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More
about "Subject"
Clauses
The purpose of a subject clause (also
known as a condition precedent) contained
in an offer of purchase is to set out a
specific condition that must be fulfilled
before the sale can go through.
Subject clauses must be carefully and
precisely worded. You would be wise to get
professional help in composing them;
however, it is ultimately your
responsibility to be sure the clauses mean
what you want them to mean.
There can be as many subject clauses as
you are able to negotiate with the seller;
however, the fewer you put into an offer,
the more serious you seem as a buyer and
the better the chance is that your offer
will be accepted. Remember that you are,
in effect, asking the seller to take the
property off the market during the period
while you are attempting to fulfill the
conditions you have set.
Some possible items you might wish your
purchase to be "subject to" include:
| A satisfactory
professional building inspection.
The arrangement of the financing
you require.
The lender’s approval of your
application to assume the seller’s
existing mortgage.
The sale of your present home. |
When you place "subject to" clauses on
your offer to purchase, you are required
to use every reasonable effort to see that
the conditions are satisfied. Once you
have fulfilled the conditions, written
notification should be given to the seller
that you are removing the subject clauses.
If you are unable to meet the
conditions after making every reasonable
effort to do so, the contract ends and
there is no legal obligation to complete
the purchase.
A seller may wish to accept your offer
containing subject clauses, yet still be
free to consider other offers until you
have removed the conditions.
To allow him or herself this freedom,
the seller may ask for a clause in the
agreement that permits the seller to
require you to remove all subjects
conditions within a short, specified time
period (usually between 24 and 72 hours)
if the seller receives another attractive
offer. If you cannot do so, your
conditional offer comes to an end. Vendors
are most likely to request this time
clause where you have made an offer which
is subject to the sale of your current
home.
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