Failure to Waive Conditions and Re-Contracting
| November 02, 2017
Most purchase contracts have conditions, and contracts fall through when buyers do not meet and waive conditions by the agreed upon condition date. Regardless of the type of condition (financing, property inspection, buyer’s existing home sale, etc.), if the buyer doesn’t waive the condition, the deal is finished.
But what happens when both parties want to still reach a deal, and they agree to extend the condition date AFTER it expired? You can adjust the dates on the existing contract, as long as both parties agree, right?
Wrong. When a condition expiry date passes, the contract is null and void. You cannot amend a contract that no longer exists.
What to do if the deadline passes
When a condition removal deadline passes without satisfying or waiving the condition, neither party is bound to continue with the deal.
If both parties want to continue, you must draft a new purchase contract for the sellers to accept.
It may be tempting to simply amend a contract to a point where both sides are happy, but legally the contract is void as soon as the condition date passes. If you proceed with such a contract, you and your clients may run into legal trouble in the future if there are any issues with the purchase.
In the event a conditional removal date passes and buyers did not waive their conditions, it is a best practice to have your clients sign a mutual release. This can help reduce the potential for any misunderstandings in the event one party believed they had an ongoing agreement.
When can I amend contracts?
If your client needs or wants to extend a conditional removal deadline, they can amend the existing offer to purchase if they and the seller agree to an extension in writing, and if the agreement to amend occurs before the deadline.
Real estate professionals need to make sure their clients understand the consequences of these deadlines before they pass. If a client doesn’t think they will meet a condition by the expiry date, they should let you know as soon as possible so you can discuss amending the purchase contract before it’s too late. Have these important conversations with your clients.
It is your responsibility as a real estate professional to give timely advice and take timely action. Make sure your clients understand the consequences of condition expiry dates, and the need to write a new purchase contract if they wish to continue negotiating after an expiry date.