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Mortgage Glossary

What is Conditional Offer?

A conditional offer is a purchase offer that becomes binding only if certain conditions are satisfied, such as arranging financing, passing a home inspection, or reviewing a status certificate. The conditions protect the buyer by allowing them to walk away if a requirement is not met. Once all conditions are waived, the deal becomes firm.

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Quick answer

A conditional offer is a purchase offer that becomes binding only if certain conditions are satisfied, such as arranging financing, passing a home inspection, or reviewing a status certificate. The conditions protect the buyer by allowing them to walk away if a requirement is not met. Once all conditions are waived, the deal becomes firm.

Also known as: conditional purchase offer, offer with conditions

Key points

  • A conditional offer is binding only once its conditions are satisfied and waived.
  • Common conditions include financing, home inspection, and status certificate review.
  • Each condition has a deadline that must be met to keep the deal alive.
  • If a genuine condition fails, the buyer can usually exit and recover the deposit.
  • Waiving all conditions in writing makes the offer firm and binding.

Conditional Offer explained

A conditional offer includes clauses, often called conditions or subjects, that must be fulfilled within set deadlines before the purchase is final. Common conditions cover financing approval, a satisfactory home inspection, the sale of the buyer's current home, lawyer review, or, for a condo, review of the status certificate.

Until the conditions are met and formally waived, the buyer can usually exit the deal and recover their deposit if a condition genuinely fails. Once every condition is waived in writing by its deadline, the offer becomes firm and binding, and the transaction proceeds toward closing on the agreed date.

What a Conditional Offer is for

A conditional offer exists to protect the buyer from committing to a purchase before key unknowns are resolved. It gives time to confirm financing, uncover defects through an inspection, or review condo documents, so the buyer is not locked into a home that turns out to be unaffordable or problematic.

How it can help you

Conditions let you commit to a price while keeping an exit if financing falls through or an inspection reveals serious issues. A financing condition is especially valuable when your mortgage is not finalized. Lenderoo shops 40+ lenders for free, helping you firm up approval within the condition window so you can waive with confidence.

When it comes up

A conditional offer comes up when you want a particular home but still need to confirm your mortgage and have the property inspected. You submit an offer conditional on financing and inspection, giving yourself, say, five to ten business days to secure approval and complete the inspection before deciding whether to proceed.

Example: Financing and inspection conditions

Suppose you offer $550,000 on a home with conditions for financing and a home inspection, each with a five-business-day window. During that time you finalize your mortgage approval and hire an inspector.

If financing comes through and the inspection reveals no major problems, you sign a waiver for both conditions and the deal becomes firm. If your lender declines or the inspection finds a serious defect, you can walk away under the condition and recover your deposit.

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Questions & answers

Conditional Offer: frequently asked questions

Common questions Canadians ask about conditional offer.

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Related mortgage terms

Agreement of Purchase and Sale (APS)

The legal contract that sets out the agreed terms of a home purchase between buyer and seller.

Read definition

Conditional Approval

A lender approval subject to conditions like income verification and appraisal.

Read definition

Home Inspection

Professional examination of a property's condition.

Read definition

Deposit

Money submitted with an offer to show good faith, held in trust and credited toward the down payment.

Read definition

Status Certificate

A document disclosing a condo corporation's financial and legal status to a prospective buyer.

Read definition
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