Everyone has heard of a financing condition or an inspection condition, but there are many other conditions that are common in real estate. Offers may contain conditions that benefit the buyer or the seller or both.
What is the difference between a term and a condition?
From a real estate perspective, a condition is something that is demanded as an essential part of an agreement, whereas a term is something that is agreed to in the contract but the contract is not conditional upon its completion. For example, the buyers might include a condition that they can get financing and a term that the sellers steam clean the carpets. If the buyers don’t remove their financing condition the sale does not proceed. If the sellers don’t steam clean the carpets the sale still proceeds even though the term is not met. After the possession the buyers will have to try and get compensation from the sellers for not cleaning the carpets.
Common buyer’s conditions include:
- Financing
- Inspection
- Condo documents
- Sale of home
- Lawyer’s approval of the contract
Common buyer’s terms include:
- Small cleaning or repair work
- Deck or landscaping completion
Sometimes sellers may have conditions. For example, if the seller has already accepted an offer, and is accepting a second offer as a backup, they will need to insert a condition to reflect the fact that the offer is only accepted if the first offer does not proceed.
Over the years we’ve seen many terms and conditions. You can try and have just about any condition accepted that you can think of, but it may not make sense strategically to do so. Every situation, and every home is different, so make sure you get the advice you need.
