What Buyers and Sellers Need to Know Before a Sale Becomes Firm
In my last Buyer Client Guide, I walked through what happens after your offer is accepted. One of those steps deserves a closer look: subject removal.
An accepted offer does not necessarily mean you have a firm sale. Many real estate contracts contain conditions, commonly called subjects, that need to be satisfied or removed before the parties are required to complete the transaction.
And while we often talk about “buyer subjects,” buyers are not necessarily the only party with conditions or obligations during this period.
Both buyers and sellers may have conditions to satisfy, deadlines to meet, information to provide, and decisions to make as they work toward a firm sale.
📋 First, What Is a Subject?
A subject, sometimes called a condition, is a term in the Contract of Purchase and Sale that makes the obligation to complete the transaction conditional on something happening or being satisfactorily addressed.
For buyers, common subjects may include:
Financing
Home inspection
Insurance
Review of Title and property documents
Review of the Property Disclosure Statement
Strata document review
Septic, well or water testing
Municipal records or permits
Specialist inspections, reports or estimates
Sale of the buyer’s current home
Sellers can have conditions too. For example, a seller may make their obligations subject to finding a home of their choice or being released from a previous Contract of Purchase and Sale.
Every contract is different, so the specific wording of each condition and the deadlines associated with it matter.
⚖️ Subjects Come With Obligations
One of the most important things for both buyers and sellers to understand is that a subject clause should not be thought of as a free opportunity to simply change your mind.
A conditional Contract of Purchase and Sale is still a contract. BCFSA advises buyers that when they include subject clauses, they are required to use every reasonable effort to see that those conditions are satisfied, and that subjects are not “escape” clauses that allow someone to avoid their contractual responsibilities.
The precise legal obligations can depend on the wording and nature of the particular condition. This can apply to seller conditions as well.
For example, a buyer with a financing condition should genuinely pursue financing. A buyer whose purchase is subject to selling their current home should make reasonable efforts toward that sale. Similarly, a seller with a condition for their benefit may have obligations to make reasonable efforts to satisfy it.
A party generally should not think of an unrelated reason to change their mind as a reason to rely on an otherwise satisfied subject condition.
If a question arises about your legal obligations under a particular condition, I can help you review the contract and the real estate options available, and recommend obtaining legal advice where appropriate.
🏡 For Buyers: Before You Remove Your Subjects
The subject period is your opportunity to complete your due diligence and determine whether the conditions in your contract can be satisfied.
Depending on your contract and the property, this may involve several different areas.
💰 Financing
A pre-approval is a great starting point, but it is not necessarily final approval for the home you have agreed to purchase.
Your lender still needs to approve the specific property and transaction. They may request your accepted Contract of Purchase and Sale, MLS information, Property Disclosure Statement, Title documents, strata documents, an appraisal, or other information.
Before removing your financing condition, make sure your lender has provided the confirmation you need for this particular purchase.
🔍 Home Inspection and Other Due Diligence
A home inspection may answer many questions, but it can also identify something that requires further investigation.
Depending on the property, your due diligence might also include septic or well inspections, water testing, municipal records, strata documents, specialist inspections, estimates, or other reports.
Simply receiving a document or completing an inspection is not necessarily the end of the process. The important part is reviewing the information, following up on concerns where appropriate, and determining whether the applicable condition can be satisfied.
🛡️ Insurance
Insurance is an increasingly important part of a buyer’s due diligence.
Your insurer may ask about the age and condition of the roof, plumbing, electrical and heating systems, previous claims, and the location of the property. Wood-burning stoves and fireplaces may also require a WETT inspection or certification.
Some current areas of concern can include Poly-B plumbing, certain older or outdated electrical panels, and climate-related risks such as wildfires and floodplains.
An issue does not necessarily mean a property cannot be insured. If something arises, we can discuss the options available and determine whether additional information, inspections, quotes, repairs, or advice from the appropriate professional would be helpful.
If your purchase is subject to obtaining satisfactory property insurance, you should confirm that appropriate coverage is available before removing that condition.
🏠 Subject to the Sale of Your Home
If your purchase is subject to the sale of your current home, that condition is an important part of your contract and may have additional terms associated with it.
Depending on how the condition is written, there may be specific requirements relating to marketing your property, accepting an offer, your own buyer removing their conditions, providing updates to the seller, or responding to a time clause.
The wording and timelines can vary considerably, so we will review exactly how your subject-to-sale condition works and what needs to happen before it can be removed.
🔧 What If Something Comes Up?
Discovering a problem during the subject period does not automatically mean the purchase has to end.
Depending on the issue and the terms of your contract, we may need to gather more information, obtain an estimate, consult a specialist, request an extension, or consider another solution.
In some circumstances, a buyer may wish to try to renegotiate the price or another term of the contract based on information discovered during due diligence. The seller is not necessarily obligated to agree to a requested change, but where appropriate, we can discuss whether renegotiation is an option you would like to pursue.
If something arises, my role is to help you understand the real estate options available and determine what additional information or professional advice may be appropriate.
🔑 For Sellers: You May Have Conditions Too
Subjects are not always just for buyers.
A seller may have a condition that needs to be satisfied before they are required to complete the sale. For example, the contract might be subject to the seller finding a home of their choice or being released from a previous Contract of Purchase and Sale.
Seller conditions also come with their own wording, obligations, and deadlines. They should be treated just as seriously as buyer conditions.
Even when sellers do not have their own formal subjects, they may have obligations during the buyer’s subject period. Depending on the contract, these could include providing agreed-upon documents, responding to requests for information, or providing reasonable access for inspections, appraisals, insurers, or other due diligence.
Sellers should not assume the sale is firm simply because an inspection has taken place, the buyer appears happy with the property, or some of the buyer’s conditions have been satisfied.
⏳ When One Side Is Ready Before the Other
Sometimes one party has completed everything they need to do while the other still has an outstanding condition.
For example, the buyers may have removed all of their subjects while the seller still has a condition relating to finding another home. Or the seller may have satisfied their condition while the buyer is still completing financing or other due diligence.
The status of the transaction depends on the actual terms of the Contract of Purchase and Sale and whether all applicable conditions have been properly dealt with.
One party being ready does not necessarily mean the sale is firm.
✍️ What Happens at Subject Removal?
Once buyers have completed their due diligence and determined that their conditions can be removed, I prepare the appropriate subject removal documentation for them to review and sign.
This is a significant step.
Once the buyers have signed to remove all of their conditions, they are committed to the purchase according to the terms of the contract. If the seller has conditions of their own, those must also be dealt with according to the wording and deadlines in the contract.
Once all applicable conditions have been removed, fulfilled, or otherwise dealt with as required by the contract, the parties move forward with a firm transaction and the obligation to complete the purchase and sale.
That is why questions and outstanding concerns should be addressed before subject removal documents are signed.
🕐 What If Someone Isn’t Ready?
A subject removal deadline does not automatically extend because one party needs more time.
If additional time is required to complete financing, obtain information, receive a specialist’s report, satisfy another condition, or deal with an unexpected issue, it may be possible to request an extension.
Where the other party’s agreement is required, they are not obligated to grant one.
If we find ourselves approaching a deadline with something outstanding, we can discuss the options available based on the terms of your particular contract.
🎉 Once the Sale Is Firm
Once all conditions have been dealt with and the sale is firm, the focus changes from due diligence to preparing for completion.
Buyers can finalize matters with their lender and lawyer or notary, arrange their insurance binder, and begin preparing for the move. Sellers can focus on their own closing and moving preparations.
For buyers, I recommend arranging your insurance binder as soon as subjects have been removed rather than leaving it until just before completion. Insurance availability can change, particularly when an unexpected event affects an area. For example, wildfire activity may affect an insurer’s ability to bind new coverage in an affected area.
Having your coverage arranged early can help avoid unnecessary complications as completion approaches.
And from there, we are on our way to completion and possession.
🤝 My Role During Subject Removal
There can be a lot happening during a relatively short subject period.
My role is to help keep track of deadlines, coordinate the real estate side of your due diligence, gather information, identify questions that may need further investigation, explain the real estate options available under your contract, and connect you with the appropriate professionals when something falls outside my area of expertise.
I also maintain a list of inspectors, tradespeople, insurance contacts, and other service providers that my clients have used and been happy with in the past. If you need a recommendation during your due diligence, just ask.
Subject removal is not simply about reaching a date on the calendar. It is about making sure the conditions in the contract have been properly addressed and understanding when you are making a firm commitment.
📚 More Client Guides
This guide is part of my ongoing Client Guide series designed to make the buying and selling process a little easier to understand.
🏡 For Buyers
Your Offer Was Accepted... Now What Happens?
This guide walks buyers through what happens after an offer is accepted, including the conditional period and the steps leading toward completion and possession.
🏷️ For Sellers
You Have an Accepted Offer... Now What Happens?
This guide looks at the process from the seller’s perspective, including what happens during the conditional period and what to expect as you work toward a firm sale and completion.
🔜 Coming Up Next
Completion Day vs. Possession Day: What’s the Difference?
These two dates are often confused, but they are not the same thing. In an upcoming Client Guide, I’ll explain what happens on each day, when ownership changes hands, when buyers receive their keys, and why completion and possession are often scheduled at different times.
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