Condition Precedent vs Subsequent: What’s the Difference?
Any real estate contract in Ontario you see has the usual format when you are buying or selling. But look closely and you can spot special conditions. These are the clauses that guide you and the other about something they need to do. You have ‘conditions’ to fulfill so you can get on with the closing services without hassle. Whether those things should be done before or after the contract signing happens is where condition precedent vs condition subsequent comes into play. Let’s compare these differ, as you now have the power to change or even end a transaction. Read on!
How a Condition Precedent Works in a Deal
There are things you need to do or your seller has to get done for a real estate deal. That is called condition precedent, where each term is like a checkpoints that you cross to get to property transfer closing process. As the word precedence implies here, contractual obligation begins only after the required step is done. You can rest easy knowing that you are a part of a deal that is safe and practical.
Timing of conditions is one also everything when you want to add or change a clause in your property contract. Like when the seller can only fulfill their duty when a buyer offers the report of a home inspection. The starting time matters, and time period itself is enough for you to mull over your decisions making change that the contract wants you to.
Every term before you sign a real estate contract needs your approval, and you have a clear performance requirement. This means that someone (you or the other party) needs to complete an action, like getting a mortgage. Some other things that fall under these conditions are review of paperwork, or shareholder votes if your deal is commercial.
And if you or the other party cannot complete the clause? Then your contract can simply cease to exists.
Your contract gains full legal enforceability and becomes official once the needed term is met. This shift removes any misgivings and shows both sides that the contract is now locked in. Your real estate lawyer can tell you more about how condition precedent vs subsequent cases differ. Make sure you have one by your side before and not just at the closing. This will help you can go through with the deal without being held back by heavy legal jargon.
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How Condition Subsequent Can Cause Changes
You have signed and your contract is pretty much done and dusted. But there are events that occur later. This is what real estate legal terms define as a condition subsequent.
Unlike a precondition, these work the opposite way because the contract is active. That said, these later events cannot conflict with agreed-upon terms, or the end result here is contract termination.
This is often a part of purchase agreement clauses for real estate deals in Ontario. These are added when there is a good chance that a sudden event is likely, which can affect you and your buyer/seller.
It may sound odd to you that there is still a possibility that things take effect after both sides are already in. Real estate deals may not include smooth sailing for you outside theory, and a post-condition can help you have an exit path when you get caught in an unusual deal.
A future event can cancel or change the contract even if you and the other party are already part of the signed deal. What may seem like an extra delay can become time that everyone needs to adjust to any changes after signing.
Everything depends on whether the subsequent event actually takes place. If it does, the parties can change or end the contract without a penalty. You may actually get some breathing room and keep yourself from being stuck in a deal that no longer fits your needs or goals.
Key Points in Condition Precedent vs Condition Subsequent
There’s usually always a legal consequence when you do you comply with a term in your property deal. But every condition clause can make things more flexible. Whenever you are about to get into a contract, go for a law firm’s help to know what these special clauses are and how the two types differ.
Trigger Event
There is some action that is called an obligation trigger that puts a condition in action for a deal. The trigger is a duty fulfilled when it comes to conditions precedent. On the other side, a trigger for conditions subsequent is something that ends your deal.
Contract Structure
Simple contract law works in a way that precondition terms put your actions on hold before they can even start. The subsequent clause ends your duties, but after you and every one signs the contract. Both options pretty much shape the way your property contract works from the get-go!
Event Occurrence
Your contract stays active until something happens to end a condition subsequent. Nothing moves forward until the needed step is done when the subsequent terms are involved, which makes both types of conditions important when it comes to how you can and cannot take steps in your deal.
Binding Power
A precedent will matter in how valid your contract is. The reason for this is because the clause decides when yours and the other party’s duties start. You will see in subsequent terms how a conditional clause can free parties after the contract is signed.
Let us Help You Achieve Your Real Estate Goals
It can be daunting to go through a real estate contract alone when you have little to no know-how of how special clauses and other parts work. Condition precedent vs condition subsequent itself is a matter that needs some pondering so that you can move on with signing your deal safely. That’s where we come in.
At Estofa Law, we keep your interests safe from the start when you get your contract to read. We have helped hundreds of clients avoid risky terms and deals, and have secure start with their real estate deal. Book a consultation today and we’ll make sure you get to your closing error-free and completely aware of what you are signing.
