Lawyer’s Approval Clause Reviewed

Frequently, you may require a Lawyer’s Approval Clause. Quite commonly, they may be written as a Condition Precedent, however, we will review one drafted as a Condition Subsequent, in detail.

This is advantageous since if the approval is given, then nothing is required at all. The deal simply proceeds.

Clause

Condition Subsequent – Lawyer’s Approval

The Buyer may terminate this Agreement through written notice delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than _____ p.m. on the _____ day of __________, 20_____, if the Buyer’s Lawyer has not approved the Agreement both with respect to legal and business issues relating to the transaction. Upon receipt of the above notice, this Agreement shall be null and void and the deposit shall be returned to the Buyer in full without deduction. If no such notice is received within the above time limit, then this term of contract shall be deemed waived by the Buyer and this Agreement shall remain valid and binding whether or not such review had been arranged or undertaken.

Clause Reviewed in Detail with Commentary

Condition Subsequent

The clause is set forth with my comments in Italics.

The Buyer may terminate this Agreement through written notice

The option is left with the Buyer. This is a single or one party procedure.

delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto

This answers the question: where does the notice go.

not later than _____ p.m. on the _____ day of __________, 20_____,

This is the deadline or time limit.

if the Buyer’s Lawyer has not approved the Agreement

Here we are assuming that the lawyer has not approved.

both with respect to legal and business issues relating to the transaction.

This clears up the issue of whether we are talking about legal terms, business terms or both. In Ontario, this matter has not been resolved. So, this term would clear up any ambiguity.

Upon receipt of the above notice, this Agreement shall be null and void and

This is the result of the contract.

the deposit shall be returned to the Buyer in full without deduction.

This is what happens to the deposit.

If no such notice is received within the above time limit, then this term of contract shall be deemed waived by the Buyer and

This inclusion is probably unnecessary, but if you have room, why not?

this Agreement shall remain valid and binding whether or not such review had been arranged or undertaken.

This is a very accurate statement. The contract was already firm and binding. Frequently, and erroneously reference will be made here to “firming up” the deal. No, it wasn’t firmed up, it just wasn’t terminated.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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