Removing Conditions on an Agreement of Purchase and Sale

When you have a conditional agreement, there are three (3) ways you can move toward a firm agreement.

A Notice of Fulfillment, a Waiver, or an Amendment.

So, what's the difference?

Notice of Fulfillment (NOF)

An NOF notifies the other party that a condition has been satisfied. It acts as "notice in writing", the requirement that most WEBForms conditions call for. It's essentially a standardized document used to tell the other party that the condition has been completed.

Waiver

A Waiver is a form that notifies the other party that you are giving up or relinquishing your right to cancel the agreement. You're not technically saying you've satisfied the condition, but you're also not saying that you haven't. You're simply giving up the protection that was included in the form of a condition.

It has the same legal effect as an NOF. Both turn a conditional agreement into a firm agreement unilaterally.

Amendment

An Amendment is used to mutually change an Agreement of Purchase and Sale. It's used in a variety of situations, like extensions and price reductions, but can also be used to "delete" conditions, creating a firm agreement.

Using an Amendment to firm up an agreement is most common when the buyer is attempting to negotiate a price reduction in exchange for deleting the conditions.

Considerations for Realtors:

Be careful when using an Amendment

An Amendment is a two (2) signature document, meaning both the buyer and the seller need to sign it to be valid. If you're nearing a condition deadline and you send an Amendment, it's not valid until the seller actually signs it. In other words, you have no control - and if the seller doesn't sign it before the deadline, the agreement becomes void.

A True Condition Precedent cannot be waived

Remember what a True Condition Precedent is? It's a condition that relies on the outcome of a 3rd party. It cannot be waived by the buyer or the seller. A good example is a severance condition. The sale of severed land cannot actually happen without the consent of a municipality, therefore it's the municipality that has the ability to make the agreement firm, or not.

Does this mean that we only use an NOF for a True Condition Precedent?
Actually, no. Ontario case law tells us that a True Condition Precedent is deemed fulfilled when the 3rd party's decision is made. An NOF is technically not necessary (though clear and express communication is always recommended).

Pay attention to the "Right to Waive"

If you look at the last sentence in many of the WEBForms conditions, you'll notice:
"This condition is included for the benefit of the Buyer and may be waived at the Buyer's sole option...". This is express language indicating that the buyer may waive the condition.

So what happens when either party deletes or omits that line?
It depends (I know, typical lawyer answer).

There's no legal requirement that says the right to waive a condition has to be in writing. The courts will look to determine whether the condition was included for one party's sole benefit - which creates the right to waive the condition.

There is a lot of grey area here, so the best practice is to use clear and express language specifying whether you want the option to waive the condition or if it must be fulfilled. Clear and express language can save your client a lot of money in legal fees.

The myth about NOF vs Waiver

Some believe that these two forms represent a strict difference, where an NOF can only be used when you did satisfy the condition and a Waiver can only be used when you did not.

This oversimplification is not true. I've heard the argument that if you waive the condition you're saying you legally didn't do it". This is simply wrong. If you ended up in court and the seller alleged you didn't do a home inspection because you used a Waiver, simply call the home inspector as a witness (if, of course, you actually did it).