In British Columbia, most home purchases happen in two stages. First the seller accepts your offer, and you have a binding contract. Then, before a date written into that contract, you remove your “subjects”, and the sale becomes firm. Understanding what happens between those two moments is the best protection a buyer has.
What a subject is
A subject, also called a condition precedent, is a condition you write into your offer that has to be satisfied before the purchase goes ahead. BCFSA, the province’s real estate regulator, gives the classic example: if you need a mortgage, your offer is subject to arranging that financing by a specific date before completion. Once the financing is approved, you remove the subject.
The subjects buyers most often include:
- Financing: your lender’s final approval, not just a pre-approval.
- A satisfactory home inspection.
- For a condo or townhome, a satisfactory review of the strata documents.
- Sometimes, the sale of your current home.
- Sometimes, the seller completing a Property Disclosure Statement.
The contract is binding from acceptance
This is the part many buyers get wrong. BCFSA is clear that a contract of purchase and sale is legally binding once both parties have signed it, even while subjects are outstanding. Subjects are not escape hatches. The buyer is required to make every reasonable effort to satisfy them: order the inspection, apply for the financing, read the documents.
If, after a genuine effort, a condition can’t be met, the contract ends and you have no obligation to complete. But a subject can’t be used simply because you’ve changed your mind.
Removing your subjects
When your conditions are satisfied, you give the seller written notice that you’re removing them. From that moment, the purchase is firm: you’re committed to completing on the date in the contract.
Deadlines matter. If the subject removal date passes without written notice, the contract can end. BCFSA has noted that an expired contract can’t simply be revived; an extension has to be agreed in writing before the deadline, or the parties need a new contract.
Your deposit while subjects are outstanding
Your deposit is usually held in a real estate brokerage’s trust account, as a neutral stakeholder rather than for either side. BCFSA points out something that surprises many buyers: if a subject in your favour isn’t removed, the deposit doesn’t come back automatically. Both buyer and seller normally have to sign a release before the brokerage can pay it out. If they don’t agree, the brokerage may pay the money into court for a judge to decide.
Subjects and the 3-day rescission period
Since January 3, 2023, buyers of most homes in BC also have a separate right to rescind, or cancel, within three business days of acceptance, for a fee of 0.25% of the price. It runs at the same time as your subjects and has nothing to do with them: it applies even to a subject-free offer. How the rescission period works
Sellers have a lever too
A seller who accepts an offer with subjects can keep considering other offers until those subjects are removed. Some contracts include a clause that lets the seller, if another attractive offer arrives, require the first buyer to remove all subjects within a set time, or the contract ends. It’s worth knowing whether your contract has one.
Should you go subject-free?
In a competitive market, a subject-free offer can look stronger. BCFSA calls it one of the riskiest options, for three reasons:
- You may discover defects after you’ve bought. Sellers only have to disclose certain kinds of defects; finding the rest is the buyer’s job, through an inspection.
- A pre-approval is not a final approval. If financing falls through, you could lose your deposit and face a claim from the seller.
- For a strata, the owners may have approved changes, to parking or storage allocations or the bylaws, for example, that you didn’t know about.
There are ways to reduce the risk before you write: an inspection before the offer, a title search, and reading the strata documents up front. If you’re considering it, talk it through with me first.
Questions people ask
How long is the subject period?
There’s no fixed length. It’s negotiated in each offer and written into the contract as a date. It has to give you enough time to arrange financing, an inspection and any document review.
Can the seller accept another offer while I have subjects?
The seller can keep receiving and considering other offers. Whether they can require you to remove subjects early depends on whether your contract includes a clause allowing it.
Is my offer binding before subject removal?
Yes. The contract is binding from acceptance; the subjects are conditions you must make a genuine effort to satisfy.
General information for buyers in British Columbia, current as of publication. It isn’t legal advice: your contract and your lawyer or notary have the final word.