When you sign an Agreement of Purchase and Sale (APS) in Ontario, the conditions you include can save you from financial disaster or trap you in a deal you cannot escape. These clauses act as safeguards that must be met before a real estate transaction becomes firm and binding.
Conditions protect buyers and sellers, reduce the risk of unexpected problems, and give parties a clean way out if essential requirements fall through. They also shape how your deposit, which typically runs 2 to 5 percent of the purchase price, gets handled if something goes wrong.
This guide walks you through the 10 most common conditions used in Ontario real estate, what each one does, and how Ontario law treats them. You will learn what happens when conditions are met, waived, or missed.
What Is a Condition Clause in an Ontario Real Estate Agreement
A condition clause is a requirement written into your Agreement of Purchase and Sale that must be satisfied or waived before the deal becomes firm. If the condition fails by the deadline you set, the agreement ends and the deposit goes back to the buyer.
Most conditions in Ontario residential transactions are condition precedents. Under a condition precedent, the buyer must deliver written notice (a Notice of Fulfillment or a Notice of Waiver) before the deadline. If no notice arrives in time, the agreement automatically becomes null and void.
Ontario real estate agreements must be in writing under section 4 of the Statute of Frauds. The standard form used in most residential transactions is the OREA Form 100, produced by the Ontario Real Estate Association. Real estate professionals operate under the Trust in Real Estate Services Act, 2002 (TRESA), which fully replaced REBBA in December 2023.
As Demet Altunbulakli, founding lawyer at Insight Law Professional Corporation, puts it, “A condition clause is only as strong as the words you put in it. Vague language gives you a false sense of safety and gives the other side room to argue you.”
The 10 Most Common Condition Clauses
1. Financing Condition
The financing condition lets you back out of the deal if you cannot secure a mortgage on terms acceptable to you within a set period. Most buyers ask for 5 to 10 business days, depending on lender turnaround.
If you cannot get financing despite reasonable efforts, you can terminate the agreement and recover your deposit. This stops you from being forced to close without approved funds. Lenders also tie financing approval to an appraisal, so the property must support the loan amount.
Best practice is to insist on a Notice of Fulfillment rather than allowing a waiver. That way, if your financing falls through after waiving, you keep more options open.
2. Home Inspection Condition
This clause gives you the right to have the property inspected by a qualified home inspector before the deal becomes firm. The inspection typically covers structural, electrical, plumbing, HVAC, roof, and foundation systems.
If the inspector finds serious defects, you can do one of three things. You can request that the seller make repairs. You can renegotiate the price. You can walk away from the deal entirely.
Sellers sometimes push back by tightening the scope of the inspection clause to “major structural defects” rather than open ended dissatisfaction. Read the wording carefully before you sign.
3. Status Certificate Review Condition (Condominiums)
If you are buying a condo, this clause lets your lawyer review the condominium corporation status certificate before the deal firms up. Under section 76 of the Condominium Act, 1998, the corporation must deliver the status certificate within 10 days of a proper request, and the fee is capped at $100 including HST.
The status certificate reveals critical information including the reserve fund balance, planned special assessments, common element fees, ongoing legal disputes, and any arrears on the unit. Under section 76(6) of the Act, the certificate is binding on the corporation as to its contents in favour of the prospective purchaser.
If the review uncovers red flags like an underfunded reserve, a pending special assessment, or active litigation, you can terminate the agreement. Skipping this condition in a hot market is risky. You could inherit thousands of dollars in surprise costs that title searches will never reveal.
4. Lawyer Review Condition
This clause gives your lawyer (or the seller lawyer) a window of time to review the APS or related documents before the agreement becomes binding. It applies most often to condo purchases, pre construction deals, private sales, and complex commercial transactions where standard forms have been heavily modified.
The typical review period runs 2 to 5 business days. Keep the scope objective. A loose “satisfactory to the buyer lawyer” wording can be challenged as an unfettered right to cancel.
5. Sale of Buyer Property Condition
This condition makes your purchase conditional on selling your current home within a specified period. You avoid the financial strain of carrying two mortgages and the risk of being unable to close because your funds are tied up in your old property.
Sellers usually negotiate an escape clause. The escape clause lets the seller keep marketing the property while your condition is in place. If another buyer makes a firm offer, the seller gives you (typically) 24 to 72 hours to waive your condition or step aside.
6. Insurance Condition
This clause makes the deal conditional on you obtaining property insurance at a reasonable cost. Some older homes with knob and tube wiring, aluminum wiring, oil tanks, or unconventional heating systems can be tough or expensive to insure.
Rural properties may also face higher premiums or limited coverage options. If insurers refuse to cover the property at a reasonable rate, the insurance condition lets you exit before closing.
7. Title Search Condition
The title search lets your lawyer confirm that the seller has clear title and that no liens, unregistered easements, or other encumbrances threaten your ownership. In Ontario, this is typically completed by a title search and examination before the requisition date set in the APS.
The OREA Form 100 sets the requisition date as the deadline for the buyer lawyer to examine title at the buyer expense. If a title problem cannot be resolved by the seller (such as discharging a mortgage or providing title insurance), you can terminate the agreement. Section 4 of the Vendors and Purchasers Act sets a statutory 30 day requisition period if the APS is silent.
8. Zoning and Use Verification Condition
This clause ensures that the property zoning under the local by law allows the use you have in mind. Zoning is set by municipal by laws under section 34 of the Planning Act, and every Ontario municipality maintains its own zoning codes.
In commercial transactions, the condition often goes further and asks for confirmation of building code compliance, work order status, and permitted occupancy. A residential buyer planning to run a daycare, a home based business, or convert a basement into a rental unit should also verify the use before closing.
Buying a property whose zoning does not permit your intended use can destroy your investment. You may have to apply for a minor variance under section 45 of the Planning Act or a full rezoning under section 34, neither of which is guaranteed.
9. Appraisal Condition
This clause protects you if the property appraises for less than the purchase price you agreed to pay. Lenders will lend only up to a percentage of the appraised value, so a low appraisal can leave you scrambling to cover the gap in cash.
If the value comes in low, you can renegotiate the price with the seller or walk away from the deal. Appraisal conditions matter most in volatile markets, in unique or rural properties, and where bidding wars push prices above market value.
If your financing condition already requires lender approval, the appraisal may already be baked in. Talk to your lawyer before adding both to avoid duplication that could trip you up.
10. Repairs and Renovations Condition
This clause requires the seller to complete specific repairs or renovations before closing. You typically get the right to reinspect before closing to confirm the work was done properly.
Common examples include fixing a leaky roof, replacing a furnace, repairing electrical issues flagged on inspection, or finishing minor renovations. Ambiguity in the scope of work is the biggest source of disputes here, so describe the work in detail and require receipts or proof from licensed trades.
If the seller fails to complete the agreed work, you can negotiate a holdback at closing or, in severe cases, terminate the agreement.
Comparison Table of Condition Clauses
| Condition | Purpose | Drafting Tips | Risks to Watch |
| Financing | Lets you exit if a lender will not approve your mortgage on acceptable terms | Set a realistic deadline aligned with lender processing. Define amount, term, and rate where possible | Waiving without confirmation can force default if financing later collapses |
| Home Inspection | Lets you walk away or renegotiate after a qualified inspector reviews the property | Spell out who pays, scope of inspection, reinspection rights, and notice format | Open ended satisfaction language invites pushback from sellers in hot markets |
| Status Certificate Review | Lets your lawyer review the condo corporation financial and legal position | Allow time for the 10 day delivery window under the Condominium Act, 1998 | Delays in obtaining the certificate can push closing dates. Build in extensions |
| Lawyer Review | Allows legal review of the APS and supporting documents | State what is being reviewed, the time period, and the notice required | Vague scope can be interpreted as a free right to cancel by buyer lawyer |
| Sale of Buyer Property | Makes the purchase conditional on selling your current home | Identify the property by address, set the sale deadline, and address escape clauses | Without an escape clause for the seller, you lock the seller in for weeks |
| Insurance | Lets you exit if insurance cannot be obtained at a reasonable cost | Identify the type of coverage (fire, all risk, liability), insurer approval, and timing | Older homes, oil tanks, and rural systems can make insurance unobtainable |
| Title Search | Confirms clear, marketable title with no surprise encumbrances | Set the requisition date with enough runway. Address remedies if defects emerge | Missing the date can limit your remedies. Some defects take time and money to resolve |
| Zoning and Use Verification | Confirms the property can lawfully be used as you intend | Name the municipality, the proposed use, and the verification method | Zoning alone may not be enough in commercial deals. Add building code and work order checks |
| Appraisal | Protects you if the appraised value falls short of the purchase price | State who orders and pays for the appraisal, and the threshold for terminating | If tied to your lender, this may overlap with financing. Coordinate to avoid duplication |
| Repairs and Renovations | Requires the seller to complete specific work before closing | Describe the work in detail, require receipts, and reserve reinspection rights | Ambiguous descriptions cause disputes. Include holdback remedies for incomplete work |
What Happens if a Condition Is Not Met
When a condition is not fulfilled or waived by the deadline, the standard OREA wording renders the agreement null and void, and the deposit returns to the buyer in full without deduction.
For a condition precedent, the buyer must deliver written notice (OREA Form 124, Notice of Fulfillment, or OREA Form 123, Notice of Waiver) by the deadline. No notice means the deal dies. For a condition subsequent, the deal becomes firm automatically unless the party benefiting from the condition delivers written objection within the time limit.
A small number of conditions are true conditions precedent. These require action by a third party (a mortgage assumption approved by the bank, for example, or a severance approved by the municipality). True conditions precedent cannot be waived. You need a Notice of Fulfillment or the deal collapses.
If you waive a condition you should have kept, you lose that protection. The deal becomes firm and you face deposit forfeiture and possible damages if you later walk away without legal justification.
Why You Need a Real Estate Lawyer to Review Your Conditions
Conditions are only effective if they are clear, specific, and enforceable. An experienced real estate lawyer in Toronto will do the following for you.
Draft enforceable language. Vague wording is the number one reason buyers lose deposits or get stuck in deals they wanted to leave. Your lawyer makes sure every condition states what must happen, by when, and how.
Set realistic deadlines. Lender turnaround, inspector availability, and status certificate delivery times all need to align. A 3 day financing condition in a slow lender market is asking for trouble.
Advise you on waiver decisions. Waiving a condition you should keep can cost you the deposit and expose you to damages. Your lawyer helps you weigh the risk before you sign anything.
Protect you when conditions fail. If a condition cannot be met or the other side balks, your lawyer knows how to deliver proper notice, recover the deposit, and document the file to defend against later claims.
As Demet often tells clients, “The conditions you negotiate at the offer stage decide whether you have leverage later. By the time something goes wrong, it is usually too late to fix the wording.”
Frequently Asked Questions
How long do I have to satisfy a condition in an Ontario real estate agreement?
The deadline is whatever you negotiate. Financing conditions typically run 5 to 10 business days. Home inspection conditions usually run 5 to 7 business days. Status certificate review conditions usually run 10 business days plus 5 business days for lawyer review, since the condominium corporation has 10 days under section 76 of the Condominium Act, 1998 to deliver the certificate.
What is the difference between a condition precedent and a condition subsequent?
A condition precedent requires the buyer to deliver a Notice of Fulfillment or Waiver by the deadline, or the deal becomes null and void. A condition subsequent makes the deal firm automatically unless the benefiting party delivers a written objection by the deadline. Most OREA Form 100 conditions are condition precedents, which protects buyers.
Can I waive a condition if my mind changes?
Yes, you can usually waive a condition that exists for your benefit. You waive by delivering a Notice of Waiver in writing before the deadline. But once waived, the protection is gone. If financing later falls apart and you waived the financing condition, you can lose your deposit and face damages.
Is the status certificate fee really capped at $100 in Ontario?
Yes. Subsection 76(8) of the Condominium Act, 1998 caps the fee a condominium corporation can charge for issuing a status certificate at $100 including HST. Corporations cannot legally charge more than this prescribed amount for a standard certificate.
Do new home buyers in Ontario get a 10 day cooling off period?
For new condominium units, yes. Buyers of pre construction condos have a statutory 10 day rescission period under section 73 of the Condominium Act, 1998, starting from receipt of the disclosure statement and the fully executed APS. For new freehold homes, the Homeowner Protection Act, 2024 created a 10 day cooling off period, but the freehold cooling off provisions are not in force yet and await proclamation. Resale homes never have a statutory cooling off period in Ontario.
What happens to my deposit if a condition is not satisfied?
When a condition precedent fails to be fulfilled or waived by the deadline, the standard OREA wording states the agreement becomes null and void and the deposit returns to the buyer in full without deduction. If there is a dispute, the brokerage holding the deposit in trust will require a written release signed by both parties, or a court order, before releasing the funds.
Final Word
Conditions in your Ontario real estate agreement are not boilerplate. They decide whether you can walk away from a bad deal or lose tens of thousands of dollars trying to get out. Financing, inspection, status certificate review, title search, and zoning conditions all have specific roles, deadlines, and Ontario legal rules.
Get your conditions reviewed before you sign. Insight Law Professional Corporation is a real estate law firm based in Toronto, serving clients across Ontario.
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.
