Agreement of Purchase & Sale with Financing Conditions
A purchase contract structured with financing conditions that protect the buyer.
An Agreement of Purchase and Sale (APS) that includes financing conditions, allowing the buyer to confirm financing before the deal becomes firm. It structures the purchase around the buyer's ability to secure financing within a defined window.
How It Works
The APS includes a financing condition (also called a mortgage condition) that gives the buyer a set period to arrange satisfactory financing. If the buyer cannot secure financing on acceptable terms within the window, they can walk away without penalty. The condition can also be structured to set the financing parameters the parties expect, and to coordinate with other creative strategies (assumption, VTB, seller financing) if conventional financing falls through.
Advantages
- Protects the buyer if financing cannot be secured
- Provides a defined window to arrange and confirm financing
- Can be combined with creative backup strategies
- Reduces the risk of losing a deposit on an uncertain deal
Considerations
- Sellers may prefer firm offers and reject conditional ones in hot markets
- Condition windows add timing complexity
- Waiving conditions to win a deal increases buyer risk
- Requires careful drafting to be enforceable and clear
Typical Use Cases
- Buyers who need to confirm mortgage approval before firming up a purchase
- Coordinating a primary purchase with a creative backup strategy
- Protecting the buyer's deposit if financing is uncertain
- Aligning timing between sale of an existing property and a new purchase
Ideal For
Buyers who need to confirm financing before committing, and sellers willing to accept a conditional offer with a defined financing window.
Risk Considerations
Waiving a financing condition to win a deal can leave the buyer liable if financing then fails. Conditions must be drafted carefully to be enforceable. Buyers should obtain legal advice before signing or waiving conditions.
Eligibility Considerations
- The condition must be clearly drafted with a defined window and terms
- The buyer should have a realistic financing plan before firming up
- Waiving conditions carries risk and should be informed
- Provincial real estate contract rules apply
Key Terms
Process Overview
- 1
Obtain a pre-approval and understand your financing parameters
- 2
Draft the APS with a clear financing condition and window
- 3
Actively arrange financing during the condition window
- 4
Waive the condition only when financing is confirmed
- 5
Proceed to a firm closing or terminate per the condition terms
Frequently Asked Questions
Can a seller refuse a financing condition?
Yes. In competitive markets sellers may prefer firm offers. A conditional offer is a negotiation point and may be accepted or rejected.
What happens if I waive the condition and financing fails?
Once the condition is waived the offer is typically firm, and failing to close can lead to loss of deposit and legal liability. Obtain legal advice before waiving.
Trio is a marketplace platform, not a financial institution.
Trio Marketplace is not a financial institution, lender, mortgage brokerage or financial advisor. Trio does not provide, approve, arrange or guarantee financing. Financing products and services are provided by independent third-party providers. Eligibility, rates, fees, terms and approval decisions are determined by the applicable provider.
Providers for This Strategy
Independent providers whose services may relate to this strategy. Contact them directly to explore options.
Maple Ridge Mortgage Co. (Demo)
DEMO DATA — for testing only. Not a real provider. Residential and commercial mortgage brokerage.
Range: 50,000 – 2,000,000 CAD
Related Strategies
Delayed Closing
Push the closing date out to give the buyer time to arrange financing.
Purchase + Refinance Strategy
Buy with short-term financing, then refinance into a long-term loan once stable.