Thursday's Ask The Broker, May 3rd

We've been declined for financing and can't buy the property we put an offer in on.  Do I have to sign a non-waiver or does the deal just die?

Many people are under the impression that once that condition day comes and goes, the deal is dead and the deposit is automatically refunded to the buyer.  This may not always be the case. 

The Residential Offer To Purchase states:

  • 3.5 The Deposits shall be held in trust for both the Seller and the Buyer and shall be:
  • (a) applied against the Commission and paid directly out of trust to the brokerage(s) when the Commission is earned in accordance with the terms of the Listing Contract;
  • (b) refunded forthwith to the Buyer if this offer is not accepted;
  • (c) refunded forthwith to the Buyer upon the Buyer’s cheque clearing the brokerage’s trust account if a condition is not satisfied or waived (as per clauses 8.5 and 8.6) or the Seller fails to perform this Contract; and
  • (d) forfeited to the Seller if this offer is accepted and all conditions are satisfied or waived and the Buyer fails to perform this Contract.


  • 8.4 Unless otherwise agreed in writing, the Buyer’s Conditions are for the sole benefit of the Buyer and the Seller’s Conditions are for the sole benefit of the Seller. The Buyer and Seller must use reasonable efforts to satisfy their respective Conditions.
  • 8.5 The Buyer and the Seller may unilaterally waive or acknowledge satisfaction of their Conditions by giving a written notice to the other party on or before the stated Condition Day. If that notice is not given, then this Contract is ended immediately following that Condition Day.
  • 8.6 Subject to clause 8.4, the Buyer and the Seller may give written notice to the other party on or before the stated Condition Day advising that a Condition will not be waived, has not been satisfied and will not be satisfied on or before the Condition Day. If that notice is given, then this Contract is ended upon the giving of that notice.

Operationally we look at what we need as far as a to track that deal file and ensure the proper checks and balances are in place.  When we have a deal file being reviewed by our clerical, they have no working knowledge of that file and would not know if the deal is ended, or we are waiting on condition removal paper work and the deal is proceeding, or if the deal is in need of an extension and that paper work is m late in coming.  So from a broker and office stand point we need that paper work.

We need that paper work, not only to provide us with a clear direction, but because we have a contracual obligation and fiduciary duty to our seller to answer questions such as "have the buyers used reasonable efforts to satisfy that condition?".  Did the buyer even try and get financing?  did they actually book that inspection and the results provided to us, did they try and satisfy that condition?  Conditions on an offer to purchase are not escape clauses.  They are their because the buyer intends to buy a property and has some diligence to do.  So yes you do need paperwork to demonstrate that you were not approved, you did try and now you are unable to proceed.  It is not about making you feel embarrassed it's about having the proper documentation. 

We always refer back to the contract.  The contract is clear that a buyer must use all reasonable efforts to satisfy a condition. As stated in 8.4 and it also clear regarding communicating notices in writing.  However disputes do arise.  Who decides?

  • 3.7 If there is a dispute between the Seller and the Buyer as to entitlement to the Deposits then:
  • (a) the brokerage holding the Deposits shall review the circumstances, determine entitlement and pay the money to the party who is entitled to the Deposits;
    (b) if no reasonable conclusion can be made in regard to (a) above, the brokerage shall notify the parties
  • to the Contract in writing and shall pay the money into a lawyer’s trust account;
  • (c) the parties agree to allow the lawyer or the brokerage to deduct from the Deposits a reasonable fee and costs incurred for dealing with the Deposits;
  • d) a brokerage and/or lawyer acting in good faith under this clause shall not be liable to either party for any damages associated with the handling of the Deposits, except as arising from the negligence of the brokerage or lawyer.

So to review as the broker, I have a contract with the seller, I am holding that deposit in trust and I have to have enough information to refund a deposit or not.  I recommend you have you waivers and non waivers in writing.

The Broker,

Patrick Galesloot


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