The Condo Status Certificate Timing Trap
A salesperson represents a buyer purchasing a resale condominium townhouse for $715,000. The agreement includes a condition: 'This offer is conditional upon the buyer receiving and reviewing the status certificate and the buyer being satisfied with it, in the buyer's sole discretion, on or before the fifth business day after acceptance.' The agreement is accepted on a Thursday. The property manager is slow, and the status certificate arrives on the following Wednesday - the fourth business day after acceptance. The buyer's salesperson reviews it and notices a special assessment of $18,000 for roof repairs, a reserve fund that is only 12% funded, and a pending lawsuit against the corporation. The buyer is travelling and has not seen the certificate. The fifth business day is Thursday. The buyer's salesperson sends the certificate to the buyer on Wednesday evening and asks for a decision 'by tomorrow.' The seller's salesperson calls on Thursday morning asking whether the condition is waived.
1. What is the salesperson's obligation regarding the condition deadline, and what should happen if the buyer does not respond in time?
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The condition is a true condition precedent: if the buyer does not waive it in writing by the deadline, the agreement becomes null and void (subject to the exact wording). The salesperson must not waive the condition on the buyer's behalf, and must not tell the seller the condition is waived unless the buyer has signed a written waiver.
The salesperson should: (1) immediately tell the buyer, in writing, that the deadline is Thursday and that the certificate discloses a special assessment, a weak reserve fund, and litigation; (2) advise the buyer to review the certificate with legal advice and to decide whether to waive, amend, or let the condition lapse; (3) not pressure the buyer to waive; and (4) if the buyer does not respond by the deadline, let the condition lapse and notify the seller's side in writing that the condition was not satisfied, so the agreement is at an end.
The salesperson should not 'extend' the deadline unilaterally. Any extension must be agreed in writing by both parties. If the buyer wants more time, the salesperson should negotiate an extension before the deadline, not after. The salesperson should document all communications and the buyer's instructions.
2. The buyer asks whether they should waive the condition. What can the salesperson advise, and what must they avoid?
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The salesperson can help the buyer understand the certificate and its implications, but cannot give legal advice or make the decision for the buyer. The salesperson should explain, in plain language: the $18,000 special assessment is a cost the buyer may have to pay; the 12% reserve fund means future special assessments are more likely; and the pending lawsuit is a risk that could affect the corporation's finances and the buyer's exposure.
The salesperson should recommend the buyer review the certificate with a lawyer and, if needed, a condominium specialist, and should suggest the buyer consider whether to negotiate a price reduction, ask the seller to cover the special assessment, or walk away. The salesperson must avoid saying 'it's fine' or 'everyone waives these' - that would be steering the buyer to waive a condition that protects them. The salesperson should also avoid telling the buyer the property is a 'great deal' if the financial risks are significant.
If the buyer decides to waive, the salesperson should get the waiver in writing before the deadline. If the buyer decides not to waive, the salesperson should notify the seller's side promptly. Document the advice and the buyer's decision.
3. The seller's salesperson offers to 'hold the deal together' by having the seller sign a waiver of the condition. Is that appropriate?
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No. The condition is for the buyer's benefit, and the buyer is the one who must waive it. A seller cannot waive a buyer's condition - the seller's signature does not satisfy a condition precedent that requires the buyer's satisfaction. Attempting to 'hold the deal together' by having the seller waive the buyer's condition is legally ineffective and misleading.
The seller's salesperson may be trying to keep the deal alive, but the correct step is to ask the buyer's side whether the buyer will waive or extend, in writing, before the deadline. If the buyer does not waive, the agreement lapses. The buyer's salesperson should not accept a seller-side waiver as a substitute for the buyer's decision, and should not tell the buyer the deal is 'safe' because the seller signed something.
If the parties want to keep the deal, they should sign a written extension of the condition deadline, agreed by both parties, before the deadline expires. The salesperson should document the sequence of events and recommend legal advice if there is any dispute about whether the condition was waived in time.