Brian Madigan LL.B., Broker
BRMadigan@Rogers.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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Rejecting the Waiver: Is that Allowed?

December 4, 2018 - Updated: December 6, 2018

Rejecting the Waiver: Is that Allowed?
 

Increasingly, Listing Agents are complaining about receiving Waivers rather than Notices of Fulfillment.
 

They want the “NOF”. They resent receiving the Waiver. They say that the Buyer’s Agent should “go back to school” to learn the right way of doing things.
 

Historically
 

There was a problem, and that was that you can’t really waive a True Condition Precedent. That’s the one where the consent of a third party is required. For example, the Buyer agrees to take over the Seller’s first mortgage with ABC Bank. But, this isn’t going to happen unless ABC Bank agrees.
 

So, the Notice of Fulfillment was created to use instead of a Waiver by the Buyer once he secured permission to assume the mortgage by ABC Bank. The non availability of the waiver was decided by the Supreme Court of Canada in Turney v. Zhilka, [1959] SCR 578.

 

The Problem
 

There are other Conditions Precedent before proceeding with the closing, which don’t involve any third party.
 

Consider either an Inspection or Financing condition. The Buyer simply wants to proceed with the transaction, and shop for a mortgage later, or proceed and not be bothered with the inspection, even though there are such clauses contained in the Agreement of Purchase and Sale.
 

The Listing Agent wants an NOF, apparently, concluding that the Buyer now has obtained and has satisfactory, unconditional financing. No, that’s not what it means. The Bank may still pull the financing before closing. There were likely conditions associated with the approval which may not be accepted by the Bank.
 

Additionally, the Listing Agent wants an NOF, apparently, concluding that the Buyer has conducted an inspection and now is satisfied with the condition of the building. No, once again, there’s no statement by the Buyer to that effect. Maybe they were happy and maybe they weren’t.
 

Later, if there were litigation on the contractual failure to proceed, evidence would be obtained from the Bank and the Home Inspector by having them testify under oath. They can be subpoenaed, if required, by the Seller.
 

Waiver
 

Let’s have a look at the wording in the usual financing and inspection clauses:
 

Financing
 

This Offer is conditional upon the Buyer arranging, at the Buyer’s own expense, a new Charge/Mortgage for not less than ($ ), bearing interest at a rate of not more than % per annum, calculated semi-annually not in advance, repayable in blended monthly payments of about ($ ), including principal and interest, and to run for a term of not less than years from the date of completion of this transaction. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than p.m. on the day of _____, 2018 , that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.
 

Inspection
 

This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer’s own expense, and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than p.m. on the day of_____ , 2018 , that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.
 

TRUE CONDITION PRECEDENT Wording
 

The Buyer agrees to assume the existing Charge/Mortgage held by for approximately , ($__________ ), bearing interest at the rate of % per annum, calculated semi-annually not in advance, repayable in blended monthly payments of ($ ), including both principal and interest, and due on the day of , 20 . This Offer is conditional upon the Buyer obtaining the approval of the Chargee/Mortgagee to assume the existing Charge/Mortgage. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than p.m. on the day of_____ , 20 , that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Buyer hereby agrees to proceed immediately to make an application and provide such material as may be required by the Chargee/Mortgagee for approval of the Buyer as the Chargor/Mortgagor.
 

NOTE: This clause is a true Condition Precedent and neither a Seller nor a Buyer is entitled to waive this condition.
 

The above underlined section appears in the instructions. Please note, you can’t use the Waiver, since this is indeed a True Condition Precedent.
 

So, for regular Conditions Precedent, there are two choices:
 

  1. NOF, see italics: notice… that this condition is fulfilled,
  2. Waiver: see highlighted: may be waived at the Buyer’s sole option.
     

When we move to the True Condition Precedent, there is only the one choice:
 

  1. NOF, see italics: notice… that this condition is fulfilled,
     

The Waiver is not allowed. There is no reference to it. It’s not an option.
 

Rejection
 

Let’s consider whether the Listing Agent who apparently wants an NOF can simply reject the Waiver and demand the NOF for inspections and financing. Have a look at the clause. There are two choices made available in the Agreement, not one, and no statement to the effect that the Buyer has to choose the NOF because the Listing Agent likes it better.
 

The Buyer is provided the legal right to use a Waiver!
 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: true conditions precedent notice of fulfillment regular conditions use of waiver turney v. zhilka ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

BRMadigan@Rogers.com

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