"Subject To:" Vs. "Contingent On"

Hi!

There was a recent thread about "subject to" statements in purchase agreements.

There was a clarification that John Locke's "Subject To" phenomenon is just one specific method, while the "subject to" clause(s) in a typical purchase agreement are many and varied, and do not refer to an entire process/strategy/method as Mr. Locke practices and teaches.

My question is this:

In a purchase agreement, what is the difference, or is there a difference, between these "subject to" clauses and clauses that are "contingent on" (or is it "contingent upon"?) some condition?

Are these legally treated the same?


Thanks in advance!


Take care,

Kevin

Comments(1)

  • jfmlv19509th September, 2003

    Hi Kevin,

    Good question, that has confused many because of the words “Subject to”.

    In the method meaning, “Subject to” means purchasing a property while keeping the seller’s name on the loan; or in other words “Subject to the existing mortgage.”

    In the contingency meaning, “Subject to” means something must happen or condition met before acceptance; or in other words ie “Subject to buyer’s financing approval.” The contract is contingent upon the buyer being approved for financing.

    So you can see that you can use the same words, but their meaning is different depending how you intend to use them.

    Best of luck

    John (LV)

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