The purpose of subjects are to allow a buyer to perform due diligence regarding a property they intend to purchase. Typical subjects include Financing, Property Inspection and Condominium Document Review. During this limited period of time, the buyer still has opportunity to walk away from the contract…or do they?
Some savvy buyers think that they can use this grace period as a tool to keep a property off the market while they make up their minds, assuming that they do not have to actually do anything. In doing this, they are not acting in good faith and are taking a legal risk.
A buyer cannot sit back and do nothing, wait for the subject removal date and then say, “I was unable to remove the condition.” The party benefiting must act in good faith and use best efforts to do what is necessary to remove the condition, as they have entered a legal contract requiring them to do so.
Buyers who don’t attempt to fulfill their subjects and then try to walk away from the contract may find themselves being asked questions by the seller’s lawyers, such as “give me a list of all of the financial institutions you visited to inquire about possible financing.” Ultimately, the buyers may find themselves in court, defendants in a lawsuit if they are unable to show they acted in good faith to fulfill their conditions.