We’re no longer in a strong seller’s market, and conditional clauses are making a comeback! Here’s a quick refresher on the most common conditional clauses in real estate offers.
Quick Note: While these are the most common clauses, the number of days and specific wording can vary depending on the market. Other types of conditional clauses exist, but these are the ones you’ll encounter most frequently.
What Is a Conditional Clause?
A conditional clause is a provision in an offer that outlines specific terms that must be met for the deal to proceed. If the conditions are not satisfied, the agreement becomes void, and the buyer’s deposit is returned.
Every conditional clause must include:
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Who benefits from the clause (e.g., buyer, seller, or both).
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What the clause is conditional on (e.g., financing approval, property inspection).
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A timeframe (e.g., a set number of business days after acceptance or a specific deadline).
If the specified conditions are not met within the agreed timeframe, the deal is canceled, and the buyer’s deposit is refunded.
Conditional vs. Firm Deals
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A deal is considered "Conditional" when an offer is accepted, a deposit is provided, but certain terms still need to be met before the agreement is legally binding.
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A deal is considered "Firm" when there are no conditional clauses. In this case, the agreement is legally binding from the moment the offer is accepted, and the buyer has no opportunity for additional due diligence (which is why it’s essential to complete it beforehand).
The Acceptance Date is the day both parties agree to the offer. Many timelines in conditional clauses are based on this date.
Most Common Conditional Clauses
1. Financing Condition
Typical timeframe: 3-5 business days from the acceptance date.
A financing condition allows the buyer time to secure mortgage approval. If they cannot obtain financing within the specified period, they can back out of the contract and receive a full refund of their deposit. This clause is particularly common when a buyer requires a mortgage to complete the purchase.
2. Inspection Condition
Typical timeframe: 3-5 business days.
An inspection condition allows the buyer to have the property examined by a qualified inspector within a specific period. The offer is conditional upon the buyer being satisfied with the inspection report.
3. Status Certificate Review (For Condos Only)
Typical timeframe: 10 business days for the seller/management to provide the status certificate + 2-3 business days for the buyer’s lawyer to review it.
The status certificate contains critical information about the condominium corporation’s financial health and any rules and regulations owners must follow.
This clause allows the buyer to:
4. Lawyer Review Condition (Common in Assignment Sales)
This clause is primarily used in assignment sales, where the buyer is purchasing an agreement to buy a pre-construction property from another buyer.
Since assignment sales involve reviewing both the original purchase agreement and the new assignment contract—often hundreds of pages long—a lawyer review clause ensures the buyer (or seller) has time to:
This clause is especially useful for buyers/sellers unfamiliar with assignment sales.
Conditional Clauses & Market Conditions
The decision to include conditional clauses in an offer is always up to the buyer.
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In a strong seller’s market with multiple offers, sellers often prefer firm offers with no conditions. This poses a risk to the buyer, who must complete all due diligence before submitting an offer.
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In a balanced or buyer’s market, sellers are typically more open to accepting conditional offers.
A professional and ethical real estate agent will always educate buyers on the risks of a firm offer and advise them to consult relevant professionals (lawyers, mortgage brokers, inspectors, accountants, etc.) when necessary. Real estate agents provide real estate advice, while legal and financial matters should be addressed by the appropriate experts.
At the end of the day, whether to include conditional clauses in an offer is entirely up to the buyer.
