Humber/Ontario Real Estate Course 2 Exam Practice

How should a condition precedent in an agreement of purchase and sale for a buyer arranging a new first mortgage typically be structured?

1. As a requirement for a certain interest rate.

2. As the first condition in a multiple condition offer.

3. As a requirement to obtain mortgage insurance.

4. To include a waiver provision.

5. To require an appraisal by the mortgage lender.

6. With the approval of a financial advisor.

The correct answer is: To include a waiver provision.

In an agreement of purchase and sale, a condition precedent for a buyer arranging a new first mortgage should typically be structured to include a waiver provision. This provision enables the buyer to walk away from the deal without penalty if they are unable to secure financing as agreed upon. This protects the buyer from being forced to proceed with the purchase if they cannot obtain the necessary financing. The other options can be considered less common or unrelated to the purpose of a condition precedent for arranging a new first mortgage. For example: - Option A is not necessary as the interest rate negotiation is typically a separate matter from the condition precedent for arranging a new first mortgage. - Option B is about the order of conditions in a multiple-condition offer and not specific to structuring a condition precedent for a new first mortgage. - Option C is related to mortgage insurance and may not always be a required condition for arranging a new first mortgage. - Option E refers to an appraisal by the mortgage lender, which may be a separate requirement but is not specifically related to structuring a condition precedent. - Option F mentions the approval of a financial advisor, which could be helpful but is not a standard aspect of structuring a condition precedent for a new mortgage.