Definition
A financing condition is a suspensive clause inserted in the purchase offer stating that the sale will only be completed if the buyer obtains satisfactory mortgage financing within a specific timeframe — typically 5 to 10 business days in Quebec.
If financing is not obtained (or if loan conditions are unsatisfactory), the buyer can withdraw from the offer at no cost and recover the full deposit. The condition protects against loss of deposit and legal obligations of the purchase agreement in case of bank refusal.
In highly competitive real estate markets (downtown Montreal, south Laval), some buyers attempt to present offers without a financing condition to stand out. This is a significant risk: in case of loan denial, the buyer may be forced to purchase anyway or lose the deposit. An AMF broker who has pre-analyzed the file and obtained a rate hold can mitigate this risk, but never eliminate it entirely.