition precedent end?
At the deadline, unless the protected party has delivered written notice of fulfilment or waiver before it. The notice must actually reach the other side in time. A notice that lands an hour late fulfils nothing, and nobody owes a grace period.
Even with no binding contract yet, both sides owe something while the condition runs. The buyer must work in good faith to complete the due diligence, and the seller must keep the property available to that buyer and cooperate where the condition needs it. Steering a condition so that it fails, by refusing an inspector access or withholding documents from a lender, may not be good faith.
If the deadline passes in silence, the agreement simply ends. A lapsed condition precedent needs no termination notice. The deposit is a separate question: it is trust money, and a brokerage disburses trust money only in accordance with the terms of the trust (TRESA, s. 27(1)(d)), with every trust transaction authorized by the broker of record (O. Reg. 567/05, s. 19). In practice that means a signed mutual release or a court order before the deposit moves.
Parts of Course 2 describe ending a deal with a termination notice plus a release. On the exam and in practice today, the termination notice belongs to a condition subsequent; a lapsed condition precedent ends by its own wording, and the release handles the deposit.
How does a condition subsequent end?
Only by a termination notice delivered within the time limit. The agreement is binding the moment everyone accepts. If the protected party does nothing, the condition is deemed waived and either party can insist on closing, whether or not the condition was ever met.
That is the danger of the subsequent form: a buyer whose financing fails and who forgets the termination notice can be bound to buy with no mortgage. The course teaches that this form serves buyers poorly, so explain the risk whenever you see one.
What is a true condition precedent?
A condition that depends on someone other than the buyer and the seller, where the transaction itself cannot go ahead without that person's yes. Neither party can waive it, so it is drafted without a waiver provision, and the only notice that keeps the deal alive is a notice of fulfilment.
Classic examples:
- a lender approving the buyer to assume the seller's mortgage;
- a consent to sever part of a lot;
- a release from an earlier conditional agreement the seller already signed.
Severance shows why. Under the Planning Act, an agreement to convey part of a lot in contravention of the subdivision control rules creates no interest in land, but an agreement expressly conditional on compliance with those rules is valid (Planning Act, s. 50(21)). Nobody can waive their way past that.
Because the deal cannot be firm before the third party agrees, a true condition precedent can never be written as a condition subsequent. Watch the label, though. A condition needing approval only for the buyer's own plans, such as a condominium board approving a charger, is not a true condition precedent: the purchase can complete without it, so it can be waivable if the clause says so.
How do you tell which one you are reading?
Read the wording, not the topic. A financing condition can be written either way.
| Marker in the clause | It signals |
|---|---|
| "This offer is conditional upon... unless the buyer gives notice... this offer shall be null and void" | Condition precedent |
| "...may be waived at the buyer's sole option" | Condition precedent with a waiver provision |
| "The buyer may terminate this agreement by notice... failing which the condition is deemed waived" | Condition subsequent |
| A third party's approval or consent, no waiver language | True condition precedent |
Two quick tells: precedent clauses talk about the offer (there is no agreement yet), while subsequent clauses talk about the agreement. And if the clause tells you what happens when no notice is sent, read that sentence first. "Null and void" means precedent. "Deemed waived" means subsequent.
A complete condition precedent answers six questions: who does it, who pays, what is done, by what time and date, what if it is not done, and whether it can be waived. Exam questions often ask what a weak clause is missing; usually it is who pays or the waiver. For a closer look at how these questions are built, see how to read real estate exam questions.
What does this look like in a real file?
Priya and Daniel Okafor agree to buy a bungalow on Lakeview Crescent in Cobourg for $642,000. Their offer is conditional on financing until 6:00 p.m. on Thursday, June 11, written as a condition precedent with a waiver for their sole benefit. On Tuesday their lender approves them in full.
- If their salesperson delivers a notice of fulfilment at 2:00 p.m. Wednesday, the deal is firm.
- If nobody sends anything, at 6:01 p.m. Thursday the offer is null and void, even though the money is there. The seller is free to accept another buyer, and the $30,000 deposit stays in trust until a mutual release is signed.
Now change one fact. Suppose the clause had read: "The buyer may terminate this agreement by written notice delivered not later than 6:00 p.m. on June 11 if financing is not arranged, failing which this condition is deemed waived." The lender declines on Wednesday, and the Okafors assume the deal will "just end". It will not. At 6:01 p.m. Thursday the condition is deemed waived, and they are bound to close at $642,000 without a mortgage. Only a termination notice delivered before the deadline would have protected them.
What traps show up on the exam?
- "Nothing was sent, so the deal is over." Only for a condition precedent.
- "The buyer terminated, so the deposit comes straight back." The deposit moves on a mutual release or a court order, not on one side's notice.
- "The seller waived the buyer's inspection condition." Only the party a condition protects can waive it.
- "The lender approved, so the condition is satisfied." Not until written notice reaches the other side in time.
Which document to send in each of these moments has its own guide: waiver vs notice of fulfilment. Conditions also matter when a seller is weighing several offers, covered in competing offers under TRESA. If you are working through the course itself, start with how to study Course 2, and for the simulation setting see how to prepare for Simulation 1.
Frequently asked questions
Does a lapsed condition precedent need a notice of termination? No. If no notice of fulfilment or waiver arrives by the deadline, the agreement ends by its own wording. The deposit is then dealt with through a mutual release or a court order.
Can a seller waive a buyer's financing condition? No. Only the party a condition benefits can waive it, and only if the clause allows waiver. A seller's "waiver" of the buyer's condition does nothing.
Can a true condition precedent be waived? No. It depends on a third party, such as a lender approving a mortgage assumption or a consent to sever, so it must be fulfilled exactly as written.
Which form is more common in Ontario residential offers? The condition precedent. The subsequent form appears in some local markets and builder agreements, and brokerage policy usually decides which is used.
How does ExamPass help you practise this?
ExamPass gives you hundreds of original scenario questions on conditions and deadlines, with every option explained, so you learn why silence ends one deal and firms up another. The Study notes cover each course module in plain language, and the Mock Exam, Drill Wrong Answers and AI Tutor help you find and fix the patterns you keep missing. See courses and pricing