Humber/Ontario Real Estate Course 2 Exam Practice

What defines a true condition precedent in a real estate transaction?

1. Can be waived.

2. Must be fulfilled by a third party.

3. Would not typically be used when obtaining a severance.

4. Is binding even if the condition is not fulfilled.

The correct answer is: Must be fulfilled by a third party.

A true condition precedent in a real estate transaction is a condition that must be fulfilled by a third party for the transaction to proceed. This means that the completion of the condition is outside the control of the buyer or seller, relying on an external party to meet the requirement. In the context of a real estate transaction, examples of conditions that may need to be fulfilled by a third party could include obtaining approval from a zoning board or a financial institution, or other similar external factors. Option A is incorrect because a true condition precedent, by definition, cannot be waived by the parties involved in the transaction. Option C is incorrect because true conditions precedent can be used in various real estate transactions, including when obtaining a severance, depending on the specific requirements of the transaction. Option D is incorrect because a condition precedent is not binding if the condition is not fulfilled; it is a condition that must be met for the transaction to proceed.