Condition Subsequent in Real Estate

A condition subsequent is a clause in a real estate contract that sets a condition that, if not fulfilled, will result in the contract being terminated. In other words, it is a condition that must be met in order for the contract to remain in effect. The purpose of a condition subsequent is to provide an escape clause for one of the parties if certain circumstances change after the contract is signed.

For example, a buyer may include a condition subsequent in a real estate contract that requires the seller to obtain a clear title to the property before the sale can be completed. If the seller is unable to obtain a clear title, the contract will be terminated and the buyer will be released from their obligation to purchase the property.

Another example of a condition subsequent in a real estate contract is a financing contingency. This condition requires the buyer to obtain financing within a certain timeframe. If the buyer is unable to obtain financing within the specified time, the contract will be terminated and the buyer will not be obligated to purchase the property.

A condition subsequent can also be used in a real estate contract to protect the seller. For example, the seller may include a condition subsequent that requires the buyer to remove all contingencies within a certain timeframe. If the buyer does not remove the contingencies, the contract will be terminated and the seller will be free to sell the property to another buyer.

When including a condition subsequent in a real estate contract, it is important to be specific and clearly define the conditions that must be met. The timeframe for fulfilling the condition should also be specified. This helps to avoid misunderstandings and disputes between the parties.

It is also important to keep in mind that conditions subsequent can be mutual or one-sided. Mutual conditions subsequent benefit both parties, while one-sided conditions benefit only one party. For example, a financing contingency is typically a one-sided condition that benefits the buyer. On the other hand, a condition subsequent that requires both parties to agree on a closing date is a mutual condition.

In conclusion, a condition subsequent is an important clause in a real estate contract that provides an escape clause for one of the parties if certain circumstances change after the contract is signed. It is used to protect the buyer or the seller, depending on the specific conditions included in the contract. When including a condition subsequent in a real estate contract, it is important to be specific and clearly define the conditions that must be met and the timeframe for fulfilling the conditions.