Your Guide On Conditional Home Sales
Posted by Admin Staff on Monday, March 29th, 2021 at 3:26pm.
Have you ever found a home that you were interested in buying, only to find that near the bottom of the page the status reads, "conditional sale" ? What does that mean? Is the home sold, or isn't it? Sold listings are taken down since they're no longer active on the market, so why is a home that is conditionally sold still up there?
A conditional sale is much like the photo above. Each domino represents each part of the agreement, and the action of the dominoes falling one after the other represents these parts being completed/agreed upon. The hand stopping the action represents a condition, or a part of the agreement, that has not yet been met. Simply put, when a home is ‘sold conditionally’, it means that a buyer and seller have come to an agreement on the sale of the property (hence, sold). However, there are conditions that have to be met as part of the agreement for the whole deal to be considered binding (hence, conditionally).
Can you put an offer on a house that is conditionally sold?
The short answer is yes. You can make an offer on a house or condo that is conditionally sold, but you gotta remember that the seller has already accepted an offer from another buyer. The seller would have to be released from that deal in order to avoid a legal nightmare of selling their home to more than one buyer. Most of the time it's not worth it to put an offer in on one of these solds, but there are a few exceptions to this rule. You and your Realtor can talk about these exceptions at length, determining if your situation and the conditionally sold house in question match up to one of the exceptions.
Let's go deeper into the topic!
Terms To Become Familiar With
Agreement of Purchase and Sale - a written contract between a seller and a buyer for the purchase and sale of a property. In the agreement, the buyer agrees to purchase the property for a certain price, provided that a number of terms and conditions are satisfied. The process begins when the buyer makes an offer, which is permanent for a certain time period. If there are no counter offers, and the agreement is signed by the seller within the time period the offer was left open, then the agreement becomes legally binding. At this point, the agreement cannot be cancelled unless both parties agree. If the offer is not signed before the offer expires, it becomes void.
Fixtures - improvements made to a property that are attached or can't be easily removed without causing damage to the property. Examples include: water heaters, built-in cabinets, light fixtures, etc. These items are assumed to be included in the sale of the home, unless they are specifically excluded in the agreement.
Chattels - moveable items of personal property, that have to be listed in the agreement if they are to be part of the sale of the home. Examples include: appliances, lawn and garden equipment, blinds, drapes, etc.
Requisition Date - the time within which the homebuyer has to examine the title, and complete all other searches. It's within the buyer’s best interest to do a number of searches to ensure that there are no problems with the property. These include things like searching the registered ownership of the property with the land registry, checking that the property complies with zoning regulations, and searching for any outstanding municipal work orders. Usually, the buyer's agent and lawyer will handle this.
Removal Date - the date on which conditions must be fulfilled, waived, or removed for the agreement to be binding, and for the transaction to proceed to the closing stage.
Closing Arrangements - all relevant documents are exchanged by the lawyers on either side of the agreement, and the sale is finalized.
Completion Date / Possession Date - the date that the seller must give vacant possession of the property to the buyer.
Common Conditions On An Offer To Purchase
This offer is conditional upon the buyer receiving approval of a mortgage on the property, in the amount set forth in the agreement on or before a given date. This condition is typically included to protect the buyer in the event that they're unable to secure the required financing, causing them to lose their deposit.. and potentially being sued by the seller for non-completion of the transaction.
Subject to Home Inspection
This means that the offer is conditional upon the inspection of the property by a professional home inspector, and the obtaining of a report satisfactory to the buyer in their sole discretion on or before a given date. This clause is standard and appears in almost every residential real estate transaction. This condition gives the buyer the right to have the home professionally inspected by a certified home inspector to evaluate the house that's being sold. This condition is the buyer’s way of being protected from the unknown deficiencies in the home. The house must pass the inspection for the purchase to proceed, or the buyer and seller may further negotiate their agreement to account for the findings in the home inspection.
Subject to Encroachment Check
This means that the offer is conditional upon the buyer obtaining and approving a satisfactory encroachment check on or before a given date. An encroachment check will help the buyer determine if the building(s) on the land comply with zoning bylaws, or if there are any encroachments by building(s) onto adjacent land. The survey will also determine whether any building(s) from neighbouring land encroach upon the subject’s property. A recent survey can disclose the location of fences to the property boundary, and if there have been recent additions to the property. Finally, the survey helps to determine whether anyone else may have a claim against the subject property, or if any rights of way or easements exist.
Subject to Gas Line Encroachment
The offer is conditional upon the buyer obtaining and approving a satisfactory gas line encroachment check on or before a given date. This condition is usually standard, and is simply a request submitted to SaskEnergy to facilitate an inspection of the natural gas facilities at the property. Encroachments are classified in the following ways:
1. A pipeline encroachment is any building or structure located over, or in some cases near, the natural gas pipeline or facility, including facilities that are not situated in an easement. A natural gas facility may include, but is not limited to, the pipeline itself, regulators, shut-off valves, meters or gas mains.
2. An easement encroachment generally consists of any tree, shrub, pit, well, foundation, pavement, building, or structure located on a pipeline easement. Urban pipeline easements are identified on the property title.
Subject to Property Information Disclosure
This means the offer is conditional upon the buyer obtaining and approving a satisfactory property information disclosure report on or before a given date. A property information disclosure statement is provided by the City of Yorkton or the necessary municipality at the request of the buyer. The information provided shows a search of existing building records, including building code, plumbing code, and deficiencies of the property at the time of the last inspection. The report will also outline all building permits that have been issued for the property, and whether there were any deficiencies at that inspection. This report will help the buyer determine whether there has been any unpermitted work done on the property, and if any deficiencies exist.
Subject to Property Condition Disclosure Statement (PCDS)
This means that the offer is conditional upon the buyer viewing and approving the PCDS on or before a given date. A PCDS is a document completed by the homeowner at the time of listing the home. In this report, the seller is required to disclose defects that they are personally aware of. The seller is responsible for the accuracy of the answers in the disclosure, and can be held accountable by law for any inaccuracies they knowingly provide.
Making Your Own Conditions
You should know that you can also add any additional conditions that you feel are important for the seller when considering your offer. These include: the sale of your own property, removal of garbage or debris from the back yard, leaving window treatments, leaving appliances, leaving special lighting, etc. While the conditions are meant to protect you and you should take advantage of them, beware of including too many in the offer. You may lose the deal if the seller should reject your offer. Your Realtor will be able to help you best define which conditions to include in your offer, and guide you through the whole process.
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