Can I make my own financing a formal closing condition?

A buyer can propose that closing depend on financing. The seller has to accept the clause, so it is a negotiated term, not a right. If it is agreed, it belongs in the signed agreement and not only in a conversation or an email. Ask a lawyer to draft it, because the words decide what happens when a lender says no.

What the clause has to spell out

Settle which financing counts: one named lender, any lender, or a specific government-backed program. Fix a date by which the buyer must have the lender’s answer. Say what proves the lender declined, who may waive the condition, and what happens to the deposit if it fails. Ask your lawyer whether the wording makes clear what the buyer must do to pursue the financing. The related page on whether a seller can keep a deposit if the buyer backs out covers the deposit side.

Why the deadline needs care

BDC says it can review a financing request once the buyer has identified a business and negotiated the main terms of the purchase, and that the buyer and seller must agree on a purchase price before the buyer applies. It lists a letter of intent and an expected closing date among what it looks for, and it says it does not offer prequalification. If a condition period starts on signing, ask the lender how long its review takes and set the date to match.

Government-backed loans

Innovation, Science and Economic Development Canada describes the Canada Small Business Financing Program as making it easier for small businesses to get loans from financial institutions by sharing risk with lenders, and tells borrowers to contact a lender. If the plan depends on that program, name it in the clause and ask the lender whether the business and the purchase qualify.

A Québec drafting point

The Civil Code of Québec says an obligation that depends on a condition at the sole discretion of the debtor is null. It adds that the obligation is valid where the condition consists in doing or not doing something, even if the act is at the debtor’s discretion. Ask a Québec lawyer how a clause that turns on a lender’s decision fits that rule, and which wording to use. A related page explains what happens when a buyer causes a condition to fail.