Lawyer’s Approval and Insurance Conditions in an Ontario Offer: When They Earn Their Place

Two short clauses a seller notices right away. What each one actually says, where the insurance condition ends and clause 14 begins, and why one version is easier for a seller to accept.

Read an offer from the seller’s chair for a moment. The price is fine, the closing date works, and then, in Schedule A, two sentences say the deal depends on the buyer arranging insurance and on the buyer’s lawyer approving the terms. Neither one says what would count as failure. To a seller, that can read like the buyer has kept a door open and hasn’t said which way it swings.

I’m Arthur Zhao. This article looks at those two clauses the way the seller reads them and then the way a buyer should weigh them: what each one says in OREA’s standard wording, where the insurance condition stops and the printed contract’s own insurance clause takes over, why a capped insurance condition reads very differently to a seller, and how the deadline works. Inspection and financing conditions are a separate subject and only come up here where they share the work.

The insurance condition, open-ended version

In OREA’s standard wording, the first insurance condition makes the offer conditional on the buyer arranging insurance for the property, at the buyer’s expense, satisfactory to the buyer in the buyer’s sole and absolute discretion.

Three pieces of that sentence matter. The cost is the buyer’s. The judgment is the buyer’s alone, so there is no outside standard for the seller to point at. And the clause adds a promise from the other side: the seller agrees to co-operate in providing access to the property, if necessary, for any inspection required to satisfy the condition.

OREA attaches a note to this clause saying that, because of its nature, a short time frame should be chosen. That note is the clause’s own author acknowledging that an open-ended test should not stay open for long.

The capped version: named perils and a yearly ceiling

The second insurance condition keeps the same notice, null-and-void and deposit-return mechanics, and the same seller co-operation on access. What changes is the test. The buyer has to arrange insurance for the named perils written into the blank, at a yearly cost not to exceed a stated amount, excluding applicable taxes.

So the question stops being whether the buyer is happy and becomes two checkable facts: does the quote cover the perils listed, and is the annual cost, before tax, at or under the figure. The clause does not mention deductibles or policy limits, so anything beyond the listed perils and the yearly cost is not part of the test unless it is written in.

Where the condition stops and clause 14 takes over

Buyers sometimes treat the insurance condition as protection against the house being damaged before closing. That job belongs to a different part of the contract. Clause 14 of OREA Form 100 says all buildings on the property remain at the risk of the seller until completion. Pending completion, the seller holds the insurance policies, if any, and the proceeds in trust for the parties. If there is substantial damage, the buyer may either terminate and have all monies paid returned without interest or deduction, or take the insurance proceeds and complete the purchase.

The same clause ends with a line that explains why the insurance condition exists at all: no insurance shall be transferred on completion. The seller’s policy does not follow the house to you. From closing day on, the coverage is yours to arrange, and the insurance condition is a way of finding out early whether you can arrange it on acceptable terms. Put simply, clause 14 covers the period before closing and the insurance condition is about the period after it.

The lawyer’s-approval condition, read word for word

The buyer’s lawyer’s-approval condition is short, and its test is a single phrase: the offer is conditional upon the approval of the terms hereof by the Buyer’s solicitor. After that come the usual mechanics: written notice of fulfillment by the stated time, otherwise null and void with the deposit returned in full without deduction, and the buyer may waive it by written notice within the time period.

Two things follow from the wording. It is the terms of the agreement that the lawyer approves, not the house, the price, or the title. And the clause lists no reasons for disapproval and no standard the lawyer has to meet. There is also a seller’s mirror version, in which the offer depends on the seller’s solicitor approving the terms and the seller gives the notice.

A lawyer’s-approval condition vs. having a lawyer review before you sign

Why sellers hesitate

What follows is reasoning about incentives, not a statistic. While any condition is outstanding, the seller has accepted an offer but does not have a firm sale, and the deal ends without anyone doing anything if the buyer’s notice never arrives. That is true of every buyer condition.

These two get extra scrutiny because of how their tests are worded. The lawyer’s-approval condition names no grounds, and the open-ended insurance condition rests on the buyer’s sole and absolute discretion. From the seller’s side, both can look less like a check on something specific and more like time the buyer has bought to think. When a seller is also comparing an offer with fewer conditions, the difference shows. The capped insurance condition answers part of that concern because the seller can see exactly what has to happen for it to be met.

How to think about the deadline

There is no standard number of days, and the clauses leave the date blank. A few fixed points shape the choice.

Fulfillment has to be affirmative. Both clauses say that unless the buyer gives written notice by the stated time that the condition is fulfilled, the offer is null and void. Silence ends the deal, so the deadline is the last moment you can say yes, not a date when a no is due.

The date is hard to move. Clause 20 of Form 100 makes time of the essence and allows times to be extended or abridged only by an agreement in writing signed by the seller and buyer, or by their lawyers if specifically authorized. Assume the date in the offer is the date you will live with.

Notices usually travel through the brokerages. Under clause 3, where each side has its own brokerage, those brokerages are appointed as agents for giving and receiving notices. Allow for that step before the deadline.

Your lender may care about the same insurance anyway. According to the Canadian Bar Association’s mortgage instructions toolkit, lenders often ask to be named on the policy as loss payee and need confirmation of insurance before closing. Exact requirements come from your own lender’s instructions, but it means the insurance question has to be answered before closing regardless, and the condition simply brings it forward.

How these two divide the work with other conditions

Each condition in an offer answers a different question. Inspection conditions test the physical house, and financing conditions test the money. The insurance condition tests whether the property can be covered from closing day at a cost you can accept, which the other two do not check. The lawyer’s-approval condition tests the document itself: the wording you have agreed to.

That split helps when deciding what to include. If the question is about the roof, a lawyer’s approval will not answer it, and if the question is about a clause in Schedule A, an inspection will not either. Adding a condition that tests the wrong thing makes the offer more conditional without making it any safer for you.

Questions to bring to the people who can answer them

These are information questions, to ask before the offer is written and again once it is accepted.