Humber/Ontario Real Estate Course 2 Exam Practice

Which of the following accurately describes a condition precedent in a real estate transaction?

1. A condition that must be fulfilled before a real estate contract becomes binding.

2. A condition that allows the buyer to back out of a deal without penalty.

3. A financial term that must be agreed upon by both parties.

4. A mandatory disclosure by the seller before closing.

The correct answer is: A condition that must be fulfilled before a real estate contract becomes binding.

A condition precedent in a real estate transaction is a requirement that must be met before a contract becomes binding. This condition acts as a contingency that must be satisfied for the parties to be legally obligated to fulfill their obligations under the contract. In other words, until this condition is fulfilled, the contract is not considered in effect. This distinguishes it from the other options: B is describing a condition allowing the buyer to back out, C refers to financial terms, and D is about mandatory seller disclosures, none of which directly pertain to the formation of the contract itself.