Form 408 & Buyer's Conditions Updates (Effective January 3, 2022)

Buyer's Conditions Updates - Effective January 3rd, 2022

August 27, 2021

Training and more information on the updates to satisfying buyer's conditions.

To view the transcript to the training video, CLICK HERE.

To view all the forms changes, CLICK HERE.

Changes to Satisfying Buyer’s Conditions

Effective January 3^rd, 2022, the process of satisfying buyer’s conditions in the Agreement of Purchase and Sale will change significantly.

In response to industry feedback over the original process for satisfying buyer’s conditions, the Commission struck an Agreement of Purchase and Sale Task Force who surveyed the issue of dissatisfaction and recommended changes to the Board. The Board approved the changes and referred the recommendations to the Forms Committee who revised the current real estate forms to reflect the changes to satisfying buyer’s conditions, and developed Form 408: Buyer Waiver of Conditions. The Board approved the changes made by the Forms Committee and an implementation plan by the Commission.

Form 400: Agreement of Purchase and Sale’s clause on buyer’s conditions will be revised to state*:

“The Buyer shall provide the Seller or the Seller’s Agent, on or before _________ a.m./ p.m. Atlantic Time on the date specified above, with Form 408 confirming that all conditions identified in this clause are satisfied and now waived. If the Buyer fails to provide the required form this Agreement shall be deemed terminated. If the Buyer determines, prior to the condition date, that they are not satisfied the Buyer may terminate this Agreement. The deposit shall be returned to the Buyer subject to the applicable NSREC By-laws.”

*All other forms that reference buyer’s conditions are being revised with similar wording to reflect the change.

Changes are being made as a result of feedback from the industry after ongoing issues regarding confusion over the silent confirmation (“no news is good news”) process of satisfying buyer’s conditions where written notice was only sent in cases of dissatisfaction.

These changes only apply to buyer’s conditions in clause 4.1 of the Agreement of Purchase and Sale. They do not apply to clauses on lawyer review, title investigation, and the estoppel certificate.

The Old Way (No News is Good News) - Up to January 2, 2022

For example, when preparing an Agreement of Purchase and Sale in Nova Scotia, clause 4 highlights the buyer’s conditions. It stated that the Agreement is “subject to the buyer, at the buyers expense, securing, conducting or reviewing the following” on or before X date. These conditions are “out clauses” meaning if the buyer provided notice of dissatisfaction, either the buyer or the seller were at liberty to terminate the Agreement. There is a checklist of conditional items, including:

• property disclosure statement
• restrictive covenants that may affect the property
• equipment schedule, if not attached
• financing
• property inspection(s)
• insurance
• other

The parties agree on a condition deadline for the items selected on the checklist. The buyer now has a list of conditions they are responsible for and a deadline they must meet.

The buyer’s conditions were considered satisfactory unless the seller or seller’s agent were notified to the contrary, in writing before the deadline passed. If the deadline passed, and the buyer was not provided notice of dissatisfaction in writing, it was assumed everything was in order and the transaction could proceed. “No news is good news”.

However, if there was an issue, for example, with the property inspection, the buyer or buyer’s agent had to notify the seller or seller’s agent in writing of their dissatisfaction prior to the deadline. At this point, either party was at liberty to terminate.

If the buyer wished to proceed with the Agreement, they could proposed an amendment. The seller could choose to accept the buyer’s amendment, reject the buyer’s amendment and all terms and conditions in the Agreement remained in full force and effect, proposed a different amendment, or terminated the Agreement.

Sellers did not receive written confirmation if a buyer had satisfied their conditions. If a buyer was dissatisfied and wanted to propose an amendment, they risked the seller triggering a termination over ‘notice of dissatisfaction.’ This discouraged them from attempting to amend an agreement over minor issues, impacting their ability to negotiate.

The New Way (No News Means You Lose) - Since January 3, 2022

In the new process, the buyer’s conditions remain the same: the buyer still have a checklist of items they are responsible for and a condition deadline(s) that is agreed to by both parties.

Once the buyer has completed their list of conditions and are satisfied, they must provide the seller or seller’s agent with written confirmation that they are satisfied and waiving their conditions. The Commission has developed a new form for this purpose: Form 408: Buyer Waiver of Conditions. The revised Agreement of Purchase and Sale requires Form 408 to be provided to the seller or seller’s agent on or before the condition deadline. If Form 408 is not provided to the seller or seller’s agent before the condition deadline, the agreement is deemed terminated. Form 408 confirms that the buyer is satisfied with and waiving those conditions from the Agreement of Purchase and Sale. Once Form 408 has been completed and provided to the seller or seller’s agent, the buyer and seller can proceed with the transaction.

The new process allows the buyer to negotiate new terms to their agreement without the fear of the seller terminating when they propose an amendment. Under the new process, only the buyer may terminate before the specific condition deadline. By providing notice of satisfaction, sellers now have written confirmation that buyers have completed their due diligence and have satisfied all of the conditions per their agreement.

Affected Forms

Effective January 3^rd, 2022, the following forms will change to reflect the new process:

• Form 400: Agreement of Purchase and Sale, clause 4.1
• Form 402: Resale Condominium Schedule, clause 2.2
• Form 403: Agreement of Purchase and Sale for New Construction, clause 4.1
• Form 404: Vacant Land Schedule, clause 2.3
• Form 406: Mini/Mobile Home Schedule, clause 3.2
• Form 407: Multi-Unit Residential Income Property Schedule, clause 2.1
• *New* Form 408: Buyer Waiver of Conditions
• Form 431: Water and Septic Schedule, clause 2.1

The Commission created Form 408: Buyer Waiver of Conditions, to provide written notice that the buyer is satisfied and waving their conditions from the Agreement of Purchase and Sale. The revised Agreement of Purchase and Sale requires Form 408 to be provided to the seller or seller’s agent on or before the condition deadline. Form 408 came as a result of feedback obtained from the industry survey about buyer’s conditions.

The revised forms become mandatory on January 3rd, 2022. Until January 3rd, licensees must continue using the current forms and following the original process for satisfying buyer's conditions. 

Brokerages that use electronic signature software can request the new forms as PDFs for administrative purposes by emailing the Commission's Communications Officer, Chloe Kenney, This email address is being protected from spambots. You need JavaScript enabled to view it.. 

Important Dates

July 23^rd, 2021: Brokers and managing associate brokers notified of the changes.

September 7th, 2021: All licensees notified of the changes.

January 2^nd, 2022: Agreements that are signed and accepted up to and including January 2, 2022 will follow the original method of satisfying buyer’s conditions, per the clauses in the agreements.

January 3^rd, 2022: The new and revised forms that reflect the changes to satisfying buyer’s conditions go into effect and use of revised forms are mandatory. Agreements that are signed and accepted must now follow the new conditions.

About Form 408: Buyer Waiver of Conditions

Form 408 is a mandatory form created by the Commission, effective January 3^rd, 2022 that explicitly waives buyer’s conditions in the Agreement of Purchase and Sale. The buyer must provide the seller or seller’s agent with Form 408 on or before the condition deadline as written confirmation that they have satisfied their list of buyer’s conditions.

Form 408 is a one page form. The form states: “In accordance with the Agreement, the Buyer gives notice to the Seller they are satisfied with and waive the following conditions (specify exact clauses and schedule(s), if applicable):” and has space to list the satisfied conditions. The conditions must be clearly stated, and should specify which clause and schedules is being identified. See example provided below.

 

Form 408 must be completed to identify all conditions that must be satisfied in order to waive the buyer’s conditions clause from the agreement and proceed with the transaction. Licensees can use one or more forms to list all conditions.

Buyers must provide Form 408 to the seller or seller’s agent before the condition deadline as per the terms of the agreement, otherwise the agreement is deemed terminated. No news means you lose.

Terminations & Dissatisfaction

If Form 408 is not provided to the seller or seller’s agent before the condition deadline, the agreement is deemed terminated. “No news means you lose.”

If the buyer is dissatisfied with any of the specific conditions and no longer wants the property, they can terminate the agreement in advance of the condition deadline.

If the buyer is dissatisfied with any of the specific conditions but wishes to proceed with the transaction, they can propose an amendment in advance of the condition deadline. Regardless of what happens, if the buyer wants to proceed with either an amended agreement or with the original terms of the agreement, they must provide Form 408 to the seller or seller’s agent on or before the deadline.

If the agreement is terminated and there is a deposit, it shall be returned to the buyer subject to the applicable NSREC By-laws. This can be done using Form 440: Termination of Agreement of Purchase and Sale and Release of Deposit. If there is no deposit, a termination form is not required.

Responses to Proposed Amendments

If a buyer is dissatisfied with any of the specific conditions but wishes to proceed with the transaction, they can propose an amendment in advance of the condition deadline.

The seller can choose to:

• accept the buyer’s amendment;
• reject the buyer’s amendment and all terms and conditions in the agreement remain in full force and effect; or
• propose a different amendment to the buyer.

This new process does not permit the seller to terminate if a buyer proposes an amendment prior to the condition deadline.

Regardless of what happens, if the buyers wants to proceed with either an amended agreement or with the original terms of the agreement, they must provide the completed Form 408 to the seller or seller’s agent on or before the deadline.

Unaffected Clauses

There are conditions in the Agreement of Purchase and Sale that have not been impacted by this change, including:

• Lawyer review
• Title investigation
• Clause 2.4 of the Resale Condominium Schedule regarding the estoppel certificate

For these clauses, if the buyer is dissatisfied it is still required to provide written notice of dissatisfaction by the deadline specified in the clause.

Transactions That Overlap January 3rd

Agreements of Purchase and Sale that are accepted up to and including January 2nd, 2022 will follow the old method of satisfying buyer’s conditions, per the clauses in the agreements.

On January 3rd, 2022, the new method of satisfying buyer's conditions goes into effect and use of revised forms is mandatory. Agreements of Purchase and Sale that are prepared on or after this date must now follow the new conditions.

However, there may be situations that overlap the change date. For an example, an Agreement of Purchase and Sale prepared on January 2nd using the old forms and relayed to the seller with an open for acceptance date of January 4th.

If you are representing the seller client, you must advise them of the new forms and process that came into effect after the Agreement was prepared. The seller can then decide if they want to:

• proceed using the old forms following the old process (reject, accept, not respond, or counter); or
• request/counter that the Agreement of Purchase and Sale be re-submitted on the new forms.

Once your seller has made a decision, you must follow the lawful instructions of your client.

Key Things to Remember

• January 3^rd, 2022 is when the new process goes into effect and revised forms become mandatory.
• Buyers still have their list of conditions to satisfy and their deadline.
• There are specific conditions that are impacted by this process.
• This new form is required to waive the buyer’s conditions from the Agreement of Purchase and Sale. Failure to provide written notice of satisfaction (Form 408: Buyer Waiver of Conditions) now means the agreement shall be deemed terminated.
• Once the buyer is satisfied with their conditions, they must complete and sign Form 408: Buyer Waiver of Conditions, and provide it to the seller or seller’s agent on or before the condition deadline.
• The buyer has the ability to propose an amendment without the seller being able to trigger a termination over notice of dissatisfaction.
• The buyer still has the ability to terminate the agreement prior to the specific buyer’s condition deadline, however, the seller does not.
• Remember: No news means you lose!
• The clauses on lawyer review, title investigation and the estoppel certificate in the condo schedule have not changed, and still use the process of notice of dissatisfaction/objection.
• As a reminder, licensees are to ensure their client's lawyer is provided with all necessary real estate transaction documents including any and all competed and signed Form 408s.

Tools and Resources

To educate the real estate industry in Nova Scotia on the changes being made to buyer’s conditions, the Commission has created this document as well as:

• A training video on buyer’s conditions, available at the top of the page.
• The full transcript of the buyer’s conditions training video, available at the top of the page. 
• A guide to buyer's conditions forms, available HERE.
• An mockup of Form 408, available above.
• A Q&A, available below.
• Bulletins sent to brokers/manging associate brokers
  • July 23rd, 2021: Broker announcement bulletin
  • August 30th, 2021: Broker reminder bulletin 
  • November 8th, 2021: Broker Reminder: Brokers Responsible for Updated Forms Training
• Bulletins sent to the industry:
  • September 7th, 2021: Buyer's conditions updates, effective January 2022
  • September 17th, 2021: APS Changes Reminder
  • November 4th, 2021: Reminder: Updated Forms in January 2022
  • December 14th, 2021: Important Changes to Buyer's Conditions in January 2022
  • December 22nd, 2021: Everything You Need to Know for January 3rd

Licensees who have questions about the process of satisfying buyer’s conditions should speak to their broker or managing associate broker.

Licensees who use electronic signature software can request the new forms as PDFs for administrative purposes by emailing the Commission's Communications Officer, Chloe Kenney, This email address is being protected from spambots. You need JavaScript enabled to view it..

 Q&A

 Q: What happens if a buyer submits an amendment and the seller does not respond by the amendment deadline?

A: If the seller does not respond before the amendment deadline, the amendment has no effect. The original wording of the Agreement of Purchase and Sale stands. 

When preparing amendments, caution should be exercised to ensure that amendment deadlines do not coincide with buyer’s condition deadlines. If an amendment is not accepted or is ignored by the seller, the buyer needs sufficient time to decide if they want to proceed with the transaction, which may include submitting Form 408.

Q: What if a buyer requires additional time to address something such as securing financing?

A: If a buyer wants to extend the condition deadline, they need to propose an extension using Form 421: Amendment to the Agreement of Purchase and Sale to the seller or seller’s agent. If accepted by the seller, the condition deadline would be extended to reflect the date agreed on by both parties. If the seller rejects or does not respond to the amendment, the amendment has no effect. The original wording of the Agreement of Purchase and Sale stands.

Q: The condition deadline was missed, Form 408 was not submitted, and the agreement is deemed terminated. What happens if the Buyer and Seller both want to proceed with the transaction?

A: By not submitting Form 408 prior to the condition deadline, the Agreement is deemed terminated. If both parties wish to proceed, the buyer can submit a new offer. Parties in this situation should be referred to their legal counsel. 

Q: Do all satisfied conditions have to be completed on the same Form 408 or can a buyer complete multiple forms?

A: A buyer can submit one or more Form 408s to notify the seller of satisfied conditions. The most important thing is whether you use one form or multiple forms, the form(s) must be submitted on or before the condition deadline(s).

Q: How do I fill out the Buyer Notice section of Form 408?

A: The recommended practice would be to cite each individual condition. Example:

Form 400, Clause 4.1:

• Financing
• Property Inspection
• Insurance
• Property Disclosure Statement
• Equipment Schedule

Form 431, Clause 2.1, a-c

Q: If the buyer wants to terminate and there is a deposit, do they have to use a termination form?

A: Yes, a termination form is required because the brokerage holding the funds requires written mutual release per the NSREC By-law.  

Q: If the buyer wants to terminate and there is no deposit, do they have to use a termination form?

A: A termination form would only be required if the buyer wants to terminate prior to the condition date. Otherwise, if Form 408 is not provided to the seller/ seller’s agent by the condition date and there is no deposit, the Agreement would be deemed terminated and no termination form is required.

Q: Why is there not a line in Form 408 to record the time the buyer signs the form?

A: What is critical timing wise is when the completed and signed Form 408 is provided to the seller/seller’s agent, not what time the buyer signed the form. If a buyer misses the deadline to provide the completed form to the seller/seller’s agent, the timing of the buyer’s signature is irrelevant. For example, if the buyer’s condition deadline was at 6:00pm, and the form was signed by the buyer at 5:00pm but was not provided to the seller or seller’s agent until 7:00pm, the agreement is deemed terminated at 6:01pm, because the buyer failed to provide the form to the seller or seller’s agent on or before the condition deadline. It is recommended, in case of a dispute, that the buyer’s licensee maintain a confirmation (email, fax, text, etc.) demonstrating they provided Form(s) 408 on or before the condition deadline, as it records the exact time and date they sent the form.

Q: Why would a buyer provide multiple copies of Form 408?

A: There are different reasons why a buyer may provide multiple Form 408s:

• There is more than one deadline for the buyer’s relevant conditions in the original agreement.
• The buyer may need an extension to one or more of their conditions, so would provide Form 408 prior to the deadline for those satisfied conditions and request an amendment to the deadline for the one or more outstanding conditions, assuming the seller agreed via written amendment to the buyer's needed extension.

For example, if a buyer had three conditions with a deadline of January 15^th and a fourth condition with a deadline of January 25^th, the buyer must submit the first Form 408 for the first three conditions before the first deadline and the second Form 408 for the final fourth condition before the second deadline. This would satisfy the terms of the agreement. If the buyer waited and submitted only one Form 408 after the first deadline but before the second deadline with all four conditions (for example, on January 22^nd), the agreement would have been deemed terminated as the buyer missed the deadline for the first three conditions.