Condition Precedent vs Condition Subsequent

I think the real estate education courses do a lousy job of explaining the difference between these terms.

The first thing to remember is that a condition can be written as either a condition precedent or a condition subsequent. In other words, they're not different conditions, they're different methods of fulfillment - action vs inaction.

If you want to make an offer conditional on financing, you can write it as a condition precedent or as a condition subsequent, depending on the preference of your client.

Let's start with an example of a condition precedent:

You've likely seen this exact clause before. Condition precedents are the most common form in residential transactions.

It requires the buyer to take positive action (provide written notice) failing which the agreement will terminate, therefore it's a condition precedent. It requires an event to occur before the agreement can continue, hence precedent (to precede).

Now let's look at the same condition, written as a condition subsequent:

You're less likely to have seen this condition clause written in an offer.

It's identical to the first example in the sense that it provides the buyer with an option to terminate the agreement if they cannot arrange a first mortgage to their satisfaction.

The difference, however, is that it doesn't require the buyer to take action (provide written notice) in order to complete the agreement. It's the opposite.

If the buyer is unable to arrange a first mortgage to their satisfaction, they will need to take action (provide written notice) in order to terminate the agreement.

The difference is whether you want to make the action of providing written notice the trigger for fulfillment or the trigger for termination.

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The condition precedent will typically be the better form when including a condition for the protection of your buyer. It errs on the side of caution in the event of a missed deadline.