In general Canadian contract law: “A condition precedent is a state of affairs that must exist before a party is obligated to close at all,” and it is deliberately distinguished from a covenant: “A covenant, by contrast, is a promise to do (or not do) something.” The consequence of breaking each is different in kind, not just degree — “Breaching a covenant doesn’t automatically excuse the other party from closing the way an unsatisfied condition can; instead, it typically gives rise to a claim for damages.”
Ontario real estate practice does not usually reach for the Latin-adjacent label. RECO’s own materials and a standard Agreement of Purchase and Sale simply say “condition”: “a term written into your Agreement of Purchase and Sale that makes the deal binding only if — or until — a specified event happens within a set timeframe.” Legally, it is the identical structure — a true condition precedent excuses the obligation to close if it is not met, exactly as the doctrine describes.
The mechanic resolves exactly two ways, and both must be in writing: the condition is either fulfilled, or the protected party waives it, and both fulfilment and waiver must be communicated in writing and delivered before the deadline. Once that happens, the deal becomes firm “whether or not the underlying protection was ever actually confirmed” — a buyer who waives a financing condition is bound to close even if the financing later falls through. Make sure a client understands that distinction before they sign a waiver, not after.
A financing condition is a textbook condition precedent: if it is not fulfilled or waived in writing by the deadline, neither side is obligated to close. Compare that to a covenant such as a promise that the chattels will be in good working order on closing — if that promise turns out to be false, it does not unwind the closing itself; it becomes a claim for damages discovered after possession, which is a materially weaker position for a buyer than an unmet condition would have been.
See also: conditionally sold vs firm sold and severance consent.
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