Conditions in an Agreement of Purchase and Sale (APS) are safeguards that outline requirements which must be met before a real estate transaction becomes firm.
They protect both buyers and sellers, reduce the risk of unexpected issues, and give parties an exit strategy if essential requirements are not satisfied.
This guide explains the 10 most common conditions in Ontario real estate transactions, why they matter, and how they protect your interests.
- Key Takeaways
- The 10 Most Common Conditions in Ontario Real Estate
- 1. Financing Condition
- 2. Home Inspection Condition
- 3. Status Certificate Review (Condominiums)
- 4. Lawyer’s Review Condition
- 5. Sale of Buyer’s Property Condition
- 6. Insurance Condition
- 7. Lawyer Title Search Condition
- 8. Zoning/Use Verification Condition
- 9. Appraisal Condition
- 10. Repairs/Renovations Condition
- Ontario 10 Common Real Estate Conditions
- Why Legal Advice Matters
- Contact a Real Estate Lawyer in Toronto
- Get a Free Quote for Your Real Estate Transaction
- What Happens if Conditions Aren’t Met?
- Final Word
Key Takeaways
- Conditions such as financing, home inspection, and sale of a current home allow buyers to withdraw from the deal under specific circumstances, protecting them from financial and legal risk.
- Important conditions like title search, insurance, and status certificate review safeguard against legal and practical problems before closing.
- Engaging a real estate lawyer early helps ensure conditions are drafted clearly, deadlines are realistic, and your rights are protected.
The 10 Most Common Conditions in Ontario Real Estate
1. Financing Condition
Ensures the buyer can secure satisfactory mortgage financing within a set time frame.
If financing cannot be arranged despite reasonable efforts, the buyer can terminate the agreement without penalty.
This prevents buyers from being forced to close without approved funds.
2. Home Inspection Condition
Home inspection condition gives the buyer the right to have the property inspected by a qualified home inspector before the deal is firm.
If serious defects are found, the buyer can request repairs, renegotiate the price, or walk away.
This protects against costly surprises and ensures the property is in acceptable condition.
3. Status Certificate Review (Condominiums)
Allows the buyer (and their lawyer) to review the condominium corporation’s status certificate, which contains vital details on finances, rules, and any legal disputes
If the review reveals issues such as upcoming special assessments or lawsuits, the buyer can terminate the agreement.
4. Lawyer’s Review Condition
Provides time for a buyer’s or seller’s lawyer to review the APS or related documents before it becomes binding.
This is especially valuable in private sales or complex transactions where standard forms may have been altered.
5. Sale of Buyer’s Property Condition
Lets the buyer make the purchase conditional on selling their current home within a specified period.
This ensures they have the necessary funds and avoids the risk of carrying two properties at once.
Sellers often negotiate an “escape clause” allowing them to consider other offers while the condition is in place.
6. Insurance Condition
Makes the deal conditional on the buyer being able to obtain property insurance at a reasonable cost.
Some properties—particularly older homes with outdated wiring, oil tanks, or rural heating systems—may be difficult to insure.
7. Lawyer Title Search Condition
Allows the buyer’s lawyer to search the property title to confirm ownership, identify encumbrances, and ensure there are no liens, easements, or title defects.
Issues must be addressed by the seller before closing—often by discharging debts or providing title insurance.
8. Zoning/Use Verification Condition
Ensures the property’s zoning permits the buyer’s intended use.
In commercial transactions, it may also involve verifying building code compliance or permits.
Without this, a buyer could purchase a property that cannot legally be used as intended.
9. Appraisal Condition
Protects the buyer if the property appraises for less than the purchase price.
If the value comes in low, the buyer can renegotiate or walk away.
This is especially relevant for unique properties or when market prices are volatile.
10. Repairs/Renovations Condition
Requires the seller to complete agreed-upon repairs or improvements before closing.
The buyer often has the right to re-inspect before the deal closes to confirm the work has been completed satisfactorily.
10 Common Real Estate Conditions in Ontario
| Condition | Purpose | Drafting Notes | Risk Considerations |
|---|---|---|---|
| 1. Financing | Ensures buyer can secure satisfactory mortgage financing before being bound to close. | Define: amount, term, rate, approval deadline. Avoid vague “satisfactory to buyer” language without objective criteria. | If waived without confirmation, buyer may default if financing fails. Avoid overly short timelines that don’t align with lender processing times. |
| 2. Home Inspection | Allows buyer to inspect property for defects and terminate/renegotiate if issues found. | Include: who pays for inspection, scope, re-inspection rights, method/timing for delivering notice of dissatisfaction. | Seller may resist open-ended conditions—tighten scope to “major structural defects” if needed in negotiations. |
| 3. Status Certificate Review (condominiums) | Ensures buyer’s lawyer can review condo corporation’s documents before deal is firm. | Set clear delivery timeline (e.g., “within 2 business days of receipt by buyer”), specify review period. | Delays in obtaining status certificate can impact deal timelines. Use clause that allows extension if not received promptly. |
| 4. Lawyer’s Review | Provides legal review window for APS or lease terms. | State scope (entire APS vs. specific clauses), review period, and notice requirements. | Vague clauses may be interpreted as buyer’s unfettered right to cancel. Keep objective purpose stated. |
| 5. Sale of Buyer’s Property | Allows buyer to secure funds from sale of current home. | State property address, sale deadline, and whether seller can invoke an escape clause. | Without an escape clause, seller may be locked in for extended periods, losing other offers. |
| 6. Insurance | Ensures buyer can obtain property insurance at a reasonable cost. | Include type (fire, all-risk, liability), insurer’s approval, and timing. | Older wiring, oil tanks, or rural properties can make insurance unobtainable—risk of last-minute cancellation. |
| 7. Lawyer Title Search | Allows buyer’s lawyer to conduct and review a title search to confirm the property is free from encumbrances, liens, easements, or other title defects. | Specify search completion date (often 10 days before closing) and outline remedies if issues arise (e.g., seller to discharge encumbrances or provide title insurance). | Failure to complete the search on time can limit remedies under the APS. Some defects may not be curable before closing without significant delay or cost. |
| 8. Zoning/Use Verification | Confirms property is zoned for intended use. | Include municipality name, specific use to be verified, method of verification (written confirmation from municipality). | In commercial deals, also verify building code compliance—zoning alone may not be sufficient. |
| 9. Appraisal | Allows buyer to back out or renegotiate if property appraises below purchase price. | Define whether appraisal is lender-ordered or independent, and who pays. | If tied to financing, may be redundant—consider merging with financing condition to avoid duplication. |
| 10. Repairs/Renovations | Ensures seller completes agreed work before closing. | Describe repairs in detail, require receipts or proof, allow re-inspection before closing. | Ambiguity can lead to disputes. Include remedy if repairs are incomplete (e.g., holdback). |
Why Legal Advice Matters
Conditions are only effective if they are clear, specific, and enforceable.
A real estate lawyer will:
- Ensure deadlines are realistic.
- Specify exactly what constitutes fulfillment of the condition.
- Advise on when to waive conditions and when to walk away.
- Protect you from being bound to a deal that no longer meets your needs.
Contact a Real Estate Lawyer in Toronto
Get a Free Quote for Your Real Estate Transaction
Insight Law Professional Corporation is a real estate law firm located in Toronto. If you need legal assistance with your real estate transaction, contact us today to learn how we can help.
What Happens if Conditions Aren’t Met?
If a condition is not fulfilled or waived within the agreed timeframe, the agreement typically becomes null and void, with the deposit returned to the buyer.
This allows parties to exit the transaction without penalties when essential requirements aren’t met.
Final Word
Including the right conditions in your Ontario real estate agreement isn’t just a formality—it’s a critical layer of protection. From financing and inspections to zoning and title searches, these clauses ensure you can proceed with confidence, knowing the property and the deal meet your expectations. Work closely with your lawyer to ensure these conditions are properly drafted, clearly timed, and in your best interest.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
