Humber/Ontario Real Estate Course 2 Exam Practice

What is true regarding the relationship between a condition precedent and a condition subsequent in a real estate agreement?

1. A binding agreement involving a condition subsequent is terminated with a mutual release, while a condition precedent requires a termination notice.

2. The condition subsequent can be waived, but not the condition precedent.

3. A binding agreement is created if an offer contains a condition subsequent, but this is not the case with a condition precedent.

4. The removal of a condition precedent relies on the approval of a third party, while no such approval is required with a condition subsequent.

The correct answer is: A binding agreement is created if an offer contains a condition subsequent, but this is not the case with a condition precedent.

Regarding the relationship between a condition precedent and a condition subsequent in a real estate agreement, it is important to understand that a condition precedent is a condition that must be met before the contract becomes binding. In contrast, a condition subsequent is a condition that, once met, can terminate the already binding contract. In the given question, the correct answer is C because it highlights a key distinction between the two types of conditions. When an offer contains a condition subsequent, a binding agreement is created, but with a condition precedent, a binding agreement is not established until the condition is satisfied. This difference is crucial in understanding how these conditions affect the creation and termination of a real estate agreement. Options A, B, and D create confusion by providing incorrect information about the nature of conditions precedent and subsequent, making them incorrect choices in this context.