Question:
Can a Mutual Release be sent before the deposit cheque is given in? Offer is conditional on mortgage financing. This is the day after acceptance and deposit cheque is due, but bad news on mortgage has already been received.
Answer:
Your client has a duty to perform the contract. This means if they were disappointed with the results from one Bank, they should find out what others would say. If they are short a small amount then they should propose a Vendor Take-Back (VTB) to the Seller. Don’t act too early on the condition otherwise it does make it appear that Buyers are in breach of their good faith obligation to complete the contract.
A reasonable Buyer, wishing to close will seek several different methods for financing, not just one.
The Buyer has taken the property “off the market”, meaning that the Seller may now get less when it goes back on the market.
The Seller might claim the difference in price from the Buyer.
While the condition likely included some reference to “absolute and unfettered discretion” on the part of the Buyer, this does not mean “at the Buyer’s whim”. There’s no weasel clause here.
Brian Madigan LL.B., Broker