Conditional Sale

What is a Conditional Sale?

A conditional sale is a real estate transaction that becomes legally binding only when specific conditions outlined in the offer are fulfilled within a set timeframe.

Why Conditional Sales Matter in Real Estate

In Canadian real estate, conditional sales provide both buyers and sellers with protection during a transaction. Common conditions include:
- Financing approval
- Home inspection
- Sale of the buyer’s existing home

These conditions must be satisfied by a deadline specified in the agreement. If a condition isn’t met (e.g., the buyer can't secure financing), the buyer can typically walk away without penalty.

Conditional sales are especially important in markets where buyers need flexibility or additional assurances. Sellers may accept such offers depending on market conditions or the buyer's financial strength.

Once all conditions are met, the sale becomes ‘firm,’ and both parties are fully committed. Failing to meet or waive the conditions by the deadline can terminate the deal, so clear communication and prompt action are essential.

Understanding conditional sales helps buyers protect themselves while ensuring sellers understand the implications of accepting conditional offers.

Example of a Conditional Sale in Action

A buyer purchases a home in Edmonton with a condition that their current house sells within two weeks. Once it sells, the conditional sale becomes firm.

Key Takeaways

• Sale depends on meeting agreed-upon conditions.
• Common in buyer-friendly or balanced markets.
• Typical conditions include financing or inspection.
• Protects both buyer and seller from unforeseen issues.
• Sale becomes firm once all conditions are fulfilled.

Related Terms

• Conditional Offer
• Firm Sale
• Financing Condition
• Home Inspection Contingency
• Real Estate Contract