A condition precedent is something you must satisfy before a deal becomes firm and both sides have to complete it. A condition subsequent works the other way. It ends or changes a deal that already binds you once a specific event happens. In Ontario real estate, almost every condition you see in an offer is a condition precedent.
This guide explains both terms in plain language. You will see real examples from an Agreement of Purchase and Sale, sample wording you can recognize in your own offer, and the rules that decide whether you walk away clean or lose your deposit. We also cover how a conditional deal turns firm through a Notice of Fulfillment or a Waiver.
Conditions matter more than ever. The Toronto Regional Real Estate Board reported that 2025 was one of the slowest resale years in the Greater Toronto Area in two decades, and buyers gained more negotiating room. Financing and inspection conditions came back as a standard part of most offers. Getting the wording and the deadlines right protects your money.
Condition Precedent vs Condition Subsequent at a Glance
Here is the short version before we go deeper.
| Feature | Condition Precedent | Condition Subsequent |
| When it applies | Before the deal becomes firm | After the deal already binds you |
| Effect on the deal | The deal does not become firm until you meet or waive the condition | The deal ends or changes if the named event happens |
| Common in Ontario real estate | Yes, in almost every conditional offer | Rare |
| Typical examples | Financing, home inspection, status certificate review | A clause that ends the deal if the seller cannot buy a replacement home |
| If it is not satisfied | The deal usually ends and the deposit returns to the buyer | The deal stays in place unless the named event occurs |
Need Help with Your Real Estate Transaction?
Speak with an experienced Ontario real estate lawyer to get assistance with your real estate matter.
Serving Clients Across Ontario
Remote Services Available
Client Focused & Flexible
What Is a Condition in a Real Estate Contract
A condition is a clause in your purchase agreement that must be met for the deal to move forward. Conditions protect both buyers and sellers. They give you time to confirm important facts before the agreement becomes firm. If a condition is not satisfied within the agreed time, the contract can end without penalty.
The most common conditions in Ontario deals deal with financing, a home inspection, and a status certificate review for condominiums. A financing condition gives you time to confirm your mortgage. An inspection condition lets you check the property for serious defects. A status certificate condition lets your lawyer review the financial and legal health of the condominium corporation before you commit.
What Is a Condition Precedent
A condition precedent is a requirement you must satisfy before the parties have to complete the purchase. When you and the seller sign the offer, you already have a binding agreement. Neither side has to close, though, until the condition is met or waived. If the condition fails within the set time, the agreement becomes null and void, and the deposit normally returns to the buyer.
Common Conditions Precedent in Ontario Real Estate
These four conditions cover most residential deals. Each example shows wording close to what you will find in a standard offer.
Financing Condition
This condition gives you time to confirm your mortgage. If your lender declines you, you can end the deal and recover your deposit.
This Offer is conditional upon the Buyer arranging, at the Buyer’s own expense, a new mortgage on terms satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice that this condition is fulfilled within five (5) business days after acceptance, this Offer becomes null and void and the deposit is returned to the Buyer in full without deduction.
Home Inspection Condition
This condition lets you hire a qualified inspector and walk away if the report turns up serious problems.
This Offer is conditional upon the Buyer obtaining, at the Buyer’s own expense, an inspection report from a qualified home inspector within five (5) business days after acceptance. If the report reveals defects the Buyer finds unacceptable, the Buyer may end this Offer by written notice to the Seller within that period, and the deposit is returned in full.
Status Certificate Review Condition for Condominiums
This condition lets your lawyer review the condominium corporation before you buy. Under section 76 of the Condominium Act, 1998, the corporation must deliver the status certificate within 10 days of a written request and the fee, which is capped at $100 including HST. That is why this review period usually runs about 10 business days.
This Offer is conditional upon the Buyer’s lawyer reviewing the status certificate and attached documents for the unit within ten (10) business days after the Buyer receives them. If the lawyer finds the financial or legal status of the condominium corporation unsatisfactory, the Buyer may end this Offer by written notice to the Seller before the period expires, and the deposit is returned in full.
Sale of the Buyer’s Existing Home Condition
This condition lets you buy a new home while you still need to sell your current one. If your sale does not firm up in time, you can walk away.
This Offer is conditional upon the Buyer entering a firm agreement to sell the Buyer’s existing home within fifteen (15) days after acceptance. If the Buyer does not secure a firm sale within that period, this Offer becomes null and void and the deposit is returned to the Buyer in full.
What Is a Condition Subsequent
A condition subsequent ends or changes an agreement that already binds you when a named event happens, or fails to happen. The obligation exists from the start, and the named event can switch it off later. This idea is part of general contract law, but you rarely see it in Ontario real estate because most conditions are written as precedent to keep things clear once the offer is signed.
A few situations behave like a condition subsequent. Here are two examples.
- Seller’s right to cancel. The agreement may let the seller end the deal if the seller cannot secure a replacement home by a set date.
- Buyer’s later sale obligation. The deal may proceed, but the buyer keeps the right to end it if the buyer’s current home does not sell within a set period.
In most deals, lawyers draft these protections as conditions precedent instead, so everyone knows the deal is not firm until the issue is resolved. That avoids arguments after the offer is signed.
Can You Waive a Condition in Ontario
Often yes. A condition written for your benefit can usually be waived if your offer gives you the power to waive it. That is why a standard Agreement of Purchase and Sale includes a waiver clause. It lets you drop a condition and firm up the deal on your own.
There is an important limit. Canadian courts treat some conditions as a true condition precedent, which depends on a future event controlled by an outside third party. The Supreme Court of Canada set this rule in Turney v. Zhilka, a 1959 case about a land sale that depended on a village council approving annexation and a subdivision plan. The Court held that the buyer could not waive that condition on their own, because until the outside event happened, neither side had to perform.
The practical takeaway is simple. Read your offer for an express right to waive, and confirm the condition is one you can satisfy or control. If the condition depends on someone outside the deal, you may not be able to waive it without the seller’s agreement. This same logic shows up in business and commercial contracts too, which is one reason careful drafting matters.
For a wider look at how Ontario contracts form and bind the parties, see our guide on what makes a contract legally binding. If your deal is on the business side, an Insight Law business lawyer can help with conditions in commercial agreements.
How a Conditional Deal Becomes Firm
A conditional deal becomes firm in one of two ways. You either confirm the condition was met with a Notice of Fulfillment, or you give up the condition with a Waiver. Both turn a conditional offer into a firm one, but they protect you very differently.
A Notice of Fulfillment is your written confirmation that a condition precedent was satisfied, such as financing approval or a clean inspection. Once you sign and deliver it within the condition period, that condition is met and the deal moves ahead. If you fail to deliver it in time, the agreement can become void and the deposit usually returns to the buyer.
A Waiver is different. You use it when you choose to give up a condition even though it was not satisfied. Say your financing did not come through, but you still want the home. You can sign a Waiver to remove the financing condition. The risk is real. Once you waive it, you can no longer cancel the deal based on that issue.
| Aspect | Notice of Fulfillment | Waiver |
| What it means | You confirm the condition was met | You drop the condition even though it was not met |
| When you use it | Your financing or inspection came back fine | You decide to proceed without satisfying the condition |
| Effect on the deal | The deal becomes firm | The deal becomes firm and you give up that protection |
| Main risk | Low, the condition was satisfied | Higher, you lose the right to cancel based on that issue |
What Happens If a Condition Is Not Met
When a valid condition fails and you give written notice on time, the deal ends and your deposit normally comes back to you in full. The key words are valid and on time. Miss the deadline or skip the written notice, and you can lose the protection the condition gave you.
Deposits in Ontario are commonly about 5 percent of the purchase price. On a home priced at $1,000,000, that is roughly $50,000. The listing brokerage holds the deposit in trust, and it can only be released with a mutual release signed by both parties or a court order. If your deal is already firm and you cannot close, you risk losing that deposit, and the seller can sue for the shortfall if the home later sells for less.
Most condition disputes I see come down to two things, poor coordination of deadlines which end up getting missed and verbal promises that were never put in writing. Track every date in your offer and deliver your notices in writing. That habit protects your rights far more than any single clause.
Demet Altunbulakli, Founding Lawyer, Insight Law Professional Corporation
Frequently Asked Questions
What happens if a condition precedent is not met on time?
The offer usually becomes null and void. Neither side has to close, and the deposit normally returns to the buyer in full. You generally need to give written notice within the condition period, so a missed deadline can cost you that protection.
Can you waive a condition in an Ontario offer?
Often yes, if your offer gives you the power to waive and the condition exists for your benefit. Standard agreements include a waiver clause for this reason. Courts treat some conditions as a true condition precedent you cannot waive on your own, a rule that traces back to Turney v. Zhilka.
What is the difference between a Notice of Fulfillment and a Waiver?
A Notice of Fulfillment confirms the condition was satisfied. A Waiver drops the condition even though it was not satisfied. Both make the deal firm, but a waiver means you give up the protection that condition gave you.
Is a conditional offer legally binding?
Yes. Once you and the seller sign, you have a binding agreement. The conditions decide whether you must complete the purchase. Until they are met or waived, neither side has to close, and either side can usually walk away if a valid condition fails.
How long do you get to satisfy conditions in Ontario?
It depends on what you negotiate. Financing and inspection periods often run about five business days. A condominium status certificate review often runs about 10 business days, partly because the condo corporation has up to 10 days under the Condominium Act, 1998 to deliver the certificate.
Do you lose your deposit if you cancel during the condition period?
No, not if you cancel properly. When a valid condition fails and you give written notice on time, the deposit normally returns to you. You risk your deposit when the deal is already firm and you cannot close.
Summary
A condition precedent must be satisfied or waived before your deal becomes firm. A condition subsequent ends or changes a deal that already binds you. In Ontario real estate, you will mostly work with conditions precedent, and the line between keeping and losing your deposit usually comes down to deadlines and written notice.
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.
